Archive for June, 2008


Report:

TSA Screeners’ Low

 Morale

May Hurt Airport

 Security

Kip Hawley Rips Report’s ‘flawed conclusions’

About Whistleblower Screeners

By Thomas Frank

June 24, 2008

Low morale among the nation’s airport screeners may be compromising security and forcing screeners to quit their jobs, a controversial government report said Tuesday.

The 29-page report by Homeland Security Department Inspector General Richard Skinner is the latest to chronicle personnel problems among the nation’s 48,000 airport screeners.

To view a copy of the report, Click Here.

The workforce has some of the highest turnover and injury rates in the federal government.

Unlike past workplace reports, this one says security could suffer as a result.

“Given their frustration, employees may be distracted and less focused on their security and screening responsibilities,” Skinner’s report says.

Transportation Security Administration chief Kip Hawley ripped Tuesday’s report, saying it relies on disgruntled screeners at a few airports. “This results in flawed conclusions,” Hawley wrote in a sharp, point-by-point rebuttal.

The report charges the agency with “not successfully addressing … longstanding workplace issues.”

Among them are screeners’ concerns that they feared retaliation for raising complaints and were discouraged by managers from meeting with an ombudsman.

The report says screeners have complained about discrimination, selective hiring, nepotism and “management misconduct” but gives no details. Skinner focuses on TSA’s efforts to deal with workplace problems before screeners file formal complaints.

TSA efforts to address problems were called inadequate. The agency’s programs that it set up to deal with personnel issues “may provide false hope and have the unanticipated effects of heightening employee dissatisfaction,” the report says.

AJ Castilla, a screener at Boston’s Logan Airport and spokesman for a screeners’ union, said in an interview Tuesday that conflicts with TSA managers are taking a toll. “With low morale, you can definitely lose your focus,” Castilla said.

But deputy TSA administrator Gale Rossides said that morale is “very good” and that screeners “are very much turned on” and focused on security.

The TSA recently began training all screeners in improving interaction with airline passengers and is giving them new uniforms with badges aimed at getting more respect.

“We have areas to improve upon, but we also have made great strides,” Rossides said.

Hawley’s written reply accuses Skinner of “bias” because his investigators interviewed screeners at only eight of the 450 commercial airports, and those airports were picked because screeners there had previously aired complaints.

Hawley also seized on what he called “unclear” conclusions, noting that the report says screeners “may” be distracted.

A Homeland Security Department employee survey released in February found mixed feelings among screeners. While 94% said their work was important, only 20% said promotions are based on merit.

Hawley, who two years ago called screening a “dead-end job,” has tried to create new, skilled positions such as screeners who patrol airports to find suspicious-looking passengers.

See Original Article Here:

http://www.usatoday.com/travel/flights/2008-06-24-screeners_N.htm?csp=34

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By Wade Goodwyn

June 16, 2008

This is shaping up to be the year of the whistle-blower at the Federal Aviation Administration.

So far, 32 men and women have stepped forward with concerns about safety issues — nearly triple the number for all of 2007.

The FAA has responded by implementing new systems for reporting safety issues, and it says the situation underscores that the agency has dedicated workers who put public safety first. But the agency also has been accused of looking the other way when supervisors retaliated against those who spoke out — potentially ruining a whistle-blower’s career.

An Invitation to Disaster

Peter Nesbitt was a veteran controller with 17 years of experience when he transferred from Austin, Texas, to the control tower at Memphis International Airport in Tennessee. Both Northwest Airlines and FedEx use Memphis as a base of operations, and Nesbitt liked working the night shift.

But there was something that didn’t sit right with him: During the times when the airport got a big push of inbound traffic, controllers were instructed to use all four runways for landing.

Nesbitt thought this was an invitation to disaster.

“When I saw the operation, I asked some of my peers and supervisors, ‘Hey, what’s up with this procedure, this looks kinda scary,’ ” Nesbitt says.

Imagine three parallel runways next to one another like rows of corn. The fourth runway at Memphis International runs across the end. If all the landings go as planned, there is no problem because the plane landing on the fourth runway is already on the ground as the other planes pass overhead on approach. But if the plane landing on the crossing runway has a problem and needs to execute what is called a “go around,” then its flight path could take it directly into the flight path of the other planes.

This occasionally happens at Memphis. Last year, in fact, a Northwest Airlines DC-9 aircraft almost collided in midair with a commuter plane while Nesbitt watched from the control tower.

“I saw a twin turboprop on approach to land on runway 27 [the crossing runway],” Nesbitt says. “At the same time, there was a DC-9 on approach to the left runway. As the Saab-Fairchild approached the runway, the pilot informed the local controller that he was going around due to an unsafe gear indication.”

As the jet and the commuter plane converged, the controller handling the landing began to plead with the turboprop pilot to “stay low, stay low, stay low.” The Saab-Fairchild pushed the nose over and flew down the length of runway 27, says Nesbitt. At the same time, the pilot flying the DC-9 jammed his throttles forward, pulled back the stick and clawed for the sky. The commuter plane ended up flying right underneath him.

“I estimate that it was 800 feet or less,” Nesbitt says. “It was the closest we had seen two airplanes come together in my career — and everyone else’s, too.”

Nesbitt says managers had always told the controllers at Memphis International that the airport had a special waiver from the FAA to land planes this way. When the controllers asked to see the waiver, Nesbitt says they were told it wasn’t in Memphis: It was kept in Atlanta and they didn’t need to worry about it. The truth was that both Memphis Airport officials and FedEx executives liked having the four runways landing planes at once during peak operations. But Nesbitt was too frightened to let it go.

“I went straight downstairs when I got a break, and I filled out a NASA aviation safety report, and submitted it to NASA that night,” he says. “Then I contacted the National Transportation Safety Board, and sent them an e-mail about the runway.”

From the beginning, Nesbitt worried about retaliation. And federal investigators quickly uncovered embarrassing information. Memphis International, in fact, did not have a waiver to conduct that controversial landing procedure, and the FAA ordered it stopped immediately.

But the desire to maintain the status quo was strong, and Memphis managers continued to land planes in the same operation until Nesbitt busted them to the FAA again, according to FAA documents.

The retaliation against him was quick and intense, Nesbitt says. Over the past year, managers in Memphis have decertified him for alleged performance issues.

“It’s been excruciating,” Nesbitt says. “It’s been disturbing. I’ve tried to do the right thing and enhance safety, and I’ve paid the price.”

To Be an Outcast

Nesbitt is not alone when it comes to a backlash.

Dallas-based FAA aircraft inspectors Charalambe “Bobby” Boutris and Douglas Peters blew the whistle on shoddy maintenance practices at Southwest Airlines. That led to the grounding of thousands of Southwest, American and other airlines’ planes. Boutris and Peters went before the House Transportation Committee in April and gave blistering testimony about how the FAA had abandoned its own aircraft inspection protocols.

At a ceremony Wednesday in Washington, D.C., Boutris and Peters were honored by the Office of Special Counsel for their service to the country.

While accepting his public servant award, Boutris described the retaliation he encountered.

“When I came forward, the next step was to put me under investigation, take my inspector duties away, and tell me I had to stay in my cube and stare at the four walls for six months,” Boutris says.

FAA officials refuse to comment specifically about the allegations of retaliation against any particular whistle-blower. But the agency has acknowledged it has a problem and says that in the past few weeks it has put in place new procedures designed to facilitate reports of unsafe conditions.

FAA spokesperson Diane Spitaliere says the agency has replaced some of the FAA managers at Dallas-Fort Worth International Airport with “experienced managers from other facilities.”

Anne Whiteman, a controller who was the first to go public about the problems inside the tower at DFW a decade ago, says it’s no fun being an FAA whistle-blower.

“They did things blatant, they tried to run me off the road,” Whiteman says. “A guy used to knock me down at work all the time. He’d walk by — if nobody was looking, he’d knock me down.”

Whiteman blew the whistle on managers at DFW who were covering up incidents involving aircraft flying too close to one another. They retaliated by declaring her medically unfit for duty. While the top brass of the FAA in Washington now admits it’s had an ongoing problem at DFW, Whiteman says that for her it doesn’t matter, the retaliation in Dallas never stops. After 10 years, she’s worn down.

“I used to say I would do it again; [now I’m] not so sure,” Whiteman says, her voice shaking. “Twice now I’ve been removed from my job. The most recent instance, I was locked in the office. I’ll never be the same ‘ole Annie again. They’ve changed me in many ways. But I do have my pride. I do have a sense that I did the right thing, but I have a whole lot of sadness that I don’t think I would have ever had.”

Whiteman’s account and supporting testimony by witnesses were documented by the federal government. Managers disputed the door was locked.

To be an FAA whistle-blower is to be an outcast. But the dangers they eventually report weigh heavily on their consciences. It is their fear of the soul-crushing guilt they would suffer if the worst actually were to happen — and they had done nothing to stop it.

See Original Article Here:

http://www.npr.org/templates/story/story.php?storyId=91428378

OSC Chief Scott Bloch

Made Subordinates Post

Online Rebuttals to News

 Stories

[ who impersonated military combat veterans ]

By Dan Friedman

June 13, 2008

Scott Bloch, the embattled head of the U.S. Office of Special Counsel, whose office and home federal agents raided last month, has faced a lot of bad publicity. And he evidently doesn’t like it.

On many occasions since 2006, Bloch ordered a subordinate to post comments on blogs and in the “comment” sections of online news stories using a pseudonym, current and former OSC employees told CongressDaily.

The postings have defended Bloch against online articles and comments by readers that he has perceived as negative, the sources said.

“That did go on,” said a former employee who has been involved in the activity. “Bloch would suggest posting things in the comments section. … There’d be a negative article about Scott’s involvement on something … and [the] comment would be something like ‘This Bloch guy is doing a good job.”

Two former OSC employees have gone so far as to describe Bloch as thin-skinned and “obsessed” with his press coverage.

A federal grand jury is investigating whether Bloch obstructed justice by destroying files sought by the Office of Personnel Management’s inspector general, who was looking into allegations that Bloch improperly retaliated against OSC employees for opposing his policies.

The former OSC employee familiar with the anonymous postings on Bloch’s behalf was recently interviewed by FBI agents gathering evidence for the grand jury probe, but said the agents did not ask about the issue.

Roscoe Howard, an attorney representing Bloch, said Bloch would not comment due to the continuing criminal probe. An OSC spokesman said Bloch was unavailable Thursday.

The former OSC employee, who described the Web posting operation in exchange for anonymity, said such instances might have numbered in “the double digits.” Bloch “would be involved in the discussion of what should be said,” the employee said.

The employee suggested at least one OSC worker posted comments on the Web sites of such publications as the Washington Post, Topeka Capital-Journal, and the Lawrence Journal World. The two Kansas-based publications have written about Bloch because he is from the state.

In another instance confirmed by CongressDaily, an OSC employee who has not served in the military identified himself as “A Combat Vet” in an online response to a July 13, 2007, article on GovernmentExecutive.com. In the article, House Oversight and Government Reform Committee Republicans faulted Bloch for his use of personal e-mail to discuss agency business.

The anonymous posting said news organizations were devoting too little coverage to OSC’s enforcement of the Uniformed Services Employment and Reemployment Rights Act, which bars discrimination against people based on service in the armed services.

“Where is the coverage of USERRA?” the posting asked. “OSC helped my buddy out when he couldn’t get his job back, and it doesn’t seem like anybody is checking into how it helps veterans. … Who the hell cares if Bloch sent an email about congresscritters goofing off and playing pattycake. This USERRA issue is a huge deal for us who served. Does anyone give a crap?”

At the time, public affairs officials at OSC, which enforces federal workplace rights, were urging reporters to cover USERRA enforcement cases.

During the hearing described in the article, House Oversight and Government Reform ranking member Tom Davis, citing an e-mail Bloch had sent, accused him of acting inappropriately in distributing to several people news articles about OSC investigations of federal officials.

Davis offered similar criticism Thursday.

“A public official should be accountable to the public.” Davis said in a statement. “To secretly use the resources and personnel of his office — on government time — to comment on negative press reports is improper and deprives the public of accountability.

“If true, this could constitute an unlawful use of appropriated funds to publish covert propaganda,” Davis said. “This is further evidence that Scott Bloch is unfit for his office and should resign, be fired or at least be placed on administrative leave.”

Davis added that he would ask House Oversight and Government Reform Chairman Henry Waxman “to initiate an investigation into this activity.”

http://www.govexec.com/dailyfed/0608/061308cdam1.htm

Press Release

For Immediate Release: Monday, December 5, 2005
Contact: Chas Offutt (202) 265-7337

WHISTLEBLOWERS GET NO HELP FROM BUSH ADMINISTRATION
Record Numbers Are Blowing the Whistle but Fewer Cases Investigated

Washington, DC — The U.S. Office of Special Counsel, the agency that is supposed to protect federal employees who blow the whistle on waste, fraud and abuse, is dismissing hundreds of cases while advancing almost none, according an analysis of the latest agency figures released today by Public Employees for Environmental Responsibility (PEER). Despite record numbers of federal employees filing whistleblower disclosures and complaints of retaliation, there are fewer investigations and a much greater likelihood that those who blow the whistle will be silenced.

Scott Bloch, the Bush appointed Special Counsel has been in office for nearly two years, during which time positive results for whistleblowers have plummeted. Even though the first quarter of FY 2006 is almost over, last week Bloch finally posted his annual report for FY 2004 on the OSC website, without any public announcement and nearly a year late. The overdue report’s contents explain its tardiness:

• Less than 1.5% of whistleblower disclosures of problems were even referred for investigation while more than 1,000 employee reports of waste, fraud and abuse were closed by Bloch’s staff on the grounds that they were not worthy of further review; and

• Only eight whistleblower disclosures were substantiated (none were found to be unsubstantiated) during Bloch’s first year but, according to the OSC report, the most significant cases involved theft of a desk and attendance violations.

“With Scott Bloch at the helm, the Office of Special Counsel is acting as a Plumber’s Unit for the Bush administration, plugging leaks, blocking investigations and discrediting sources,” stated PEER Executive Director Jeff Ruch. “Under Bloch, political appointees, not civil servants, decide which cases go forward and which cases are round filed.”

Those whistleblowers who claimed to suffer retaliation for making reports fared even worse:

• Favorable outcomes declined sharply (24%) under Bloch even though there were more cases;

• The only favorable outcomes were in cases where the offending agency agreed to make changes. In no case did Bloch litigate directly on behalf of a whistleblower; and

• More than nine out of ten surveyed employees were dissatisfied with the effectiveness of OSC, with more than three in four classifying themselves as “very dissatisfied.”

“If the Special Counsel were a private business it would have to close its doors,” Ruch added, noting that pending reform legislation allows whistleblowers greater freedom to directly advocate their cases. “Bloch’s abysmal performance raises serious questions about whether the Office of Special Counsel should be abolished altogether.”

###

See the belated OSC FY 2004 Report to Congress

Review the poor track record of Scott Bloch

 

 

 

Ph: (202) 265-7337 • Fax: (202) 265-4192 • email: info@peer.org
all content © peer.org 2005

 

 

 

Hundreds of Whistleblower Cases Dismissed Improperly, Group Charges

by Brendan Coyne

Dec. 6, 2005 – Amid growing charges that various federal agencies are acting illegally, the office responsible for investigating many such allegations made by government employees released its 2004 report a year late and with no public announcement.

According to the 2004 report of the United States Office of Special Counsel, only a handful of the nearly 1,200 employee reports of waste, fraud and abuse on the Office?s schedule at the start of 2004 were deemed worthy of further investigation. Of those investigated, the office found only eight to have merit.

The Office received almost 2,000 new complaints during 2004 and referred 244 for investigation, closing 1,799 within 240 days of receiving them, the report noted. There were 653 complaints carried over from 2003.

In a statement released yesterday, Public Employees for Environmental Responsibility (PEER) alleged that Scott Bloch, the office?s head and a political appointee of the Bush administration, has been sweeping serious complaints under the rug at the behest of White House officials. For more than a year, PEER has been attacking Bloch over similar concerns, including charges that he conducted a purge of Special Counsel workers for whistle-blowing activities of their own.

“With Scott Bloch at the helm, the Office of Special Counsel is acting as a plumber?s unit for the Bush administration, plugging leaks, blocking investigations and discrediting sources,” PEER Executive Director Jeff Ruch said in the statement. “Under Bloch, political appointees, not civil servants, decide which cases go forward and which cases are round filed.”

The OSC report begins with two pages of Bloch?s biography and a laundry list of his accomplishments at the helm of the Office.

It does not include information about the controversy surrounding his management of the office. As reported by The NewStandard in April 2004, Bloch first made waves when he decreed that sexual orientation would no longer be considered “protected conduct” for government employees. The move was condemned by lawmakers and, eventually, President Bush. A year later, critics charge, Bloch attempted to orchestrate a virtual purge of the Washington, DC office by forcing senior staffers to transfer to regional branches purportedly created for just that purpose. That move is now under investigation by a separate agency, the Office of Personnel Management.

Of most concern to PEER and the whistleblowers whose complaints went uninvestigated is the fact that Bloch cleared out a huge backlog of complaints, mostly by dismissing investigations without seeking further information from the whistleblower who filed the claim in question, a fact he cited as evidence of the good work the Office of Special Counsel was doing under his command in a letter to Representative Henry Waxman (D-California) earlier this year. PEER obtained and released the letter in February.

© 2005 The NewStandard. All rights reserved. The NewStandard is a non-profit publisher that encourages noncommercial reproduction of its content. Reprints must prominently attribute the author and The NewStandard, hyperlink to http://newstandardnews.net (online) or display newstandardnews.net (print), and carry this notice. For more information or commercial reprint rights, please see the TNS reprint policy.

The NewStandard ceased publishing on April 27, 2007.

 

This is an older story.  It does not seem to me that at least since I’ve been paying close attention to the whistleblower arena and blogging about it, that I know too many whistleblowers who intentionally attack the problem for the purpose of financial gain.  I think all whistleblowers who legitimately try to report fraud, theft or other criminal actions should be compensated for any damages to their careers and lives which occurred because of or strangely “coincidentally” after their standing up for what is right and being labeled a whistleblower.  Most all of the whistleblowers I know of have given and sacrificed in the extreme and are living examples of “No good deed goes unpunished.”  Careers, personal lives, families and spirits are being torn apart right and left, because someone had enough principle to stand up to the wrongdoers in both government and industry.   It seems now whistleblowers are having a heck of a time getting anyone, including government oversight authorities to even successfully carry through with competent and good faith investigation and prosecution of their cases.  I post this here for general historical interest and contrast. 

-GFS 

 

 

 

*********************************************************************************

On The Cover/Top Stories

http://www.forbes.com/forbes/2005/0314/090_print.html


The Dark Side of Whistleblowing
Neil Weinberg, 03.14.05

The government makes whistleblowers filthy rich for ferreting out fraud on the job.

Douglas Durand is the paragon of a corporate whistleblower. Shortly after stepping in as vice president of sales at TAP Pharmaceutical Products in early 1995, he began to suspect the company was conspiring with doctors to overcharge the federal government’s Medicare program by tens of millions of dollars. But instead of trying to fix the problem, he spent seven months gathering evidence of supposed fraud. Then he quit in 1996 and filed a secret lawsuit against TAP. One motive: If he could prove the company was dirty, he would share a nice chunk of any money TAP paid back to the feds.

He spent eight years helping the government build its own case against the company, visiting prosecutors in four states and testifying before a grand jury in Boston. He compiled a list of alleged TAP conspirators and then called these former colleagues while the FBI listened in. Moreover, Durand later filed suit making similar allegations against a TAP rival, the former Zeneca Inc. The feds ultimately joined him, filing civil and criminal charges against TAP and prodding it into paying the government $885 million to settle the case–six times as much as the claimed overcharges. Douglas Durand cashed in: He received $126 million from the U.S. government. Now age 53, he retired and lives with his wife and daughter in the tony enclave of Tarpon Springs, Fla.
Yet TAP itself was never accused of submitting bogus Medicare bills; it was charged under a little-known provision that holds medical suppliers accountable if others falsely bill the government for the suppliers’ products. On Oct. 3, 2001, the day prosecutors announced the settlement, they filed criminal fraud charges accusing TAP executives of perpetrating the overbilling scheme. This “sends a very strong signal to the pharmaceutical industry,” the prosecutor in the case, Michael Sullivan, publicly declared at the time.

Then Durand’s story began to fall apart. As the trial of a dozen TAP employees played out last year, defense attorneys poked holes in Durand’s claims. Kickbacks he said TAP paid to doctors never happened. Price hikes he had accused the firm of imposing to overcharge Medicare hadn’t actually taken place. A fancy conference Durand had described as a way to bribe doctors into selling TAP’s drugs was in fact paid for by the attendees themselves.
 

 

 

By the Numbers

Tattle Totals

 

The feds have recouped billions from pharma fraud cases. The whistleblowers have done well, too.

AstraZeneca

 

Government’s estimated loss
$39 million

 

Settlement paid by company
$355 million

 

Whistleblower reward
$47 million

Schering-Plough

 

Government’s estimated loss
$293 million

 

Settlement paid by company
$345 million

 

Whistleblower reward
$32 million

Warner-Lambert

 

Government’s estimated loss
$150 million

 

Settlement paid by company
$430 million

 

Whistleblower reward
$25 million

TAP Pharmaceutical Products

 

Government’s estimated loss
$145 million

 

Settlement paid by company
$885 million

 

Whistleblower reward
$95 million

Source: Department of Justice.

 

In July a federal jury in Boston declared all the defendants not guilty. The judge then tossed out a guilty plea entered before trial by Kimberlee Chase, a TAP sales manager charged with bribing a health maintenance organization. The judge ruled that federal antikickback statutes don’t apply to HMOs, so Chase hadn’t committed a crime. Never mind that those same HMO-related allegations had been key to the government’s case against the company. It was the third time in eight years that all the employees indicted in such cases were exonerated after their employers paid big fines–Caremark coughed up $161 million and Blue Cross Blue Shield of Illinois $144 million.

So it goes in the Byzantine world of whistleblowers. In the post-Enron era, these self-appointed do-gooders are granted breathless audiences by Congress, extolled on national television and lauded by Time magazine as Persons of the Year. But some whistleblowers are motivated by greed, willing to stretch the truth for profit. That owes to the whistleblower law, adopted in 1986, that hands informants as much as a 30% cut of any money recouped by the government. It was pushed by a public-interest lawyer who then launched a practice for whistleblower cases, pocketing millions (see box, p. 92).
Since then whistleblower cases have boomed, recovering $7.9 billion from offending companies–and paying out $1.3 billion to the insiders who ratted on the wrongdoers. A whistleblower bar now spans some 200 lawyers. As word of giant awards has spread–$100 million to the two guys who blew the whistle on HCA and $32 million for a suit against Schering-Plough–the number of suits has soared. Fiscal 2003 saw 326 whistleblower suits, ten times as many as cropped up in 1986; the government gets involved in only about one-sixth of the cases, but these yield 96% of recoveries. And while the law first took aim at defense contractors and sought to protect low-level tattlers, it is now used to target fraud in health care and an array of other businesses. And at times it insulates–and enriches–higher-ups like TAP’s Durand.

In this hell-bent pursuit of jackpot justice, the prospect of a big payoff draws would-be whistleblowers “like moths to the flame,” the 4th Circuit Court of Appeals warned in 1999, when it tossed out a suit against Roche Biomedical by two employees of a merger partner who had already collected $833,000. The Bank of China has been hit with a suit for financing mislabeled mushrooms. Money manager Mario Gabelli faces a suit for allegedly putting in sham bids at auctions of wireless spectrum. An employee ratted on Odebrecht Contractors for underbidding on a federal contract, arguing it intended to raise prices later (his suit was dismissed as “fatally flawed”).

Government is often a willing accomplice, keen to look tough and cash in. It tars targets with bad press and threatens to levy fines many times the size of its own purported losses. If a company refuses to settle, the feds can move to ban it from federal business even before getting so much as an indictment. Most times companies settle, whether they are guilty or not. “It’s absolutely a form of extortion,” says attorney David Stetler, who successfully defended TAP exec Alan MacKenzie. MacKenzie last year became president of the $4 billion (sales) company.

Like whistleblowers themselves, the feds have a profit motive: They bring in $13 for each dollar spent prosecuting a case, and whistleblowers provide 52% of all U.S. government fraud recoveries, says Taxpayers Against Fraud, the whistleblower lawyers’ lobby. “It’s a tremendous return on investment,” says U.S. Attorney Sullivan, who has 13 people working on health care fraud cases. Health care now accounts for more than half of all whistleblower suits. Drugmakers have paid $2.5 billion in fines in recent years. In most instances the penalty paid was several times the losses.

Some of these winnings are funneled back into the pursuit of new cases, a nifty little move the feds began using in 1996. For several consecutive years the larger enforcement budgets have led to larger settlements, which in turn have funded still larger enforcement budgets. “It’s all done with a wink and a nod, with the bureaucrats going back to Congress and saying bigger budgets are justified by past results,” says Robert Salcido, a former federal prosecutor who defends whistleblower suits at Akin Gump Strauss Hauer & Feld.

Supporters of the whistleblower law say it is the only way to clamp down on the intractable problem of fraud in government contracts. The U.S. government spends half a trillion dollars annually on medical care, one-quarter of its budget, and fraudulent claims could total $50 billion of that sum, says the Government Accountability Office. “There can never be enough bureaucrats to discourage fraudulent use of taxpayers’ money, but knowing colleagues might squeal can be a deterrent,” says Senator Charles Grassley (R-Iowa), who pushed passage of the law.

In this for-profit justice, “financial incentives are what bring people forward,” concedes Michael Hertz, director of the Justice Department’s civil fraud section. But thereafter, he says, “a traditional fraud investigation takes place and the facts are the facts.”

Handing informants a share of the booty dates back centuries. Suits brought by citizens on a government’s behalf are known as qui tam cases, derived from the first two words of the Latin phrase meaning “whoever brings an action for the king brings it for himself.” President Lincoln introduced qui tam suits to the U.S. in 1863, signing the False Claims Act to target vendors of dud gunpowder in the Civil War.

The law languished for a century until it was revived in 1986 by Senator Grassley and John Phillips of the Center for Law in the Public Interest, the lawyer who later went into private practice to pursue whistleblower cases. They hiked a whistleblower’s cut from 10% to as much as 30% and lowered the threshold for guilt from knowingly ripping off the government to the fuzzier notion of “deliberate ignorance” or “reckless disregard” of regulations.

The whistleblower law was in full swing by the time Doug Durand landed at TAP Pharmaceutical in 1995. He grew up in Pawtucket, R.I., one of eight children, got a degree in pharmacology at the University of Rhode Island and spent 20 years selling drugs for Merck & Co.

His career there ended in a nasty dispute in 1994 in which Durand filed an Equal Employment Opportunity Commission suit against the drugmaker. He accused Merck of retaliating against him for supporting a female colleague’s claim that a Merck president had sexually harassed her. Merck paid him $255,000 to settle. Durand claimed in a related affidavit that Merck had ruined his career. Stripped of his office and duties, and exiled on paid leave, Durand applied to TAP, saying he was still a senior regional director looking to switch jobs. When he testified later before a grand jury, Durand left out all details of his Merck ouster, saying only that a headhunter had approached him.

TAP, meanwhile, was in the fight of its life. Abbott Labs and Takeda had formed the Lake Forest, Ill. company in 1977. After it developed a new monthly injection of Lupron, the first alternative to castration for advanced prostate cancer, sales jumped from $135 million in 1990 to $744 million five years later. The drug went for $400 a dose, and Medicare covered 80% of the cost.

Durand joined the company in January 1995 just as Lupron was facing fierce competition, from Zeneca’s Zoladex, a lower-cost rival. As head of sales his primary mission was to launch Prevacid, a new drug for acid reflux. But early on, he says, he grew uncomfortable with the way TAP was pushing Lupron. TAP sold it fervently, putting together a slide show on Lupron’s “return to practice” for doctors. It held seminars at fancy resorts and gave physicians TVs so they could show its promotional videos. Wags joked internally that TAP lawyers were in the “sales prevention department.”

One of Durand’s concerns involved sales reps’ failure to properly account for the free samples they gave to doctors. A precise accounting is required by federal law to prevent doctors from falsely billing Medicare for samples they received free of charge. Doctors must sign for each free dose they receive, and if they falsely bill Medicare, drugmakers can be convicted of criminal fraud.

Durand became convinced the faulty record-keeping was intentional, designed to let doctors collect extra money from Medicare. At one point he proposed linking sales reps’ bonuses to how well they accounted for free samples but was overruled, he claimed at the trial of his former colleagues. He had learned of a sales rep who had doctors sign for doses they hadn’t received–a “big problem,” he said, but didn’t recall doing anything about it. Despite Durand’s qualms, he didn’t turn to TAP’s outside counsel for advice; asked why, he testified that only two employees below the rank of vice president were allowed to do so and he was not on that short list.

In August 1995 Durand got edgier still, after people at a staff meeting discussed paying a 2% fee to Lupron doctors to cover administrative costs; federal rules allow such payments only to HMOs and other buying groups, not to individual doctors. It was tricky legal turf. “How would Doug look in [prison] stripes?” Alan MacKenzie, whom Duran outranked, joked at the meeting. Everyone else laughed, but Durand says he viewed the remark as “serious and sinister.”

Durand began looking at how to protect himself. He says he feared getting swept up in a prosecution if the feds ever stumbled upon TAP’s misdeeds. “I wanted to do the right thing,” he says. He told a former Merck colleague about the prison-stripes comment, and a month later the colleague referred him to a lawyer–Elizabeth Ainslie, a white-collar lawyer who had run the criminal fraud section in the Philadelphia U.S. Attorney’s office.

Ainslie suggested Durand begin keeping notes and collecting TAP documents for a possible whistleblower suit. Shortly afterward Durand faxed her a story headlined: “Rugby Laboratories Pays $7.5 Million to Settle Government VA Fraud Allegations; Former Employee Who Brought Qui Tam Suit Receives $1.1 Million.” He asked if this is what she had in mind; it was.

Durand began supplying the lawyer with TAP documents, letters with the company’s attorneys and memos it exchanged with its archrival, Zeneca. She showed the stuff to James Sheehan, a prosecutor in the Philadelphia office where she had worked, hoping to pique his interest in joining the case. For whistleblowers the key is to enlist the government–with its power to subpoena defendants and deprive a company of contracts before a case has been decided–as co-plaintiff.

As Ainslie wooed the feds, Durand put on a show of remaining a team player at TAP. In truth, he was the opposite. When word reached him of a California rep whose tactics were “out of line,” he left the matter to a subordinate to handle. Then he forwarded internal TAP correspondence on the matter to Ainslie.

In February 1996 Durand brought his sales managers to a golf resort in Florida and shared his vision of TAP’s future. Later that month he got his bonus for 1995 ($35,000) and quit, leaving TAP for AstraMerck. A month later he formally hired Ainslie to pursue a whistleblower case. She would cover his expenses and share in any recovery while billing defendants for her time if Durand prevailed. Three months later they filed suits against TAP and Zeneca. Like all such suits, Durand’s were filed under seal. The government was required to investigate them, and it did so, unbeknownst to the defendants.

For the ensuing five years Durand made repeated visits to U.S. attorney’s offices in Philadelphia, Boston, Chicago and Wilmington to prevail on prosecutors to join his suits. From his office at Astra he faxed a prosecutor in the Philadelphia office, Virginia Gibson Mason, calling her “Ginny” and boasting of “a productive morning!”–he had gotten the phone numbers of former subordinates to call and incriminate as the FBI listened in. The FBI made secret tape recordings of TAP employees discussing potential legal problems. In one Durand calls a former TAP colleague at his home, tells the child who answered the phone that a “friend” is calling and then lies to the TAP exec, pretending, in a bid to get the man to incriminate himself, that Durand himself had been subpoenaed; this employee wasn’t ever indicted.

Durand’s case drew the interest of prosecutors in the Boston office of the U.S. Attorney after they came across a second whistleblower, Dr. Joseph Gerstein. Gerstein oversaw drug buying at a Tufts University HMO and recently had decided to replace TAP’s Lupron with rival Zoladex. It was then, he told the feds, that TAP’s Kim Chase and a colleague offered him an “unrestricted” educational grant if he reversed his decision. Gerstein viewed it as a possible bribe. He approached TV and newspaper reporters but was ignored. Then he contacted Boston prosecutors.

“They were looking for potential cases to investigate since they have a big health care unit,” Gerstein says. He hired a lawyer and met with prosecutors in late 1996 and filed his whistleblower suit against TAP in March 1998. At the behest of federal agents, Gerstein let the FBI hide a camera in his office and wore a wire as he twice lured the TAP reps back by pretending he might reinstate Lupron. The FBI asked Gerstein to meet again to solicit a personal bribe. Queasy about the ethics, he staged the meeting but refused to come right out and ask for a kickback.

In April 2001, five years after Durand filed his suit, the Boston U.S. Attorney’s office joined it (“intervened”). Durand’s lawyer, Ainslie, drafted a motion to dismiss Gerstein’s suit, and his claim to part of the recovery, on the grounds that her client had filed first. The whistleblowers settled their spat, with Gerstein accepting a 3% cut of whatever the government recovered and Durand skimming a 14% share.

TAP denied the charges and argued that its sample program, educational grants and other efforts were entirely legal tactics common to many drugmakers. It was a losing hand. The feds had two highly motivated whistleblowers and had collected 500 boxes of documents. TAP pleaded guilty in October 2001 to what the government said was a nationwide conspiracy that included encouraging doctors to illegally bill for free samples, bribing them to get them to prescribe Lupron and reporting bogus wholesale prices to dupe Medicare into overpaying. It agreed to pay $885 million in restitution, fines and interest.

TAP has agreed to pay $150 million to settle a private suit brought by consumers, insurers and health benefit planners related to the charges, boosting its penalties past $1 billion. The government wrangled $355 million from AstraZeneca (formerly Zeneca) in 2003. Durand had never worked at Zeneca but says he sued the firm at the recommendation of Philadelphia Assistant U.S. Attorney James Sheehan, a former colleague of his attorney.

The carefully crafted deal let TAP remain a Medicare provider. The firm pleaded guilty to criminal charges of violating the Prescription Drug Marketing Act and was allowed to stay in business. Four doctors pleaded guilty to illegal billing. The day the settlement was finalized, H. Thomas Watkins, TAP’s president at the time, conceded it had provided Lupron samples to a number of doctors who illegally billed Medicare. But he added that “We fundamentally disagree with the government’s claims regarding TAP’s pricing and reimbursement policies.” TAP had agreed to pay the big fine, he added, only because the government had threatened to end federal reimbursements for Lupron, worth half a billion dollars a year.

That enraged William Young, the chief U.S. District Court judge in Boston who had approved the settlement. Young forbade TAP to make further claims of innocence. “I don’t want some p.r. flack saying this is all just a big misunderstanding,” he said.

When the separate trial of TAP employees unfolded last summer, the judge in that case, Douglas Woodlock, rejected the claims of whistleblower Gerstein wholesale. Durand testified and “had the crap beaten out of me” during a week of cross-examination, he says. His original suit claimed TAP had paid doctors 2% kickbacks, but only one customer got the fees and they were legit: Tri-State Urology, a buying group, had a legal safe harbor to receive the fees. Durand says TAP intended to kick money back to others.

He also wrongly told Chicago prosecutors that TAP fully accounted for only half of the free samples it handed out; in fact, it accounted for a far higher portion. He inaccurately testified that a meeting in Nevis, West Indies was a free junket for doctors dubbed “TAP into the Future.” In fact, it was titled “A Commitment to Urology: Therapeutic Innovations in BPH and Prostate Cancer.” Doctors paid their own way and earned educational credits.

“If you fixed the problems, do you think it would have helped your lawsuit?” Durand was asked at trial. His reply: “If I was allowed to fix the problems I was trying to fix, yes, the lawsuit would not have probably ever happened.”

By the time the legal holes, logical leaps and inaccuracies in the case were revealed in the criminal trial last year, TAP had been shaken down. Durand picked up $79 million for his TAP case and $47 million for suing AstraZeneca, and his lawyer, Ainslie, landed $13.5 million. Gerstein shared $16 million with Tufts, and his lawyer got an undisclosed sum, plus fees and expenses.

Durand appeared with a raft of other whistleblowers on Oprah Winfrey’s TV talk show in August 2002, regaling viewers with tales of his heroics. “Financially, I lost a lot,” he solemnly told his popular TV host. The show made only fleeting reference to the most interesting part–that ten months earlier he had received almost $80 million of his whistleblower windfall.

TAP may have deserved to get smacked down by prosecutors, and Durand may have deserved a reward for helping deliver it. But in other areas the government caps whistleblowers’ rewards at sane levels–$250,000 in customs cases and $1.6 million in those involving bank fraud. It’s an odd law that makes whistleblowers centimillionaires for reporting on bad behavior after silently watching it take place under their noses.

 

 

 

 

 

Here are some older cases which still are of interest.  -GFS

________________________________________________________________________

 

Cases which are of interest because they suggest some of the social benefits, personal costs and institutional resistance to whistleblowing.  From Caslon Analytics:  http://www.caslon.com.au/whistlecasesnote.htm

The political manipulation of our government by the Bush and Cheney administration is quite apparent to most at this time.  One noted area of meddling is in the area of Justice, which has nearly brought our Justice system to its knees.

 

A Birmingham News opinion published today, (“Injustice at Justice” Sunday, June 29, 2008), states that an internal audit of the Justice department’s summer internships and honors programs “concluded that stellar applicants were culled for positively ridiculous reasons that had nothing to do with their professional qualifications, such as their perceived political or ideological affiliations.”  The Birmingham News states that because it has now been shown that the Justice Department has systematically “wrongly injected politics into hiring,” that former Governor Don Siegelman says that is more proof he is indeed a victim of partisan prosecutors.  (See earlier articles on Karl Rove’s mechanizations against Gov. Siegelman and others previously posted.)  -GFS

 

Link to article at Birmingham News:

 

http://www.al.com/opinion/birminghamnews/index.ssf?/base/opinion/121472731277930.xml&coll=2

There is no peace to be found in the area of government contracting.  The latest flap over the refueling tanker contract just won’t end.  After rival Northrop-Grumman was awarded the contract in what Boeing earlier said was a fair competition, (when they thought they had it in the bag), suddenly blew up amid cries of foul play by Boeing, once it was announced Northrop-Grumman had been awarded the contract.  Boeing has pulled in many political favors and quid pro quo favors it appears on this one, if one can judge anything by the fury exploding in rallies and protests attended conspicuously by our elected officials in Congress, (Senator Patty Murray-WA, for instance) many of whom are notorious for their use of large and numerous defense contractor campaign donations. 

 

Boeing has managed, despite the existence of currently open criminal investigations into matters concerning contracts won by Boeing in the past, to rally this kind of support to maintain their claim of  automatic right to own the tanker contract.  It makes one wonder about our elected government officials when criminal cases being investigated against defense contractors are left open, not allowed to be completed and prosecuted, apparently with Congress’s blessing, and yet new contracts are blindly awarded to the offending defense contractors.

 

What follows are links to a couple of articles regarding Congress’s attempts to pass new bills which these articles contend would steer the tanker contracts to The Boeing Company.  The first article, “New bills steer tanker to Boeing” (Sean Reilly, Friday, June 27, 2008) describes an attempt by Kansas politicians to push through a bill which would pressure the Pentagon to take the tanker contract away from Northrop-Grumman and give it to Boeing or else the Pentagon would have to rebid the contract with an added load of new conditions and red tape.    -GFS

 

Mobile Press-Register

http://www.al.com/news/press-register/index.ssf?/base/news/121455815441380.xml&coll=3

 

 

 

The second article “Pro-Boeing bill blocked by Sessions” (Sean Reilly, Saturday, June 28, 2008) describes the efforts by Senator Jeff Sessions (AL) to block this bill.  Sessions said he put a “hold” on the bill in order to give the Air Force more time to “develop a way forward that serves the military’s best interest.”

 

Mobile Press-Register

http://www.al.com/news/press-register/index.ssf?/base/news/1214644527311860.xml&coll=3

Please Support Immediate Action to Protect Whistleblowers

 

 

I am urging you to support an effort underway to finalize legislation to give whistleblower protections to federal employees and government contractors. The legislation is one of the most important common sense ways to ensure that the federal government is honest, open, and accountable.

 

In doing so, I am joining organizations representing millions of Americans across the political spectrum, who have also endorsed the legislation. The Senate and the House have both passed bills by a veto-proof majority, but the bills must be reconciled.

 

I believe the House’s “Whistleblower Protection Enhancement Act of 2007” (H.R. 985) offers stronger protections than the Senate’s bill (S. 274). It closes important loopholes by expanding protection to national security workers in the FBI and other intelligence agencies, government contractors, and almost 40,000 airport baggage screeners. It also has a specific provision to protect scientists, making it illegal to censor or alter the results of federal research. For these and other whistleblowers, the right to due process will be provided, including jury trials when they face retribution from co-workers or employers. Even if disclosures are made during official duties, employees should have meaningful protection.

 

I am discouraged that we are still waiting for you and your colleagues to reconcile the two bills and enact this critical legislation. I urge you to put politics aside in order to finalize and pass the strongest bill possible to protect whistleblowers who expose government waste, fraud, and abuse.

 

Thank you for listening to a constituent. I look forward to your reply.

 

 

FAA tries again to fix cover-up of air safety errors
By MICHAEL J. SNIFFEN Associated Press Writer
Article Last Updated: 04/25/2008 11:32:44 AM MDT

WASHINGTON—The Federal Aviation Administration announced Thursday its
second effort in three years to stop its managers in Texas from
covering up air safety violations—after a new investigation found the
misconduct continued into last year.
In the latest blow to an agency already under fire for letting airlines
ignore its safety directives, the FAA announced that the top two
managers of an air traffic control facility in Dallas-Fort Worth had
been removed from their jobs.

In addition, the Transportation Department’s inspector general found
FAA managers in Dallas-Fort Worth routinely and intentionally
misclassified instances where airplanes were allowed to fly closer
together than they were supposed to, the FAA said. Instead of calling
them operational errors or deviations from safety rules by FAA
controllers, the managers labeled them pilot errors or nonevents.

“We’re not going to stand for this,” acting FAA administrator Bobby
Sturgell told a news conference.

Hank Krakowski, a former United Airlines pilot and safety executive who
became FAA’s chief operating officer last September, acknowledged that
FAA had promised to fix the problem in 2005 but “today it’s clear to us
those commitments were not taken seriously by people in my organization
who were responsible.” He announced a new attempt to remedy the
problem.

The FAA only learned of the continuing problem because a
whistle-blower—controller supervisor Anne Whiteman, who first reported
in 2004 that agency officials were concealing safety violations—had
come forward again last year to say the FAA managers were still
underreporting safety violations by FAA controllers or now misreporting
them as pilot errors.

The new inspector general report that substantiated Whiteman’s latest
allegations was ordered last year by the U.S. Office of Special
Counsel, an independent investigating agency responsible for protecting
whistle-blowers. A brief summary of the findings was issued by the FAA.
Special Counsel Scott Bloch did not plan to release the report until he
had time to evaluate it in detail with whistle-blowers but said it
“seems to validate what our brave whistle-blower Anne Whiteman brought
forward.”

“I continue to be concerned about a national trend,” Bloch said in a
statement referring to the Dallas-Forth Worth cover-up and the recent
disclosure of lax FAA supervision of safety compliance by Southwest
Airlines and American Airlines. “These problems exist because of a
culture of complacency and cover-up in the FAA. This culture did not
develop on its own. I believe it happened with the complicity of higher
management and could not have been possible without the support of
leadership in Washington.”

Transportation’s inspector general found that between November 2005 and
July 2007, FAA managers at the Dallas-Fort Worth facility misclassified
62 air traffic events as pilot deviations or nonevents when in fact
there were 52 operational errors and 10 operational deviations by FAA
controllers, the FAA said.

Krakowski said the problem appeared to be confined to the Dallas-Fort
Worth TRACON, a facility that controls flight below 10,000 feet and
within 30 miles of the Dallas-Fort Worth airport and several smaller
airports nearby. He said a nationwide sampling found only 3 percent
misclassifications elsewhere but 25 percent there.

The air traffic controllers’ union, deep into a two-year-old fight with
the FAA over manpower and safety, pounced on the agency’s announcement
to again criticize what it considers a shortage of workers. The
Dallas-Fort Worth facility has 57 fully certified controllers, down
from 99 in January 2006, said Darrell Meachum, vice president of the
National Air Traffic Controllers Association’s southwest region.

Meachum said 45 operational errors were reported in the first six
months of this fiscal year, up from 26 over the same period in 2007.

“The system is broken,” Meachum said. “These cover-ups by the FAA are
just par for the course.”

“This once great aviation safety agency has become ‘FEMA with Wings,'”
said Meacham, referring to the Federal Emergency Management Agency
which bungled the response to Hurricane Katrina.

The FAA says it has been able to replace controllers who resign or
retire with new hires who can work some but not all stations as they
complete on-the-job training that can take up to three years.
Controllers in training now comprise 25 percent of the national
controller workforce, up from 15 percent a few years ago. Controllers
union president Patrick Forrey said there are 22 trainees at the
Dallas-Fort Worth facility but nine of them are not yet certified to
handle any radar position.

To deal with the problem in Texas, Krakowski announced four nationwide
steps because “I’m not confident it can’t happen elsewhere.”

—The cause of safety violations will no longer be determined by
managers of air control facilities, but rather by a national quality
assurance team that will also audit facility reports. This team will
report to Krakowski’s top safety officer.

—Krakowski’s newly hired to safety officer, Air Force Brig. Gen. Robert
O. Tarter, will do a complete safety review of all procedures in FAA’s
Air Traffic Organization.

—By the end of this year, FAA will install in Dallas-Fort Worth
software that electronically detects any loss of the required distance
between airplanes and will install it nationwide by the end of 2009.

—A recently signed agreement with the controllers union, similar to one
already in place for pilots, will allow air traffic controllers to
report safety problems without fear of penalties.

———

Associated Press Writer Paul Weber in Dallas contributed to this
report.
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http://www.denverpost.com/search/ci_9054397
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