Judge Kermit V. Lipez of the U.S. Court of Appeals for the First Circuit last week reversed a summary judgment decision granted by the U.S. District Court for the District of Massachusetts to two Boston hospitals, Brigham and Women’s Hospital and Massachusetts General Hospital (“MGH”), and two Alzheimer’s disease researchers, Marilyn Albert, M.D. and Ron Killiany, Ph.D.

In 2006, Kenneth Jones, Ph.D., a chief statistician for a $15 million National Institutes of Health (NIH) grant for Alzheimer’s research, filed a qui tam lawsuit under the False Claims Act.  Jones alleged that statements in the grant issued to the National Institute on Ageing and NIH were falsified, and that despite knowing this, the defendants failed to take corrective action.

This research is part of an ongoing study trying to determine whether changes in brain volume seen on structural magnetic resonance imaging (MRI) can ultimately help predict who will develop Alzheimer’s. As part of the research, Dr. Killiany and one other rater manually outlined brain structures, including the entorhinal cortex (EC) on 103 participants’ MRI scans. Based on Dr. Killany’s brain structure outlines, computer software would calculate the volume of EC, after which other team members would conduct statistical analyses to try to determine if volume changes of the EC would help predict who might develop Alzheimer’s in the future. Jones, however, alleged that Dr. Killiany falsified information submitted to NIH by manipulating his brain structure outlines to support his hypothesis.

According to Medscape: “Dr. Jones later expressed concern to his colleagues regarding quantitative differences between the data sets, stating that the alterations were substantial and that, according to his analysis, the alterations were responsible for the apparent statistical significance.”  When Jones requested that the scans be re-measured, Dr. Albert refused because she believed that the additional set of measurements would cause more confusion.

Judge Lipez, stated:

“Distribution of revisions presents a genuine issue of material fact as to whether, as [one expert] put it, [Dr.] Killiany cherry-picked measurements to revise in a non-random fashion in order to produce data that would support his hypothesis on the role of EC volume and the prediction of prodromal Alzheimer’s.”

The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity by their employer.

R. Scott Oswald, managing principal of The Employment Law Group® law firm was recently interviewed by Law360 regarding the Department of Labor’s Occupational Safety and Health Administration’s (OSHA) announcement last week that it plans to establish an a Whistleblower Protection Advisory Committee dedicated to improving OSHA’s whistleblower protection efforts.

The proposed committee would fulfill and advisory role and make recommendations to the Secretary of Labor on ways to improve the effectiveness and transparency of OSHA’s administration of whistleblower protection laws.  The committee would advise on the development and implementation of “improved customer service models” for both whistleblowers and employers, as well as recommend changes to investigator training, and regulations governing OSHA investigations.  The move, according to commentators, highlights the government’s reinvigorated focus on protecting employees who report unsafe working conditions, violations of financial and securities law, or other violations.

The proposed committee would likely be comprised of a cross-section of stakeholders representing both employee and management perspectives and would function as a public forum to discuss the whistleblower program.

According to Mr. Oswald, “a committee that includes a broad range of perspectives would also serve to continue the discussions that OSHA had with stakeholders in its efforts to develop the changes it has made so far to improve the process for whistleblowers and corporations.”

Last year OSHA, which enforces the whistleblower provisions of 21 statutes that protect employees who blow the whistle on violations, completed an exhaustive internal review of its whistleblower program and subsequently announced a restructuring of the program, as well as new updates to OSHA’s investigator manuals.

Furthermore, Oswald commented that OSHA’s establishment of an advisory committee “is a continuation of that process meant to ensure that the pragmatic changes that OSHA has established do not in any way erode over time because there will be a group of individuals that have a vested interest in whistleblower programs’ success.”

The article, entitled “OSHA Steps Up Efforts To Revamp Whistleblower Program”, appeared in the May 21, 2012 edition of the web-based legal news service, Law360.

The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity by their employer.

R. Scott Oswald, managing principal of The Employment Law Group® law firm, was recently interviewed by Law360 regarding the Whistleblower Protection Enhancement Act (WPEA), which the U.S. Senate unanimously passed last week.

If also passed by the U.S. House of Representatives, the WPEA would expand whistleblower protections against retaliation by making it easier for whistleblowers to claim protected status, by eliminating the Federal Circuit’s exclusive appellate jurisdiction over certain whistleblower cases for a period of five years, and by allowing jury trials under certain circumstances for employees who sue agencies that retaliate against whistleblowers.  Additionally, if enacted, the WPEA would extend whistleblower rights to approximately 40,000 airport baggage screeners.

Since 1994, whistleblowers have only prevailed in 3 out of 220 retaliation lawsuits heard by the Federal Circuit.  According to Mr. Oswald, “The Whistleblower Protection Enhancement Act takes direct aim at the Federal Circuit precedents by [extending] protection to several new classes of employees, including employees of the Transportation Security Administration and intelligence agencies”.

“This is a critical reform,” Oswald stated, “Whistleblowers will know their disclosures won’t be held against them if they come forward with that information in good faith.”

Oswald also emphasized that the WPEA would “restore protections intended by the original Whistleblower Protection Act by protecting communications related to an employee’s official duties and communication with supervisors.”  This, according to Oswald, “[could] help agencies deal with fraud or other problems internally”.

“We want individuals to make disclosures at the lowest possible level and not feel like they have to file a complaint with the inspector general in every instance,” Oswald said.

Finally, Oswald noted, the law would also “expressly prohibit relocation or revoking an employee’s security clearance as retaliation for blowing the whistle, which can amount to retaliatory firing by other means for some employees.”

The article, entitled “Senate Bill Would Boost Whistleblowers’ Chances In Court”, appeared in the May 15, 2012 edition of the web-based legal news service, Law360.

On May 3, 2012, the U.S. Department of Labor Occupational Safety and Health Administration (OSHA) announced that it ordered Mark Alvis, Inc., a Tennessee-based commercial motor carrier, to reinstate a former employee and pay him $180,000 in back pay, interest, and damages. OSHA found that the company violated the Surface Transportation Assistance Act by terminating the employee for refusing to drive while he was fatigued and ill, and for refusing to exceed the hours-of-service limitations of the Federal Motor Carrier Safety Regulations.

On May 4, 2010, while inspecting a milk tanker truck for readiness before making a delivery, the driver slipped and hit his chest and stomach against a ladder. After he completed the delivery, the employee’s supervisor instructed him to perform another delivery.  The employee informed his supervisor that could not make the delivery, both because he was hurt and because he did not have enough remaining service hours to complete the task in accordance with federal regulations., Under U.S. Department of Transportation Federal Motor Carrier regulations,  commercial truck drivers are limited in the number of consecutive hours they may spend on the road without adequate breaks.  Upon refusing to make the delivery, the employee was told to remove his belongings from his truck was terminated.

After he was terminated, the employee filed a formal whistleblower complaint with OSHA.  After investigating the matter, OSHAdetermined that there was sufficient evidence to conclude that the company terminated the employeebecause he refused to complete the last delivery.

“America’s truck drivers have the right to refuse to drive when they are fatigued and/or ill and when they may be in violation of hours-of-service requirements, as permitted by current federal trucking regulations,” said Cindy A. Coe, OSHA’s regional administrator in Atlanta. “OSHA will ensure that these basic worker rights are protected and will prosecute any employer found violating them.”

The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity and safety hazards by their employer.

The Employment Law Group® law firm is proud to announce that two of its principal attorneys – Adam Augustine Carter and Nicholas Woodfield – have been selected as 2012 Washington, D.C. Super Lawyers.

Adam Augustine Carter has spent most of his 20 year career as a litigator representing employees and whistleblowers.  Mr. Carter has been praised by clients, counsel, and courts for his effective advocacy and his tremendous problem solving abilities.  Mr. Carter is very experienced representing employees who bring claims against their employers involving wrongful termination, retaliation, contract disputes, employment discrimination, Sarbanes-Oxley (SOX), for violations of USERRA, FMLA, and for violations of other federal and/or state civil rights laws

Nicholas Woodfield is a veteran trial attorney who concentrates his practice on Fair Labor Standards Act wage non-payment and misclassification claims, state law wage non-payment claims, Sarbanes-Oxley whistleblower complaints, False Claims Act (qui tam) claims, and discrimination and retaliation cases. Mr. Woodfield has recovered millions of dollars in unpaid overtime and wages for his clients and currently serves as President of the Virginia Employment Lawyer’s Association

Super Lawyers is a rating service of attorneys who have obtained a high degree of professional achievement and peer recognition.  Super Lawyers selects attorneys using a multiphase, rigorous rating process that includes peer nominations, peer evaluations, as well as independent research.

R. Scott Oswald, managing principal of The Employment Law Group® law firm was recently interviewed by Law360 on a recent Department of Labor Administrative Review Board (ARB) decision establishing a lighter burden of proof for whistleblowers under the Sarbanes-Oxley Act (SOX).

The decision, Zinn v. American Commercial Lines Inc., ARB No. 10-029, ALJ No. 2009-SOX-25 (ARB Mar. 28, 2012), involved an in-house attorney, Angela Zinn, who blew the whistle on allegedly unsafe maritime transport practices while employed by the shipping company American Commercial Lines Inc.  The ARB’s decision held that whistleblowers need not establish that their employer’s allegedly legitimate reason for taking action against them was pretextual.

According to Oswald, who represents employees and whistleblowers, “management-side lawyers have fought to graft this tougher burden-shifting standard onto SOX cases, but the decision demonstrates that the DOL is not having it.”

In the decision the ARB “rejected emphatically the notion that an employee has a burden to demonstrate that the employer’s proffered reason is pretextual,” Oswald noted.

Regarding the effect of the ARB’s decision, Oswald stated: “I think this makes it clear that there will be fewer and fewer of these kinds of cases that can and should be adjudicated before an evidentiary hearing.”

According to the rationale underlying the ARB’s recent decision, DOL Administrative Law Judges should now let cases proceed “unless the employer meets its burden to show through clear and convincing evidence that the same adverse action would have been taken regardless of the alleged protected activity at issue, and that,” according to Oswald, “[was] what Congress intended.”

The article, entitled “DOL Ruling Makes SOX Whistleblower Cases Harder To Beat”, appeared in the May 1, 2012 edition of the web-based legal news service, Law360.

The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity by their employer.

R. Scott Oswald, managing principal of The Employment Law Group® law firm, was recently interviewed by Law360 and provided commentary on a report that the U.S. Securities and Exchange Commission (SEC) may have inadvertently exposed the identity of a corporate whistleblower.  Last week the Wall Street Journal reported that the SEC had unintentionally revealed the identity of a whistleblower during the course of the agency’s investigation of Pipeline Trading Systems LLC.

Some commentators have predicted that because of the SEC’s purported slipup, whistleblowers may be less likely to come forward, fearing that their anonymity may be compromised.  However, in his interview on the subject with Law360, Oswald, who represents employees and whistleblowers, noted that the reason that many whistleblowers decide to file a complaint with the SEC is because the whistleblowers have already complained to their employers to no avail.

Specifically, according to Oswald, “once [whistleblowers] have made the decision that the company is not going to act responsibly, they’re going to go to the SEC.”

“If anything”, Oswald said “the SEC’s goof would persuade potential whistleblowers to file anonymous complaints through counsel, rather than going directly to the commission”.

The article, entitled “SEC Whistleblower Reveal Won’t Sink Program, Attys Say”, appeared in the April 25, 2012 edition of the online legal news and commentary service, Law360.

The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity by their employer.

On April 23, 2012, representatives from the Veterans Administration (VA) Office of Inspector General (OIG) and former employee from the VA hospital in Manchester testified before the Senate Veterans Affairs Committee about a recent report that showed that the VA inflated its success rate in treating veterans with mental health needs. The report included testimony from Nicholas Tolentino, a former mental health administrator, who said that the VA culture encourages administrators to game performance metrics and tamper with results of VA-wide surveys.

Tolentino and a panel of VA officials discussed the findings of the IG report, which showed that the VA overstated how quickly it serves veterans in need of mental healthcare. The report revealed that in 2011, only forty-nine percent of all new patients received a full mental health evaluation within the department’s required time period of fourteen days, but the VA’s 2011 Performance and Accountability Report stated that ninety-five percent had received the evaluation within the required time period. In addition, the investigation found that only sixty-four percent of patients began treatment within 14 days of their desired start date, while the VA reported that 95 percent had done so.

Chair of the Senate Veterans Affairs Committee Senator Patty Murray had originally requested the IG investigation, and she called the report “substantial and troubling.” In response, William Schoenhard, VA Deputy Undersecretary for Health for Operations and Management, said the VA concurs with the IG’s findings and has instituted a number of changes to address the issues.  “The explanations for the [IG’s] findings are varied, none are satisfactory — we must do more to deliver the mental health services that veterans need,” Schoenhard said.

The VA announced that it will hire 1,900 mental health care staff members, including 1,600 practitioners. In addition, the Agency will also hire family therapists and mental health counselors. The VA is also conducting an extensive internal review of its mental health operations has promised to take proper action to address the concerns raised in the IG’s report.

The Employment Law Group® law firm has an extensive nationwide whistleblower practice representing employees who have been victims of retaliation for reporting fraud or improper practices.

The Department of Justice has announced that defense contractor ATK Launch Systems Inc., based in Arlington, VA, has agreed to pay $36,967,160 to settle a False Claims Act qui tam lawsuit filed in the U.S. District Court for the District of Utah by a whistleblower employee, ATK flare program manager Kendall Dye.

According the lawsuit, ATK knowingly delivered defective illuminating para-flares from 2000 to 2006 to the Defense Department. These flares were used extensively by the Air Force and Army in Iraq and Afghanistan for nighttime combat, and covert search and rescue operations.  Because flares burn at temperatures in excess of 3,000 degrees Fahrenheit for over five minutes, the government requires that they withstand a 10-foot drop test without exploding or igniting; ATK’s flares failed to meet this requirement.  In 2005, Dye learned that ATK had been aware since 2000 that its flares did not meet government standards, but the company continued submitting claims for payment.

David B. Barlow, U.S. Attorney for the District of Utah, states:

“This settlement demonstrates our commitment to aggressively go after contractors who recklessly disregard and deliberately ignore critical safety defects in munitions used by America’s uniformed fighting men and women on the front lines of the war on terror.”

As part of the settlement, ATK will pay the U.S. government $21 million in cash, and provide necessary services worth $15,967,160 in order to fix the remaining 76,000 unsafe para-flares.

The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity by their employer.

On April 23, 2012, the U.S. Department of Labor announced that St. James Stevedoring Partners LLC, a New Orleans-based riverboat company, has agreed to pay $245,000 to settle allegations that it violated the Seaman’s Protection Act when it terminated an employee for raising safety concerns.  The whistleblower provisions of the Seaman’s Protection Act protect employees who report violations of various consumer product, environmental, financial reform, food, health reform and maritime laws.

An investigator from the Occupational Safety and Health Administration (OSHA) determined that St. James Stevedoring terminated a riverboat barge captain after he notified the U.S. Coast Guard that the starboard vessel engine was inoperable.  After the incident, the company suspended the captain and told him that he was not permitted to report safety concerns to the Coast Guard, despite the fact that riverboat captains are required by law to report safety hazards to the Coast Guard.  The captain was put on probation,When he discovered another engine safety violation and reported it to the Coast Guard,  the company terminated the captain and claimed that it was because of his poor performance.

The terms of the settlement require St. James Stevedoring Partners to pay the captain a total of $245,000, which includes $23,451 in back pay, $70,352 in front pay, $133,106 in compensatory damages and $18,091 in attorney’s fees. In addition, the company will inform all employees of their right to raise maritime safety concerns without fear of being terminated.  The settlement is the most significant financial settlement under the Seaman’s Protection Act since OSHA assumed jurisdiction over the whistleblower provisions of the law in 2010.

“Employees must feel free to exercise their rights under the law without fear of termination or retaliation by their employers,” said John M. Hermanson, OSHA’s regional administrator in Dallas. “The Labor Department is committed to vigorously protecting the rights of all workers.”

The Employment Law Group® law firm has an extensive nationwide whistleblower practice  representing employees who have been victims of retaliation.

On April 18, 2012 the Consumer Financial Protection Bureau (CFPB) released a compliance bulletin announcing its intention to clamp down on discriminatory lending practices.  According to the bulletin, the CFPB plans to use a variety of available legal strategies – including disparate impact claims – to crack down on lenders and other financial institutions whose practices discriminate against consumers.

In the bulletin, the CFPB reiterated its authority to issue guidance about compliance with the fair lending requirements of the Equal Credit Opportunity Act (ECOA), and its corresponding implementation regulation, Regulation B.  The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2012 (Dodd-Frank) granted the CFPB the authority to enforce and supervise compliance with the ECOA, as well as to issue regulations and interpret the ECOA.

The ECOA makes it unlawful for any creditor to discriminate against a credit applicant on account of race, religion, national origin, marital status, age, receipt of public assistance income, or due to the exercise of a right under the Consumer Credit Protection Act.  The ECOA protects consumers from such discriminatory lending practices which can occur when applying for credit cards, car loans, student loans, mortgages, and other lines of credit.

In the bulletin, the CFPB noted that it intends to monitor banks and other financial institutions for lending practices that violate the ECOA, including lending practices that result in a disparate impact or have a discriminatory effect on individuals protected by the ECOA.

Individuals who come forward and report potential violations of the ECOA, including employees of companies that engage in discriminatory lending practices, or employees of contractors, competitors, and vendors of such companies, are protected against retaliation by their employers under Section 1057 of the Dodd-Frank Act.

The Employment Law Group® law firm has an extensive nationwide whistleblower practice representing employees who have been victims of retaliation for reporting fraud or improper practices, such as discriminatory lending practices.

According to The Employment Law Group® law firm’s managing principal, R. Scott Oswald, “2011 marked a sea change for whistleblowers at the Department of Labor’s Administrative Review Board (ARB).”  The Sarbanes-Oxley Compliance Journal recently published an article by Mr. Oswald which discusses the impact of recent ARB decisions on whistleblower protection and describes why “2011 was an important year for whistleblowers.”

In the article, Oswald highlighted 2011’s significant developments in whistleblower law, noting that “the ARB changed the standard of proving protected activity, embraced the concept of corporate knowledge, established the most generous standard for an adverse action in employment law, and established the fact that most Sarbanes-Oxley cases should proceed to an evidentiary hearing.”

Specifically, Oswald discussed the significance of the following 2011 ARB decisions:

• In Sylvester v. Parexel International LLC, ARB No. 07-123, ALJ Nos. 2007-SOX-039, 042 (May 25, 2011), the ARB affirmed that whistleblowers are protected under SOX even when mistaken and held that an employer’s disclosure of the whistleblower’s identity constitutes an adverse employment action, and, finally, found that whistleblowers can establish causation by showing that their whistleblowing activity was merely a contributing factor in the employer’s decision to take the adverse employment action.
• In Funke v. Federal Express Corporation, ARB No. 09-004, ALJ No. 2007-SOX 043 (ARB July 8, 2011), the ARB expanded whistleblower protections by confirming that an employee’s disclosure that a FedEx customer was using FedEx services to engage in mail fraud was protected activity under SOX, as was the whistleblower’s reporting of the customer’s conduct to local law enforcement.
• In Vannoy v. Celanese, ARB No. 09-118, ALJ No. 2008-SOX-064 (ARB September 28, 2011) the ARB “relieved whistleblowers from the heavy burden of proving their claims without using any of the employer’s confidential information,” whereas previously, Oswald noted, “whistleblowers could be subject to serious penalties for doing so.”
• In Menendez v. Halliburton, ARB Nos. 09-002, 09-003, ALJ No. 2007-SOX-005 (ARB September 13, 2011) the “ARB affirmed that whistleblowers are protected under SOX even when they are mistaken about the nature of their complaints” and held that an employer’s disclosure of the whistleblower’s identity constitutes an adverse employment action.
• In Johnson v. Siemens Bldg. Techs, Inc., ARB No. 08-032, ALJ No. 2005-SOX-015 (ARB March 31, 2011) the ARB “declared that whistleblowers may seek SOX’s protections from non-publically traded subsidiaries of publically traded companies.”
• Finally, in Villanueva v. Core Laboratories, ARB No. 09-108, ALJ No. 2009-SOX-006 (ARB December 22, 2011) the ARB “found that SOX can protect disclosures of violations of United States law by foreign whistleblowers who work for foreign branches or subsidiaries of United States companies”.  In the article, Mr. Oswald noted that, “as a result” of this decision, “even complaints to foreign compliance offices should be taken seriously and investigated when the violation claimed refers to U.S. law” because “foreign offices or subsidiaries can still violate U.S.s securities laws and resolutions.”

In addition to ARB decisions expanding whistleblower protections, 2011 also saw “the Consumer Financial Protection Bureau extend whistleblower protections to new industries pursuant to the Dodd Frank Act of 2010 – most recently payday lenders, student loan companies and mortgage finance companies”.

With this expansion of whistleblower protection, according to Oswald, “the ARB’s influence over the scope and contours of whistleblower protection, articulated in its precedents in 2011, will be felt for years to come by employers in areas of the US economy that may have had few, if any, whistleblower protections before.”

The article, entitled “More Protection for Whistleblowers”, was published in the April 25, 2012 edition of the Sarbanes-Oxley Compliance Journal and was also syndicated in Compliance Daily, as well as Governance, Risk Management & Compliance Daily.

The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity by their employer.

The U.S. Department of Labor Occupational Safety and Health Administration (OSHA) filed a whistleblower retaliation lawsuit against Aquatech Canvas & Consignment, a division of LOTO Services, LLC, and its owner, Allan R. Lochhead, for terminating an employee who raised health concerns about Aquatech’s facility in Stuart, Florida.  According to OSHA, Aquatech Canvas & Consignment “specializes in the preparation, sale and installation of canvas, including covers for boats and upholstery.”

OSHA filed suit in the U.S. District Court for the Southern District of Florida after its investigation found that Aquatech and Lochhead violated the whistleblower provisions of Section 11(c) of the Occupational Safety and Health Act when they terminated the employee for raising health concerns.  The employee reported to management that the offices were infested with rodents and that rodent droppings could be seen in various places.   Although Lochhead personally placed rodent traps in the office, the problem persisted and the employee complained again.  When Lochhead insisted that there was no rodent problem, the employee filed a health complaint with OSHA.  One day after OSHA notified Aquatech and Lochhead about the complaint the company fired the employee.

In addition to requesting back wages, interest, and compensatory and punitive damages, OSHA is asking the employee be reinstated and that Aquatech expunge from the employee’s personnel records any negative information relating to this matter.

The Employment Law Group® law firm has an extensive nationwide whistleblower practice  representing employees who have been victims of retaliation.

Baltimore, Maryland U.S. District Judge Marvin Garbis has awarded Salvador Lopes, the ship’s third engineer, $462,500 for blowing the whistle on Greek ship manager Efploia Shipping Co. and Denmark-based Aquarosa Shipping. In January, both shipping companies pled guilty to violating the Act to Prevent Pollution from Ships (APPS) by intentionally releasing oil and plastic waste in the port of Baltimore. Lopes could receive an additional $462,500 if the judge dismisses Efploia’s argument that Lopes should have notified company officials before complaining to the U.S. Coast Guard.

Officials state that Lopes provided the Coast Guard valuable information leading to this verdict, which include a handwritten note detailing illegal dumping of oil waste and garbage from the vessel Aquarosa, copies of the ship’s log, and over 300 cell phone photos documenting the violations.  Lopes also showed the Coast Guard where to find the “magic pipe” that allowed the ship to discharge pollutants undetected by illegally bypassing pollution prevention equipment.

Judge Garbis has also ordered that Efploia and Aquarosa each pay $952,000 in fines and donate $275,000, as part of their community service, to the National Fish and Wildlife Foundation, which has a mission of restoring the Chesapeake Bay and other Maryland waterways.

The Employment Law Group® law firm has an extensive nationwide whistleblower practice  representing employees who have been victims of retaliation.

On April 16 2012, the U.S. Department of Justice (DOJ) announced that Cablexpress Corp, which operates under the name CXtec, agreed to pay $2 million to settle allegations that it violated the Trade Agreements Act (TAA). The lawsuit claims that CXtec unlawfully sold to the federal government counterfeit gigabit interface converters (GBICs) as well as networking and voice communication equipment  that were manufactured in countries prohibited by the TAA .

Timothy Kuney, a former high-ranking employee at CXtec, brought the law suit under qui tam provisions of the False Claims Act (FCA). The FCA allows a private citizen with knowledge of an organization committing fraud against the government to file a lawsuit against the organization on behalf of the government in order to recover fraudulently obtained federal funds.

Kuney filed the complaint in 2008 with the U.S. District Court for the Northern District of New York, claiming that CXtec  knowingly violated the TAA by selling products that were manufactured in China, Taiwan, Indonesia, Malaysia and Thailand, to federal agencies. The contract between CXtrec and the government required that all products be compliant with TAA. According to the complaint, CXtrec also established a specialized operation to sort, test and repackage counterfeit GBICs in order to deceive the government that they were authentic products.

Kuney will receive an award of $380,000 as a result of the settlement. The $2 million settlement resolves some claims in the complaint, but not all. The lawsuit will continue to move forward on additional allegations that CXtec sold to the government other products that violated the TAA .

“We are gratified that the government’s attorneys and investigators aggressively pursued our client’s allegations with respect to the unlawful sale of cables and counterfeit GBICs in violation of the False Claims Act, and we intend to continue our investigation and litigation of the remaining qui tam claims in the case,” said Jonathan Tycko, one of Kuney’s attorneys.

The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity by their employer.