America’s least populated state is Wyoming with just over a half million people, the U.S. territory of Guam has even fewer, just 162 thousand. Both have something in common, the federal False Claims Act. That law, passed in 1863, pays cash rewards to whistleblowers reporting fraud involving government programs or funds.
Guam also follows the lead of 29 U.S. states in having its own local whistleblower reward law known as the Guam False Claims and Whistle Blower Act
With a large military presence on Guam and many folks receiving Medicare or TRICARE, there is bound to be fraud in the island paradise of Guam. The same hold true for territorial spending which relies on local taxes.
Federal False Claims Act & Guam Whistleblower Rewards
In 2014, the U.S Department of Justice used the False Claims Act to prosecute a construction company. GRH Technologies Construction Co., Ltd. and its treasurer, Chen Pei Su, sought reimbursement for a contract funded with federal monies. Guam Waterworks Authority used government funds to upgrade its water system. The feds say that GRH claimed reimbursement for equipment used in the water system project.
That equipment didn’t exist.
The equipment GRH says it purchased cost $117,912. GRH ultimately settled the case for $285,000. Under the Act, the government can collect triple damages and impose monetary penalties of over $20,000 per violation. Had GRH not settled they could have been liable for over $350,000 plus penalties.
Under the False Claims Act, the whistleblower reporting the fraud or misconduct is eligible for a reward of between 15% and 30% of whatever the government collected from the wrongdoer.
In 2017 federal prosecutors settled another False Claims Act case in Guam. William and Fred Toelkes filed a whistleblower lawsuit against a Japanese company, Toa Corporation. Toa had won a bid to extend a navy pier on the island. To gain preferential treatment, Toa allegedly made a “sham” joint venture with a small business on Guam called International Bridge Company. The government frequently sets aside a percentage of construction contracts for small, veteran and minority owned businesses.
Because the arrangement was a sham, Toa would not have received the contract. Ultimately, the court ordered the Japanese company to pay a 43.1 million penalty. The two men who reported the fraud were given a $775,000 whistleblower reward.
More recently in June 2020, the Justice Department prosecuted the owners of the Guam Medical Transport ambulance service for Medicare fraud.
U.S. District Judge Frances Tydingco-Gatewood of the District of Guam sentenced Clifford P. Shoemake, 63, of Guam, and Kimberly Clyde “Casey” Conner, 60, of Saipan, to serve 71 and 63 months, respectively, in federal prison in connection with their Oct. 29, 2019, guilty pleas to conspiracy to commit health care fraud and count of conspiracy to engage in money launderinh. Judge Tydingco-Gatewood also ordered the defendants to pay $10,884,964.49 in restitution.
The case against Shoemake and Connor involved transporting dialysis Medicare and TRICARE patients by ambulance. The rules for both programs only allow ambulance transportation if it is medically necessary. Most dialysis patients can drive themselves or use a wheelchair van. Only a small percentage need an ambulance.
Because dialysis patients must typically seek treatment every few days, dishonest ambulance company operators view them as cash cows. Before getting caught, the two had billed Medicare for over $31 million. They had been improperly paid $10.8 million.
How do people like Shoemake and Connor get caught? In most Medicare schemes it is because of whistleblowers. The government is only able to audit a fraction of 1% of providers each year. Most providers are honest but there are always a few looking to get more than their fair share. That hurts taxpayers since Medicare, Medicaid and TRICARE are all funded with tax dollars.
As of this writing, yet another case is pending in Guam under the federal whistleblower law. Guam residents Pragathi and Ravindra Gogienei filed a whistleblower lawsuit against Fargo Pacific Inc, Jay Park and Edward McConell over $30 million in roofing contracts on Guam military bases. The two whistleblowers say the defendants violated the minority set aside rules for government contracts.
In April 2020, a federal judge sitting in Guam refused to dismiss the whistleblowers’ claims meaning the case can proceed.
Guam Passes Territorial False Claims Whistleblower Rewards Law
The three cases above involved federal tax dollars. 29 state, the District of Columbia and a handful of cities have enacted their own whistleblower reward law. The newest member of this elite club is Guam.
In 2019, the territory enacted the Guam False Claims and Whistle Blower Act.
Guam’s false claims act, introduced by Senator Michael San Nicolas, is based on the federal False Claims Act. Unlike the federal act which bars tax claims, however, Guam’s whistleblower law also pay rewards for reporting evasion of territorial taxes.
Only a handful of U.S. states pay rewards for information about those who underreport or fail to pay their taxes. (The IRS has a separate program for tax whistleblowers.)
In a 2018 interview with the Guam Daily Post, Sen. San Nicolas said the law would improve the states the collection of local taxes by protecting whistleblowers, because “whistleblowers often put their livelihoods on the line when they report illegal tax activity. It is only right that they are rewarded when that risk leads to GovGuam collecting money it may not have known it was owed.”
Under both the federal and Guam whistleblower laws, the person seeking a reward must possess inside knowledge of the fraud. To get a reward, one must file a lawsuit in court. The lawsuit is “sealed” meaning secret while the government investigates. Ultimately it is unsealed at which time the government can intervene and take over the suit or allow the whistleblower’s own attorney to prosecute the claim in the government’s name.
Guam Whistleblowers Protected Against Retaliation
Whistleblowers reporting fraud involving Medicare, defense contract fraud or other schemes involving federal funds have long been protected from retaliation. Guam’s whistleblower law offers similar protections.
Under the Guam False Claims and Whistle Blower Act, whistleblowers also enjoy protection against retaliation. The Act provides:
“Any employee, contractor, or agent shall be entitled to all relief necessary to make that employee, contractor, or agent whole, if that employee, contractor, or agent is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done by the employee, contractor, agent or associated others in furtherance of an action under this section or other efforts to stop one (1) or more violations of this Chapter.
“Relief under Subsection (a) shall include reinstatement with the same seniority status that employee, contractor, or agent would have had but for the discrimination, two (2) times the amount of back pay, interest on the back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys’ fees. An action under this Subsection may be brought in the Unified Judiciary of Guam for the relief provided in this Subsection.”
Whistleblowers have three years to bring a retaliation claim.
Are You Eligible for a Guam Whistleblower Reward?
To date, we are aware of no whistleblowers who have brought an action under the Guam False Claims and Whistle Blower Act. (We know of several federal whistleblower cases in Guam.) Whistleblowers under the federal law collect several hundred million dollars each law all across the United States, Puerto Rico, the U.S. Virgin Islands and Guam.
Now that Guam has its own whistleblower law, we are hoping that more people will step forward and report fraud and corruption on the island. With one of the most robust whistleblower laws in the nation, Guam whistleblowers are uniquely positioned to stop corporate greed, fraud and corruption.
Mahany Law, acting with its local partners, is one of the most respected whistleblower law firms in the nation. In the last decade, our whistleblowers have collected over $100,000,000.00 in whistleblower rewards. You could be next.
To learn more about the federal whistleblower program, visit our False Claims Act FAQ page. We also have information specifically for Medicare fraud schemes as well. To see if you have a claim under Guam’s whistleblower laws, contact us online, by email or by phone 202-800-9791.
We accept cases anywhere in the United States. Representation is offered on a contingent or “success” fee basis meaning no fees or costs unless we recover money on your behalf. All inquiries are protected by the attorney – client privilege and kept confidential.