Arra Whistblower Provisions

The American Recovery and Reinvestment Act of 2009 (ARRA) provides nearly $500 billion in spending to stimulate the economy. However, those who receive those funds should be aware that ARRA contains new protections for public and private employees who blow the whistle on gross mismanagement or waste of covered funds, danger to public health or safety related to covered funds, abuses of authority relating to the use of the funds, or violation of laws or regulations relating to the grant of the funds.

ARRA whistleblower provisions include:

A broad definition of employer. New whistleblower protections affect employers receiving covered funds as:

A contractor, subcontractor, grantee, or recipient;

A professional membership organization, certification or other professional body, agent or licensee of the federal government, or a person acting in interest of an employer receiving covered funds; or

A state or local government and any contractor or subcontractor thereof receiving covered funds.

Covered funds include any contract, grant, or other payment received by any nonfederal employer if:

The federal government provides any portion of money or property that is provided, requested, or demanded; and

At least some of the funds are appropriated or otherwise made available by the ARRA.

Disclosures are protected if they contain information that the employee reasonably believes evidences:

Gross mismanagement of an agency contract or grant relating to covered funds;

Gross waste of covered funds;

Substantial and specific danger to public health or safety related to implementation or use of covered funds;

Abuse of authority related to implementation or use of covered funds;

Violation of any law, rule, or regulation related to an agency contract (including the competition for a contract) or grant, awarded or issued relating to covered funds.

Five Types of Disclosures

The five types of disclosures covered by ARRA are stated in language virtually identical to the language in the federal Whistleblower Protection Act (WPA). Presumably the inspector generals (IGs) and federal courts will look to that body of jurisprudence to interpret these provisions.

Gross Mismanagement of Agency Contract or Grant

Gross mismanagement for the WPA means a management action or inaction that creates a substantial risk of significant adverse impact on the agency s ability to accomplish its mission. Courts have held that determining whether an employee has made a disclosure protected by the WPA means looking for evidence that it was reasonable for the employee to believe the disclosures revealed misbehavior described by the Act. For gross mismanagement, the test is whether a disinterested observer with knowledge of the facts known to and readily understood by the employee could reasonably conclude that the actions of the government evidence gross mismanagement.

Gross Waste of Funds

A disclosure of a gross waste of funds under WPA means the disclosure must uncover more than a debatable or minor expenditure. The disclosure must uncover expenditure significantly out of proportion to the benefit reasonably expected to the government. Disclosure of a gross waste of funds under the WPA means that to be protected the employee must have had a reasonable belief that the disclosure uncovered a gross waste of funds.

Substantial and Specific Danger to Public Health or Safety

The disclosure of a substantial and specific danger to public health or safety under the WPA means revelation of a negligible, remote, or illdefined peril that does not involve any particular person, place or thing, is not protected. Disclosure of a danger potentially arising in the future is not a protected disclosure. The danger must be substantial and specific. Whether an alleged danger meets this test means considering the likelihood of harm resulting from the danger, when the alleged harm may occur, and the nature of the potential harm.

Abuse of Authority Related to Use of Funds

ARRA defines abuse of authority as an arbitrary and capricious exercise of authority by a contracting official or employee that adversely affects the rights of any person, or that results in personal gain or advantage to the official or employee or to preferred other persons.



Violation of Law, Rule, or Regulation Related to Agency Contract or Grant

A protected disclosure of a violation of law, rule, or regulation under WPA requires that a whistleblower need only disclose what he reasonably believes is an imminent not an actual violation of a law, rule, or regulation. Whether an employee s disclosure was based on a reasonable belief regarding a violation of a law, rule, or regulation turns on the facts of the case.

Recipients of Protected Disclosures

Disclosures are protected under the Act if the employee makes them to:

The Recovery Accountability and Transparency Board established by ARRA to coordinate and conduct oversight of covered funds to prevent fraud, waste, and abuse;

The agency s IG;

The Comptroller General;

A member of Congress;

A state or federal regulatory or law enforcement agency;

A person with supervisory authority over employee;

A court or grand jury;

The head of a federal agency; or

A representative of any of these.

Scope of Protection

The Federal Circuit has said WPA s protections exclude disclosures an employee makes in merely carrying out his required, everyday job responsibilities. By contrast, ARRA expressly includes disclosures made in the ordinary course of an employee s duties in the definition of protected activity.

Scope of Prohibited Reprisals

ARRA s language prohibiting reprisals explicitly provides that employees of employers covered by ARRA may not be discharged, demoted, or otherwise discriminated against as a reprisal for making ARRA protected disclosures.

Like other statutes with wording similar to otherwise discriminated against, the phrase will likely be broadly construed to include employment actions like oral or written reprimands, lateral transfers and reassignment of duties, as well as anything else that might well have dissuaded a reasonable worker from making or supporting a claim.

Procedural Provisions

NonPreemption Provision

ARRA says nothing in it may be construed to modify or derogate from a right or remedy otherwise available to an employee. It also states that nothing in ARRA may be construed to preempt, preclude, or limit the protections provided for public or private employees under State whistleblower laws.

Investigations

Reprisal complaints are to be filed with the IG of the government agency with authority over the covered funds. The IG conducts an investigation and prepares a report. ARRA has no time limit within which to file a complaint.

Burdens of Proof

The complainant must prove a protected disclosure was a contributing factor in the reprisal. The complainant may meet this burden with circumstantial evidence, including that the official undertaking the reprisal knew of the protected disclosure, or evidence that the reprisal occurred within a period of time after the disclosure such that a reasonable person could conclude the disclosure was a contributing factor in the reprisal. The burden then shifts to the employer to show by clear and convincing evidence that the employer would have taken the action allegedly constituting reprisal, even in the absence of the complainant s protected disclosure.

Determinations

The head of the agency with authority over the covered funds makes the decision of whether there is sufficient basis to find a prohibited reprisal. There is no required evidentiary hearing or administrative appeal.

Lawsuits

Civil actions may be filed after exhausting administrative remedies. Exhaustion includes:

Discontinuance of the IG s investigation;

Issuance of the agency head s order denying relief or passage of 210 days after submission of a complaint;

Filing only in U.S. District Court in which alleged reprisal occurred.

These lawsuits are not subject to amount in controversy requirements and ARRA has no limitations period governing the filing of such a lawsuit.

Remedies For Employee

Remedies include:

Affirmative action to abate reprisal;

Reinstatement with back pay;

Compensatory damages;

Employment benefits;

Other terms and conditions to restore employee to prereprisal position;

Award of costs and expenses, with reasonable attorneys and expert fees;

No express caps or limits on damages.

It appears punitive and exemplary damages are not available to employees, and are reserved to the government in its enforcement actions.

Judicial Enforcement of Agency Action

When reprisal is found, the agency head granting relief issues an order. If a person fails to comply with the order, the head of the agency may bring an action in the U.S. District Court. In such an action, the court may grant appropriate relief, including injunctive relief, compensatory and exemplary damages, and attorneys fees and costs.

Judicial Review

Any person adversely affected by an order finding reprisal occurred and ordering relief or denying reprisal happened may get review in the U.S. Court of Appeals for the circuit in which the alleged reprisal occurred. The standard of review follows the Administrative Procedure Act. The court decides relevant questions of law, interprets statutory provisions, and determines meaning and applicability of agency action.

Waiver of Rights

No waiver of substantive or procedural rights is permitted by any:

Agreement;

Policy;

Form or condition of employment; or

Predispute arbitration agreements unless contained in a collective bargaining agreement.

Posting Notice

ARRA requires any employer receiving covered funds to post a notice of rights and remedies. ARRA does not delegate the responsibility to prepare such a notice, and even though funds are being doled out, no such governmentissued notice has been approved. Employers ought to prepare their own notices.

Inspector General s Right to Interview

It is not clear whether other ARRA sections that provide for IG access to records and employees apply to investigations of whistleblower complaints being conducted by IG s. Employees should be aware of 18 U.S.C. section 1001, which requires imprisonment for anyone who knowingly and willfully:

Falsifies, conceals, or covers up by trick, scheme, or device a material fact;

Makes any materially false, fictitious, or fraudulent statement or representation; or

Makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry.

Actions That Are Retaliation

ARRA prohibits the discharge or the demotion of an employee as a reprisal for a covered disclosure. It also says the employee may not be otherwise discriminated against as a reprisal for a covered disclosure. SarbanesOxley has identical language. Most assume otherwise discriminated against will be broadly construed. Some cases illustrating the scope of actions constituting retaliation postBurlington Northern include the movement of police officers from night shift to rotating shift; former employer s opposition to claim for unemployment compensation benefits; and alleged changes of work stations and work shifts for waitress.

Contributing Factor

The complainant s burden is merely to establish that reprisal was a contributing factor to the employment action. Contributing factor has been defined to be any factor, which, alone or in connection with other factors, tends to affect in any way the outcome of the decision. A contributing factor is like a motivating factor.

Circumstantial Proof of Reprisal

ARRA says a disclosure may be shown as a contributing factor in a reprisal by circumstantial evidence with evidence that the official undertaking reprisal knew of the disclosure or evidence that the reprisal occurred within a period of time after the disclosure such that a reasonable person could conclude that the disclosure was a contributing factor in the reprisal.

Does this mean knowledge alone is circumstantial evidence that there was a reprisal because of a covered disclosure, shifting the burden to the employer to demonstrate by clear and convincing evidence that the action taken against the complainant would have been taken in any event? Does it mean that proof of sequential nearness between the disclosure and the act is sufficient circumstantial evidence to shift the burden of proof to the employer to demonstrate by clear and convincing evidence that the action would have happened in any event?

Clear & Convincing Evidence

Once the complainant has demonstrated a protected disclosure was a contributing factor to reprisal, the agency must find for the complainant unless the nonfederal employer demonstrates by clear and convincing evidence that it would have taken the action in the absence of the disclosure. Clear and convincing evidence is evidence indicating that the thing to be proved is highly probable or reasonably certain. This standard is a higher burden than preponderance of the evidence but less than beyond a reasonable doubt. As noted in a nuclear whistleblower case using the same burdens of proof, for employers, the clear and convincing evidence standard is a tough one. It has been defined as that measure or degree of proof that produces in the mind of the trier of fact a firm belief as to the allegations sought be established.

IG Extensions of Time

ARRA contains extraordinary provisions on extensions of time for the IG to complete an investigation. Without an extension, it is to be completed within 180 days. The complainant can agree to an extension of time for the IG and that the IG, on his or her own, may extend the period for not more than 180 days, provided the IG provides a written explanation. This language suggests that, with consent, the IG can obtain virtually unlimited extensions of time; whereas without the complainant s consent, the IG is limited to a single extension of 180 days and must provide a written explanation.

Reasonable Belief Test

ARRA reasonable belief language is virtually identical to the language in the SarbanesOxley Act (SOX). SOX has been construed to establish an objective reasonable belief standard where the employee is not required to show the reported conduct actually caused a violation of the law, but must show that he reasonably believed the employer violated a law or regulation. The employee s belief must be scrutinized under both subjective and objective standards.