United States District Court, E.D. Kentucky, Southern Division, Pikeville
UNITED STATES OF AMERICA, ex rel. JENNIFER L. GRIFFITH and SARAH CARVER, Plaintiffs,
ERIC C. CONN, et al., Defendants.
MEMORANDUM OPINION AND ORDER
AMUL R. THAPAR, District Judge.
When you work for the government and discover wrongdoing in your midst, may you recover as a whistleblower under the False Claims Act? On the one hand, why not? After all, government employees are often the individuals best positioned to discover wrongdoing in the public sector. Reducing their incentives to report fraud may mean that egregious wastes of taxpayer dollars go unnoticed. On the other hand, government employees work on behalf of the public. As a result, they often have an underlying obligation to report fraud. And it does not seem fair to reward individuals for simply doing their job, which they are already paid to do.
Jennifer Griffith and Sarah Carver were two such government employees who reported fraud in their workplace on a number of occasions to a number of officials. They made some reports during the course of their employment and Griffith made some disclosures of the fraud after she resigned. Before the March 23, 2010, amendments to the False Claims Act, this was fatal to an employee's claims (Carver), but not a former employee's claims (Griffith). Thus, for the pre-March 23, 2010, claims, Griffith may proceed, but Carver may not.
What fraud did Griffith and Carver discover that concerned them so much that they would go to great lengths to report it? They found what they thought was a scheme to defraud the government. The scheme was straightforward: Social Security lawyer Eric Conn. conspired with Administrative Law Judge David Daugherty to rig the case assignment system. Conn. would tell Daugherty the identity of his clients, R. 63 at ¶¶ 52-54, and Daugherty would pull their records and assign himself those cases, id. at ¶¶ 62, 64. Daugherty would then conduct "sham proceedings, " id. at ¶¶ 73-83, to give the appearance of an honest hearing, but the result of the proceedings was never in real doubt. In 2010, for example, Daugherty approved 99.7 percent of the applications of Conn's clients. Id. at ¶ 85. Griffith and Carver allege that doctors David P. Herr, Bradley Adkins, and Srinivas Ammisetty assisted Conn. in fabricating medical records used to support an award in the social security cases. Id. at ¶¶ 103-05.
Carver and Griffith both worked in the Huntington, West Virginia, Hearing Office in the Office of Disability Adjudication and Review ("ODAR"), where Daugherty was stationed. R. 131 at 11-12, 18-19. ODAR is part of the Social Security Administration ("SSA"). Griffith started out as a senior case technician and later became master docket clerk in 2004. Id. at 11-12. As master docket clerk, Griffith's responsibilities included keeping track of incoming social security cases. See id. at 20. The Huntington ODAR had a computerized tracking system (the Case Process Management System) for docketing new cases. That system, however, allowed any individual with access to change the status of the cases. Id. at 24. Beginning in 2006, Griffith received complaints from her supervisor about missing information from certain cases. Id. at 23-24. In response to the criticism, Griffith investigated the issue. She discovered that some new cases would disappear from the tracking system, but then soon after re-appear as a favorable decision to the claimant. How did this happen? According to Griffith, Daugherty was "changing the status" of cases, "placing the case[s] with him, and then deciding those cases favorably on the record." Id. at 26. At one point, Griffith found "50, 60 [paper] cases... assigned to other ALJs" in Daugherty's office. Id. at 26-27.
Griffith initially reported the issues to her supervisor, Kathie Goforth, and then to a supervisor in the Hearing Office Administration, Greg Hall. Id. at 25-26. When she found the 50 or 60 cases in Daugherty's office, Griffith told both Goforth and Chief ALJ Charlie Andrus. They then removed the files from Daugherty's office. Id. at 27. Griffith sent "numerous written e-mails" regarding Daugherty's conduct-apparently too many, as Goforth "told [Griffith] to stop e-mailing her about the issue." Id. at 28. By 2007, Griffith "had begun to complain almost daily" and alerted another supervisor in the office, Arthur Weathersby, about the issues with Daugherty. Id. at 29.
During this time, Carver, who was a senior case technician, also observed problems with how Daugherty handled cases. See R. 131 at 129-30. She described how Daugherty would schedule "two days of solid Eric Conn. cases... 15 minutes apart, " while most judges took over an hour to conduct one hearing. Id. at 129. Through the computerized tracking system, Carver noticed whenever "Judge Daugherty would go in and take a case and change it to his name." Id. at 133. Carver said she complained to Hall, both verbally and in writing, about the issues from 2006 through 2011. Id. at 131. Carver also reported the problems to Goforth and Weathersby. Id. at 133. As the union representative, Carver also became involved with Griffith's complaints.
In October 2007, Griffith resigned from her position after receiving a negative performance review. Griffith testified that Goforth, as part of the performance review, "told me that her goal was to get rid of me by the end of that year and that there was nothing I could do about it." Id. at 29. She also testified that she received the negative review due to her complaints about Daugherty's conduct. Id. at 29-30.
After Griffith resigned, she continued to make complaints about Daugherty's actions. She assisted ALJ Dan Kemper in filing a complaint with the ALJ union by providing him with a statement. R. 131 at 39-40. In her statement, she explained that Daugherty took cases Conn. filed and assigned them to himself. Plaintiffs' Exhibit 29. Further, she stated that "[t]here is no way Judge Daugherty could know those cases existed unless he had prior knowledge provided to him by the attorney [Conn]." Id.
In the summer of 2009, Griffith made an anonymous phone call to the SSA's Office of Inspector General ("OIG") to report the "misappropriation of cases." R. 131 at 45. Griffith reported that cases had been "taken off the docket, " then "assigned to other judges, " and "decided favorably with little or no medical evidence." Id. She also stated that there was a "quantity of cases that were decided favorably based on their attorney." Id.
In 2011, Griffith filed an online fraud complaint with the OIG. Id. at 46. In that complaint, she alleged that "Mr. Conn. and his practice... repeatedly fax list[s] to Administrative Law Judge David B. Daugherty before the cases arrive at the hearing." Plaintiffs' Exhibit 59. Daugherty would then "pull the cases from incoming master docket cases and grant the cases with little or no evidence in the file." Id. When cases were assigned to other ALJs, "Conn w[ould] contact Judge Daugherty and request that the cases be taken away from other judges and assigned to Judge Daugherty" for favorable decisions. Id.
Representatives from the OIG also contacted Griffith in April 2011 regarding the issues at the Huntington ODAR. In response to the OIG's requests, Griffith and Carver had three meetings with agents from the OIG. R. 131 at 52-53; R. 63 at ¶ 119. Griffith and Carver then spoke with staff members from the U.S. Senate's Permanent Subcommittee on Investigations, part of the Committee on Homeland Security and Governmental Affairs. R. 131 at 54-55. Griffith and Carver met with staffers and investigators for eight hours. Id. at 54.
In June 2011, Griffith wrote a letter to the OIG. Id. at 55; Plaintiffs' Exhibit 37. In that letter, Griffith described how she had left the Huntington ODAR due to retaliation for reporting Daugherty's misconduct. She "implore[d] [OIG] to put a stop to this practice." Plaintiffs' Exhibit 37. Around that same time, Griffith also filed a claim of whistleblower retaliation with the Office of Special Counsel, which eventually settled. R. 131 at 55-56.
On October 11, 2011, Griffith and Carver filed a complaint under the False Claims Act. R. 1; R. 2. The complaint was unsealed on February 19, 2013. R. 18. Conn. and the other defendants ("Conn") have now filed motions to dismiss for lack of subject-matter jurisdiction. See, e.g., R. 137-1.
The False Claims Act (the "FCA"), 31 U.S.C. §§ 3729-3733, imposes substantial financial penalties on any person who knowingly defrauds the United States. 31 U.S.C. § 3729(a). The FCA prohibits knowingly presenting "a false or fraudulent claim for payment or approval" and knowingly making or using "a false record or statement material to a false or fraudulent claim." Id. § 3729(a)(1)(A), (B). A "claim" is "any request or demand... for money... [that] is presented to an officer, employee, or agent of the United States." Id. § 3729(b)(2)(A), (A)(i).
The FCA allows private parties, called relators, to file civil actions on behalf of the United States for violations of § 3729. Id. § 3730(b). If the private party recovers in the Government's name, the party is ...