We recently spoke with attorney Michael Filoromo about some of the issues surrounding the government's COVID-19 response. These issues included employee rights under the Families First Coronavirus Response Act (FFCRA) and the potential for fraud related to funds provided to companies as part of the government's repsonse.
Michael is a partner with the whistleblower and employment law firm Katz, Marshall & Banks, LLP, in Philadelphia. He has helped achieve successful outcomes for numerous clients under the Sarbanes-Oxley corporate whistleblower protections, the False Claims Act and the anti-discrimination and retaliation protections of Title VII of the Civil Rights Act and corresponding state laws. He regularly represents whistleblowers in the pharmaceutical, healthcare, nuclear, railroad and aviation industries. Mr. Filoromo is the secretary of the Eastern Pennsylvania chapter of the National Employment Lawyers Association. He can be reached at email@example.com.
CP: What steps should an employee take if they are denied leave or harassed or let go when taking paid time off related to the COVID-19 crisis (relevant to the FFCRA)?
Michael: One thing that is important to know is that the starting assumption in the US is that you are not entitled to paid sick leave. The FFCRA was passed to provide some amount of paid leave in very specific circumstances. So the background is that you can get up to 80 hours of fully paid leave if you are quarantined and have to stay home - essentially the two weeks you are supposed to stay home if you are exposed or show symptoms of the virus.
You can also receive 80 hours at two-thirds of your pay if you are caring for an individual who is quarantined or if you are providing child care if schools are closed. You can also get an additional 10 weeks of pay at two-thirds of your normal rate to care for a child whose school or daycare is closed.
To qualify for any of those forms of leave, you have to have been employed for at least 30 calendar days prior to the first day of leave. One problem is that the FFCRA sick leave provisions only apply to companies with fewer than 500 employees. So a lot of Cafepharma readers who work for larger pharma/biotech companies may not be entitled to that leave at all.
But if you are qualified and you are quarantined, or if your child’s school or daycare is closed, you should be entitled to that paid leave under the FFCRA. This is essentially an amendment to the Family and Medical Leave Act (FMLA). The FMLA provides employment protection for people to take care of their own serious medical condition or to take care of a family member.
The FMLA provides up to 12 weeks of leave but that leave is unpaid by default. It protects someone’s position, but it does not provide any compensation. If you were denied leave that you are entitled to under the FFCRA, your recourse is the same as it would be under the FMLA - a lawsuit.
The FMLA does apply to larger companies, but it does have some holes in it as well. For example what if an employee is in a high-risk group and is concerned about contracting COVID-19, but they don’t actually have it? The FMLA likely would not apply, nor would the FFCRA. Even if it seems like one or both protections should be available to an employee, they may fall into one of the gaps in the laws’ coverage.
So I think that if you are in a position where you are being denied leave or protections you should have it is worth it to consult an attorney, because it is sort of a patchwork of potential protections. Speaking with an employment lawyer can help piece these things together to determine what are the employee’s rights and what are their obligations. It is not clear in many cases and it can be quite complicated. So it makes sense to reach out to an employment attorney to really understand your situation.
CP: Anything in terms of documentation people should keep in mind in reference to a situation where they are being denied leave?
Michael: in general, whenever you do something like requesting leave or blowing the whistle, it is important to do that in writing and get the company to state its position in writing. Usually this is done through a manager or through HR. Once you have the company’s position clarified, you can deal with it and decide best how to proceed, with legal advice if necessary. But you want to make clear that you have made a request and that you understand the response.
CP: Switching gears a little and considering the possibility that there may be an increase in fraud related to the CARES Act funds and possibly the False Claims Act, what types of fraud might be most likely to occur?
Michael: Any time there is a huge infusion of money into the private sector, the risk of fraud is high. This is the largest stimulus package in history. Oversight and regulation is difficult even in a normal environment. This is particularly true in the pharmaceutical industry where there are millions and millions of claims being made via government healthcare programs. In the context of COVID-19 and CARES, oversight will be even more difficult.
When money is suddenly injected into the economy during a crisis with the idea that it will be used for a particular purpose, there aren’t the same structural checks and oversight mechanisms that are in place through CMS and established government healthcare programs. The Department of Justice has already made clear that COVID-19 fraud is going to be a major focus just like it was after the 2008 crisis and after Katrina. Here the crisis is about health.
So you might see manufacturers selling materially substandard or faulty devices that are in high demand - perhaps faulty personal protective equipment or ventilators - or companies misrepresenting the efficacy of certain treatments. Another area where you might see fraud is around the development of vaccines to treat COVID-19. The first company to market with an effective vaccine will be providing a huge service to humanity, but it is also an opportunity to make a huge amount of money. So you can understand a temptation to overstate the efficacy of a vaccine or treatment or do. There will also be a temptation to downplay adverse events and risks, or to make results seem more conclusive than they are.
There are also more technical areas of False Claims Act violations, such as not complying with conditions related to repayment of advanced funds, or not using the funds for their intended purpose. If money is earmarked for a particular thing, to avoid having to repay that money you have to take certain steps and use it appropriately. This won’t always give rise to FCA claims but it is the kind of thing to look for and the type of thing we may see more frequently.
CP: What signs should an employee look for that would indicate that fraud is taking place?
Michael: I think that fudging data and downplaying risks are things reps might see or learn about from people with firsthand knowledge. If you are told to talk up some aspect of a treatment, or the use of a drug for the off-label treatment of COVID-19, that might be something that could indicate wrongdoing behind the scenes. The reality is that you expect development to be accelerated right now, and it would be a great thing for society to develop effective treatments or discover new uses for an existing treatment. But where there is a massive financial incentive, there is the risk of cutting corners, with potentially dangerous results.
You still have to respect the integrity of data even when there is a tremendous societal need, and if you are seeing or hearing that something is being covered up, or maybe something is not being accurately reported to CMS, those are the types of things to look for.
Also, if you have insight into money a company has received to work on some specific issue and you find the funds are being used for something else, that would be a form of fraud.
If an employee suspects fraud, what initial steps should they take? I assume that seeking legal counsel would be an important step, anything else they should do?
One of the first steps is to ask questions and document the concerns that you have. Be specific and identify the questions or concerns that you have. The response may indicate that the issues are innocuous. There may be good explanations. Or the response may sound like something is being covered up or misrepresented.
One of the key reasons to document things is to create a record that allows you to show that you expressed these concerns, and here was the company’s response. It is an escalation beyond having just an informal conversation, and that can be an uncomfortable and possibly risky thing. But it also can provide you with anti-retaliation protections. The False Claims Act, for example, has a provision to provide protection for reporting or attempting to stop fraud, a lot of state laws also prohibit retaliation for reporting misconduct. So both for the sake of being specific and clarifying concerns you have and to provide some protection for employment, documenting concerns is important.
Also, identifying evidence is important so you can say either to the employer or down the road, if you were going to report something to a regulator, here is the evidence for what it is you suspect. Another thing to keep in mind is that reviewing--and especially gathering--evidence can be a perilous thing. You need to take care that in reviewing or gathering evidence, you do so legally, and for that reason, it is better to consult a whistleblower attorney early on. A lot of times people wait until they have been fired or things have spiraled before they consult an attorney. I think an early consultation helps focus the issue and provide guidance and protection for the employee.
I realize that consulting an attorney can feel like a precipitous step, but merely consulting a whistleblower attorney for advice is not the same as launching into full-blown litigation. Just seeking advice from someone who is knowledgeable in the field can help you navigate a difficult situation.
CP: Going back to the discussion about employment issues - since companies may lay off employees during the crisis, what should employees do if they lose their jobs? For example should they sign termination agreements, should they always have agreements reviewed by counsel, and what would legal review of an agreement likely cost for a sales rep level employee?
Michael: Before signing a separation agreement I think it is always a good idea to have an attorney take a look at it. These agreements are written by lawyers for the companies in legalese, and they are written to protect the employer. Granted, a lot of the agreements are boilerplate that are common to all of these types of agreements. And even when the language may not look favorable to the employee it often may not make much difference. But sometimes the language is a big deal, and the devil is in the details.
In a mass layoff or reduction-in-force scenario, negotiating some of these terms may not be worthwhile because an employer isn’t going to want to do that with a thousand employees. But sometimes an agreement may impose new or unreasonable restrictions on an employee, such as making severance contingent on signing a broad non-compete agreement or something not part of the original employment agreement. This can be a major issue in a difficult job market, and it is often worth pushing back.
And sometimes an employee is included in a layoff as a convenient way to push out someone viewed as problematic - maybe they have taken leave under one of the provisions we spoke earlier about or have blown the whistle - and having an employment lawyer consider circumstances leading up to the termination can be useful. If such things have happened, there may be legal leverage to negotiate something better, or at least remove unfavorable terms.
The cost depends so much on the individual lawyer, the firm, the area of the country, etc. Generally a severance review and a consultation should take less than a couple of hours. If after the review, the attorney enters into negotiations on behalf of the employee, then it is likely to be longer and somewhat more costly. Less than a couple of hours for a review is going to be in the hundreds of dollars but not in the thousands of dollars, and the investment is worth it to understand your rights, obligations, and options.
CP: You mentioned non-compete agreements. If an employee is let go during the crisis do non-competes still automatically apply?
Michael: Generally a non-compete agreement will still apply unless the employer releases the employee either as part of a severance agreement or by virtue of some clause in their original agreement. For example, there may be a clause in an employment agreement that if someone is terminated without cause, as would be the case with a reduction-in-force, then the non-compete does not apply.
But the default in most layoffs will be for the non-compete to apply. Non-compete law varies a lot from state-to-state. Even within a state there is a balancing test between the legitimate interests of the company and the right of the employee to make a living. The result is that similar sets of facts sometimes lead to seemingly inconsistent results in the courts.
An example of the balancing test might be a non-compete for a rep whose territory is greater Philadelphia, and who only sells a particular asthma medicine. It likely would be unreasonable to prevent the employee from selling any other asthma medicine everywhere in the world, and it almost certainly would be unreasonable to prevent the rep from selling a cancer drug that indirectly competes with another product of the former employer. The restriction has to be reasonable in scope and duration. But the default is that whatever agreements you signed when you joined the company will remain in place unless they are contractually removed.