In honor of National Whistleblower Appreciation Day, we bring you the third of three consecutive weekly articles on whistleblowing in the US. Over the last few weeks, we have posted on the basics of whistleblowing, and then followed-up with a brief overview of exactly how one goes about “blowing the whistle” in the event that s/he comes across fraudulent acts of a public company (or even an agent, contractor or subcontractor of a public company under the Sarbanes Oxley-Act of 2002 (“SOX”)) or any company doing business with the federal government under the False Claims Act (“FCA”). Also discussed were protections available to a whistleblower in the event that s/he is retaliated against as a direct result of blowing the whistle.
When the Patient Protection and Affordable Care Act (“PPACA” or “ACA”) was created, Congress anticipated that companies would be less than inclined to follow the letter of the law and therefore, created both disincentives for companies to violate the law in the form of penalties and a private right of action by individual citizens as well as incentives for whistleblowers who learn of the fraud, to come forward and report it and as a result may be eligible to collect a financial reward for their risk and efforts. Discussed below are some ways that companies are avoiding their obligations under the PPACA and various types of retaliation upon an employee for reporting such violations either internally or to the United States Department of Labor (“USDOL”).
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The specific provisions of the ACA to which I am referring are those relating to employee health plans or for receiving tax credits or subsidies under the ACA. More specifically, for those who appreciate excruciating detail, it is described further in Sec. 1558 of the ACA, which adds a new Section 18C to the Fair Labor Standards Act (“FLSA”).
Sec. 1558 prohibits employers from discharging or in any way discriminating against an employee in the terms and conditions of his/her employment, because the employee has:
- received a credit from the Internal Revenue Service (“IRS”) or a subsidy under the ACA
- essentially reports a compliance violation in connection with the insurance provisions of the ACA (note: this must be done within 180 days by filing with the Occupational Safety and Health Administration (“OSHA”))
How would an employee see this in his/her own workplace? A typical scenario may begin with an employer offering its employees a very low cost, low value health insurance plan that does not even meet the standards of the lowest, acceptable minimum coverage, which is known as a Minimum Essential Coverage plan (“MEC”). MEC’s are permissible.
In the event that an employer offers a plan that fails to provide even this minimal level of coverage such as a MEC, essentially forcing an employee to go to the independent health care exchanges or risk a penalty him/herself, an employee may qualify for an Obamacare subsidy. Such qualification and payment of a subsidy to the employee would have the effect of exposing the employer to a penalty. In this scenario, and generally, the employer would likely be assessed a tax penalty if any of its full-time employees receive a premium tax credit through an independent exchange.
Due to the nature of this tax credit-tax penalty relationship, there is a lot of potential for an employer to retaliate against an employee. Forms of retaliation include any adverse change in the terms and conditions of one’s employment which take the form of:
- negative performance reviews
- unusual scrutiny when not otherwise warranted
Retaliation based on protected activity, i.e., the law protects a person who engages in lawful behavior and is retaliated against as a result, is illegal.
As always, bringing whistleblower and retaliation claims can be very technical and it is advisable to work with an experienced whistleblower attorney who understands how to navigate these claims. Failure to do so could result in a substantial reduction of a financial reward or a complete disqualification altogether.