Wednesday, March 29, 2006

Thanks, But No Thanks

Well here's some news that I suspect will add to Tom Reilly's burgeoning reputation for political deafness:

BOSTON - Weymouth resident Peter Scannell did an admirable job
bringing to light substantial fraud at Putnam Investments, his former employer,
Assistant Attorney General Mary O’Neil said.

But that doesn’t mean he deserves payment for his efforts,
she argued in Suffolk Superior Court yesterday.

Scannell, whose inside information about improper mutual
fund trading at Putnam eventually led to Putnam agreeing to pay the state $50
million, is now suing for a portion of the state’s settlement under the state’s
False Claims Act.

But despite Scannell’s significant - and undisputed -
cooperation with state and federal officials, he didn’t properly sue under the
Massachusetts false claims act, better known as the whistle-blower

O’Neil, arguing on behalf of Attorney General Thomas Reilly,
said Scannell doesn’t have any claim to the settlement because of he failed to
file such a suit.

AAG O'Neil does have a persuasive argument on the legal front. The statute governing false claims, M.G.L. c.12 s.5A et seq does contain an amusingly balkanized set of procedural hoops that a whistleblower has to jump through in order to make a claim for a portion of recovered funds, none of which, apparently, Mr. Scannell met. Chief among them is that the whistleblower (euphemistically called "the relator" in the statute) must first file the original complaint, under seal, and serve a copy on the Attorney General's office. Then the Attorney General is in control of the litigation and may dismiss or settle the case against the wishes of the relator or even have the relator kicked out of the case. (Pardon my cynicism, but it's almost as if the legislature wanted to discourage people from coming forward.)

Mr. Scannell was, of course, fired from Putnam for his exercise of disloyalty. He would, of course, have causes of action against Putnam for wrongful discharge and other tortious acts. Perhaps some might consider this enough.

But this "whistleblower" statute appears to add injury to insult because it cuts back on the "relator" employee's rights to sue for damages:

An employee who is discharged, demoted, suspended, harassed,
denied promotion, or in any other manner discriminated against in the terms and
conditions of employment by his employer because of participation in conduct
which directly or indirectly resulted in a false claim being submitted to the
commonwealth or a political subdivision thereof shall be entitled
to [damages and attorneys fees] only if both of
the following occurred:

(i) the employee has been harassed, threatened with
termination or demotion, or otherwise coerced by the employer or its management into engaging in the fraudulent activity in the first
place; and

(ii) the employee voluntarily disclosed
information prior to being dismissed
to a government or law
enforcement agency or acts in furtherance of a false claims action, including
investigation for, initiation of, testimony for, or assistance in an action
filed or to be filed.

[ed. note: Do you really think that the legislature intended to say that the whistleblower has to engage in the fraudulent activity in the first place in order to qualify for a remedy? As a former member of that august body, I can confidently say that the thought never cross their collective minds]

Pardon me for living, but I don't want any part of that.

At the end of the day, I end up wondering why Reilly's office would prefer to have the public witness his office stiffing an honest guy who has been put through hell to do the right thing, resulting in a mammoth windfall to the Commonwealth. It's not like it's their money!

And woe to the guy like him who sees something he knows is wrong and wonders what, if anything, he should do about it.

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