By Michael Filoromo and Jessica Westerman ( Michael A. Filoromo, III, is a partner in the Philadelphia office of Katz, Marshall & Banks, LLP, a whistleblower and employment law firm that represents employees. Jessica Westerman is an associate in the Washington, D.C., office of the firm).
The federal legislative response to the COVID-19 public health crisis has two overarching goals: bolstering the country’s health system in the fight against the Coronavirus and blunting the damage to the U.S. economy as a result of the pandemic. Employees in the pharmaceutical industry may benefit directly from legislation affording paid sick leave and expanded family and medical leave, and those who lose their jobs will see enhanced unemployment benefits. The injection of trillions of federal dollars into the economy—some of it earmarked specifically for healthcare and pharmaceutical companies—also carries with it new regulatory obligations and new opportunities for fraud and waste. This article describes the key provisions of the COVID-19 legislation benefiting employees, along with the role that whistleblowers will play in ensuring that the stimulus money is used properly.
Sick and Family Leave with Pay
The Families First Coronavirus Response Act (FFCRA), which became effective April 2, 2020, applies to employees of businesses with fewer than 500 employees and provides fully or partially paid leave under three different circumstances. First, an employee is entitled to 80 hours of fully paid leave if they are subject to a government-ordered quarantine order, if a doctor recommends that they self-quarantine, or if they are experiencing symptoms of COVID-19. Second, an employee is entitled to 80 hours of leave, paid at two-thirds of the employee’s normal rate, if they are caring for an individual who is quarantined or a child whose school or daycare provider has close for reasons related to COVID-19. Finally, an employee is entitled to an additional 10 weeks of leave, paid at two-thirds of the employee’s normal rate, to care for a child whose school or daycare provider has closed for reasons related to COVID-19. To qualify for the additional 10 weeks of leave, the employee must have been employed for at least 30 calendar days prior to the first day of leave. All of these provisions will remain in place until December 31, 2020. Pharmaceutical employees whose employers have fewer than 500 employees therefore may be entitled to up to 12 weeks of partially paid leave during the ongoing COVID-19 crisis.
Enhanced Unemployment Benefits and Direct Cash Payments
The $2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES Act), signed into law on March 27, 2020, is the largest economic stimulus package in United States history and contains several provisions for financial assistance to employees. First, for those employees who are laid off during the pandemic, the CARES Act extends existing unemployment benefits by 13 weeks and supplements them by an additional $600 per week. Although unemployment benefits vary by state, most states provide approximately 26 weeks of unemployment benefits, meaning that laid off employees may be entitled to up to 39 weeks of unemployment benefits and an additional $1,200 per biweekly pay period. Importantly for many independent pharmaceutical sales representatives, these benefits extend to independent contractors, who might not otherwise be eligible for unemployment benefits. The benefits also extend to individuals who are self-employed. Second, regardless of an individual’s employment status, the CARES Act allocates approximately $300 billion for one-time cash payments of up to $1,200 to citizens who reported up to $75,000 in adjusted gross income during the previous tax year, or up to $2,400 to married couples who reported up to $150,000 in adjusted gross income. Families also will receive $500 per child. Many pharmaceutical employees therefore will receive direct financial support as they face job losses, or at least financial uncertainty, in the coming months.
Funding for the Healthcare Industry – and the Potential for Fraud
In addition to financial assistance to employees across industries, the CARES Act sets aside approximately $150 billion specifically for the healthcare industry. Much of that money will flow to pharmaceutical and medical device manufacturers. The CARES Act allocates $80 million to the Food and Drug Administration (FDA) to “prevent, prepare for, and respond to Coronavirus . . . including funds for the development of necessary medical countermeasures and vaccines [and] advanced manufacturing for medical products[.]” The Act also allocates $27 billion to the newly-created Public Health and Social Services Emergency Fund (PHSSEF) to “prevent, prepare for and respond to Coronavirus . . . including the development of necessary countermeasures and vaccines . . . [and] the purchase of vaccines, therapeutics, diagnostics, [and] necessary medical supplies.” This amount includes $16 billion to replenish the Strategic National Stockpile and $3.5 billion “for necessary expenses of manufacturing, production, and purchase . . . of vaccines, therapeutics, diagnostics, and small molecule active pharmaceutical ingredients[.]” The Act also requires Medicare prescription drug plans to allow plan enrollees to fill or refill a 90-day supply of covered medication during the COVID-19 emergency period, which could provide an additional short-term revenue boost to the pharmaceutical industry.
With an unprecedented amount of money flowing into the pharmaceutical industry, the False Claims Act (FCA), will take on renewed importance to ensure the lawful administration of CARES Act funds. The FCA prohibits the knowing presentation of false claims for payment to the government, as well as materially false statements in connection with any such claims for payment. If an employee or other individual discovers a violation of the FCA, she can bring a civil action on behalf of the government, known as a qui tam suit, to recoup the fraudulently obtained funds. If the action is successful, she may be eligible for an award of up to 25% of the proceeds from the action. Importantly for employees, the FCA also contains a whistleblower protection provision that prohibits retaliation against individuals who undertake “lawful acts . . . in furtherance of” a qui tam action or “other efforts to stop 1 or more violations” of the FCA. Pharmaceutical employees therefore should pay special attention to the robust set of rules and regulations that already govern their industry, as well as their employers’ adherence to those rules and regulations in connection with the influx of CARES Act funds.
Pharmaceutical employees with questions about their entitlement to leave under the FFCRA, financial assistance under the CARES Act, or their employers’ compliance with industry rules and regulations relating to CARES Act funds should consult with an employment attorney.