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Legal Swindle

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You’ve probably heard of the government’s, “War on Whistleblowers.” It refers to heavy-handed efforts to discourage insiders from exposing waste, fraud, discrimination and other bad practices. But what you probably didn’t know is that these vendettas against truth-tellers are routinely funded with your tax dollars. You might call it a “Legal Swindle”. To explain how it works, we begin with an incredible case where the government managed to turn four dollars worth of unauthorized phone calls into a ten million dollar bill for taxpayers.

Dee Kotla worked as a computer technician at the Department of Energy’s Lawrence Livermore National Laboratory, a federal research lab in northern California where scientists work to maintain the nation’s nuclear weapons. But Kotla’s fourteen-year career at Lawrence Livermore ended abruptly in 1997.

Sharyl: And what was the reason they gave for firing you?

Dee Kotla: Misuse of government property.

Sharyl: What had you done?

Dee Kotla: Four dollars and thirty cents of local phone calls.

As it happened, she was fired over the phone calls, right after she blew the whistle against her employer in a sexual harassment case on behalf of a colleague named Kim.

Sharyl: When you found out you were being fired in part for four dollars and thirty cents of phone calls, what did you really think was happening?

Dee Kotla: I knew they were retaliating against me for testifying for Kim. It was devastating because I had worked so hard to move up and to learn, and was constantly goin' to school to better myself. You know, and it was my security blanket.

She sued for wrongful termination and won. But if it were as simple as that, there wouldn’t be much of a story. Instead, Dee Kotla’s lawsuit became one of the longest-running and most expensive whistleblower cases on record. That’s because Lawrence Livermore lab fought her every step of the way, using hardball tactics, high-priced lawyers and your tax dollars.

Sharyl: So how long did it take for you to win a lawsuit that said they fired you wrongfully?

Dee Kotla: Two trials and eight years.

Kotla won two separate trials: the first for a million and a second for two million. By the time it was all over in 2005, the case that started over four dollars in phone calls had racked up ten million dollars in legal costs. All paid for, believe it or not, by your tax dollars.

Sharyl: Contractors or federal agencies, when they want to retaliate against a worker, they kind of have unlimited resources to do this?

Dee Kotla: Yes. I had been told by other people that they call it, "the lab’s deep pockets." DOE has deep pockets. They just keep taking you back to court, back to court, back to court until you have no money and you give up.

It was Kotla’s outrageous and costly story that persuaded Senator Ed Markey to take action.

Sen. Ed Markey (D) MA: This case is a perfect example of where phone calls of four dollars, four dollars and fifty cents, triggers upwards of ten million dollars worth of federal government expenditures in legal fees to protect the defendants, the Department of Energy contractor from this woman standing and speaking. You know, that’s just plain wrong.

Right after Kotla’s case, Markey helped pass a law to take away the incentive for federal contractors to maliciously fight employees in court. It prohibits use of tax dollars to pay legal costs, when the federal contractor is at fault. Yet we found a decade later, it’s still happening.

Bruce Low and Mario Jimenez are proof of that. In 2008, Lawrence Livermore, the same lab that wrongfully fired Kotla, laid off hundreds of workers, including them.

Mario Jimenez: I started in '76. So I was there for thirty years. Just short of thirty-two years.

Sharyl: What did that feel like to face that sort of a layoff or firing?

Bruce Low: Actually, I was in shock. It was humiliating. After working with all these people for so long, you feel like it's a family, and you're basically being kicked out.

Sharyl: What's the job hunt been like for you since you left?

Bruce Low: Very frustrating. I was in my mid-to-late fifties. Nobody's really interested in hiring anybody in their mid-to-late fifties.

One hundred thirty of the laid-off workers sued the Lab for violating their employment contract. Like Kotla’s case, their lawsuit dragged on month after month, year after year, racking up legal fees at taxpayer expense.

Bruce Low: The lab, being that they are the large entity that they are and they do have a whole stable of attorneys. As a matter of fact, they have a whole building called “the courthouse”, which is nothing but attorneys.

Sharyl: Mario, did you get the sense that they could keep going with this forever, because they have money to spend?

Mario Jimenez: I felt like that very much so, because you think something's gonna be happening and all of a sudden, there is an appeal or a motion that just delayed everything. I just seen that the lab just had so much firepower, that they were just stringin' it out. I knew that. I've seen it before, that they were just stringin' it out as long as they could, because they could. And they were, just like I say, throwin' everything they could to stall the process, meaning more money that the taxpayers were gonna have to pony up.

Sharyl: And while the legal case is dragging on, you're getting no compensation I assume?

Mario Jimenez: No compensation and it's just more burden on me, my mental aspect.

Eventually, the lab lost a test case and agreed to pay the ex-employees more than thirty-seven million dollars, but denied wrongdoing.

Attorneys costs could be ten million dollars more. Lab officials want it all paid with your tax dollars, but they declined our interview request and refused to disclose the final bill. In a statement, a lab spokesman told us that under its federal contract, “litigation costs, settlements and judgments may be paid using Laboratory funds,” that’s tax money, “if certain conditions are met.”

Gary Gwilliam is the attorney for the laid-off workers and Dee Kotla. He says federal contractors sometimes use tax money like a bottomless purse, to fight and punish whistleblowers or those who dare to claim discrimination.

Gary Gwilliam: It’s well known in the field that that word is “scorched earth litigation”. That means, we’re going to fire you, we’re going to go after you, we’re going to drag you down, we’re going to do everything we can to you for as long as ever, to make you so you will never bring a case against us, and that everybody else out there will know that if you bring a case against us, you’re going to have to pay.

Sharyl: And in these cases, it’s taxpayers that are helping them do it?

Gary Gwilliam: Exactly, and that’s unfortunate. It’s wrong.

A recent audit found the Department of Energy paid settlements in thirty-six out of forty-six lawsuits without considering whether the contractor should have paid the tab. Cost to taxpayers: more than sixty-two million dollars.

Sen. Ed Markey: The taxpayer is ultimately defending, in many instances, the bad guy against the good person who is standing up for public health, for public safety. And the public has a right to know, and they have a right to know who their heroes are, and these whistleblowers are heroes.

Kotla says if federal contractors were spending their own money, four dollars would never be allowed to turn into a ten million dollar legal expense.

Sharyl: How important do you think it is that the lab or corporations be responsible for their own alleged misbehavior, when it comes to lawsuits and legal fees, if they're using this for retaliation?

Dee Kotla: I think they should be responsible. If they're responsible and they have to come up with the money, I think they would do a lot less retaliating against people and think twice if it comes out of their pocket. Why should they care now if you and I and everybody else is payin’ the bill?

Neither the Department of Energy nor the Lab would disclose the costs of the legal cases that we asked about. We also filed a Freedom of Information Act request for the material, but neither agency has properly responded.

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