Law Offices of Scott J Bloch, P.A.

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Scott Bloch Law Law Blog

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Bloch Amends Blackwater Class Action to Claim $240 million for unlawful trade practices

September 21, 2011 by Scott Bloch

Read First Amended Complaint as filed Mercadante et al. v Blackwater et al here.

WASHINGTON, DC (September 21, 2011) – Since 2007, Blackwater Industries, which has changed its name to Xe Services, has  employed over 10,000 personal security specialists to perform operations in Iraq and Afghanistan under lucrative  contracts with departments of the United States Government including the State Department and CIA.  While employing  these individuals, many of whom are decorated veterans of the armed services including Special Forces, Army Rangers,  Navy Seals, Blackwater sought to avoid millions of dollars in taxes, withholding, and payments of benefits to these  employees by classifying them improperly as independent contractors.

Yesterday, Scott Bloch filed an amended complaint in the class action lawsuit on behalf of four former security specialists, who were injured while working for Blackwater, in order to recover their payment of social security, unemployment insurance, and unpaid benefits and state and local withholding and unemployment insurance, and other unspecified damages.  The action is brought on their own behalf and thousands of others who have worked for Blackwater and its newly named Xe Services.  The action seeks $240,000,000 in damages for lost benefits, overtime, treble damages and punitive damages, as well as additional amounts as proved for the class of specialists.

The suit also states that one of the representative plaintiffs already had a determination from the IRS that Blackwater misclassified him as an independent contractor.  “The IRS already determined in the case of one of my clients that he should have been classified as an employee,“ said Bloch.  “Now thousands of people will have to file amended returns.  Thousands of people will likely be entitled to benefits they were denied due to the misclassification, including payment of their employer share of pension, health and disability insurance premiums, and other plans that Blackwater filed with the government for its employees, promising it would not discriminate against those employees as they did here.”

“Blackwater made hundreds of millions of dollars from taxpayers and hired thousands of former veterans of military service and police officers.  They also had in their ranks Federal Agents, such as current employees of the FBI on leave of absence. They were hired as security specialists in Iraq and Afghanistan,” said Bloch.  “It is a grave injustice to them who were mistreated and left without any health insurance or other benefits for their families, and left to fend for themselves in paying into Social Security and Medicare.  They laid down their lives to protect dignitaries and carry out duties in support of wars for America, and they deserve better than this. Many of these same men risked their lives to protect everyone from the President of the United States to U.S. Senators, Congressman, U.S. Diplomats, to Foreign Presidential & Diplomatic Figures in one of the most dangerous places on the planet.”

One of the Plaintiffs guarded such dignitaries as the just assassinated Former Afghan President Burhanuddin Rabbani as well as current Secretary of State and then Senator Hillary Clinton.

“Blackwater acted illegally and unconscionably toward these brave individuals,” said Bloch.  “Through their fraud as pointed out in the Amended Complaint, they avoided overtime for security workers who worked sometimes 12-16 hours a day 6 days a week.  They were forced to sign agreements they never read and were not given time to read and not given copies, which took away valuable rights and were unlawful in their terms.”

Read full PRESS RELEASE Amended Complaint against Xe Blackwater here.

Contact Scott J. Bloch, PA:

Scott Bloch, 202-496-1290

Reporting on Blackwater Suit by Bloch

Numerous news sources have picked up on the class action law suit filed by Scott Bloch on behalf of former employees of Blackwater Worldwide, now called Xe Services, who had been misclassified as independent contractors and deprived of benefits Blackwater provided to others it called employees.

The Virginia Pilot, Fox News, Legal Times, and many others have reported on this.  See links below.

There has been great interest in the law suit not only by news sources and the public, but by many former employees of Blackwater who have contacted us to inquire into being part of this important case to vindicate the rights of these brave individuals, and their families.  Go here to sign up.

Links to news stories:

http://hamptonroads.com/2011/06/exblackwaterxe-workers-file-60m-class-action-lawsuit

http://www.myfoxboston.com/dpps/news/lawsuit-alleges-blackwater-failed-to-pay-benefits-dpgonc-20110608-kh_13594241

http://www.myfoxchicago.com/dpps/news/lawsuit-alleges-blackwater-failed-to-pay-benefits-dpgonc-20110608-kh_13594241

http://uk.news.yahoo.com/us-lawsuit-alleges-blackwater-failed-pay-benefits-000815821.html

http://circlingthelionsden.blogspot.com/2011/06/60-million-class-action-against.html

http://civiliancontractors.wordpress.com/2011/06/07/class-action-filed-against-blackwater-xe-based-on-fraudulent-misclassification-as-independent-contractors/

http://defensebaseactcomp.wordpress.com/2011/06/07/class-action-tax-misclassification-filed-against-xe-formerly-blackwater/

http://www.law360.com/classaction/articles/249900/ex-contractors-sue-xe-for-60m-over-denied-benefits

http://www.legitgov.org/Ex-BlackwaterXe-workers-file-60M-class-action-lawsuit

http://www.google.com/hostednews/afp/article/ALeqM5hlf3wQyICosE3TFtPrtECbNdeJ_g?docId=CNG.e3a9d5e807ecdf4c688c40ef9ac6acc5.c11

http://www.myfoxdc.com/dpps/news/lawsuit-alleges-blackwater-failed -to-pay-benefits-dpgonc-20110608-kh_13594241

http://www.breitbart.com/article.php?id=CNG.e3a9d5e807ecdf4c688c40ef9ac6acc5.c11&show_article=1

http://www.myfoxorlando.com/dpps/news/lawsuit-alleges-blackwater-failed-to-pay-benefits-dpgonc-20110608-kh_13594241

http://www.myfoxtampabay.com/dpps/news/lawsuit-alleges-blackwater-failed-to-pay-benefits-dpgonc-20110608-kh_13594241

http://www.france24.com/en/20110609-us-lawsuit-alleges-blackwater-failed-pay-benefits#

http://www.myfoxmemphis.com/dpps/news/lawsuit-alleges-blackwater-failed-to-pay-benefits-dpgonc-20110608-kh_13594241

http://www.starafrica.com/en/news/detail-news/view/us-lawsuit-alleges-blackwater-failed-to-170889.html

http://nba.msg.com/article/09QPa0Z06HgO5?q=Central+Intelligence+Agency

http://arabia.msn.com/News/World/AFP/2011/June/6500128.aspx?ref=hptab

http://www.tvnewslies.org/tvnl/index.php/news/domestic-usa/19460-us-lawsuit-alleges-blackwater-failed-to-pay-benefits.html

http://loadtest.story.news.yahoo.com/s/afp/usiraqafghanistansecuritysociallawsuit

http://www.silobreaker.com/lawsuit-blackwater-failed-to-pay-benefits-5_2264626854847578166

http://www.dallas-texas-lawyers.com/lawsuit-news/us-lawsuit-alleges-blackwater-failed-to-pay-benefits-4/

http://militarylawyerreviews.com/us-lawsuit-alleges-blackwater-failed-to-pay-benefits/

http://www.newsmeat.com/news/meat.php?articleId=100347231&channelId=2951&buyerId=newsmeatcom&buid=3281

http://www.bullfax.com/?q=node-us-lawsuit-alleges-blackwater-failed-pay-benefits

http://soccernews.bigsoccer.com/article/09QPa0Z06HgO5?q=Unemployment

http://zeenews.india.com/news/world/us-lawsuit-alleges-blackwater-failed-to-pay-benefits_711494.html

http://www.rawstory.com/rs/2011/06/08/blackwater-sued-for-allegedly-failing-to-pay-benefits/

http://legaltimes.typepad.com/blt/2011/06/blackwater-sued-over-employment-benefits-dispute.html

 

Bloch Blasts Blackwater for Depriving War Zone Security Specialist of Benefits

 

Read Complaint as filed Mercadante et al. v Blackwater et al here.

 

WASHINGTON, DC (June 7, 2011) – Since 2007, Blackwater Industries, which has changed its name to Xe Services, has  employed over 10,000 personal security specialists to perform operations in Iraq and Afghanistan under lucrative  contracts with departments of the United States Government including the State Department and CIA.  While employing  these individuals, many of whom are decorated veterans of the armed services including Special Forces, Army Rangers,  Navy Seals, Blackwater sought to avoid millions of dollars in taxes, withholding, and payments of benefits to these  employees by classifying them improperly as independent contractors.

 

Yesterday, Scott Bloch filed a class action lawsuit on behalf of four former security specialists, who were injured while working for Blackwater, in order to recover their payment of social security, unemployment insurance, and unpaid benefits and state and local withholding and unemployment insurance, and other unspecified damages.  The action is brought on their own behalf and thousands of others who have worked for Blackwater and its newly named Xe Services.  The action seeks $60,000,000 in damages and punitive damages, as well as additional amounts as proved for the class of specialists.

“These brave individuals who worked in support of Operation Iraqi Freedom and Afghani Enduring Freedom, deserve better than to be turned away without health insurance, pension benefits, unemployment benefits, and other withholding afforded to Blackwater’s other employees,” said Scott Bloch.

According to the lawsuit, the United States treasury loses billions of dollars annually to misclassified employees.  Under the common law and the IRS 20 questions put out in 1987 pursuant to a regulation, Blackwater was obliged to classify these individuals as employees if Blackwater had the right to control the employees’ actions, manner of performing duties, hours, training, equipment, whether the duties of the employees go to a core function of the employer or are duties that are consider ancillary to the main purpose of the company, and other factors.

The suit also states that one of the representative plaintiffs already had a determination from the IRS that Blackwater misclassified him as an independent contractor.  “The IRS already determined in the case of one of my clients that he should have been classified as an employee,“ said Bloch.  “Now thousands of people will have to file amended returns.  Thousands of people will likely be entitled to benefits they were denied due to the misclassification, including payment of their employer share of pension, health and disability insurance premiums, and other plans that Blackwater filed with the government for its employees, promising it would not discriminate against those employees as they did here.”

“Blackwater made hundreds of millions of dollars from taxpayers and hired thousands of former veterans of military service and police officers.  They also had in their ranks Federal Agents, such as current employees of the FBI on leave of absence. They were hired as security specialists in Iraq and Afghanistan,” said Bloch.  “It is a grave injustice to them who were mistreated and left without any health insurance or other benefits for their families, and left to fend for themselves in paying into Social Security and Medicare.  They laid down their lives to protect dignitaries and carry out duties in support of wars for America, and they deserve better than this. Many of these same men risked their lives to protect everyone from the President of the United States to U.S. Senators, Congressman, U.S. Diplomats, to Foreign Presidential & Diplomatic Figures in one of the most dangerous places on the planet.”

Read full PRESS RELEASE Suit against Xe Blackwater here.  See additional reports from Article Law 360 report here.

Contact Scott J. Bloch, PA:

Scott Bloch, 202-496-1290

 

FAA Culture of Cover Up Causes Repeat Mistakes

FAA Culture of Cover Up Put Air Traffic Controllers to Sleep

By Scott J. Bloch

G.K. Chesterton said, “If a thing is worth doing, it is worth doing badly.”  This famous witticism turns out too often to be a guiding principle for government oversight.   Americans are tired and frustrated.  We sense that there is too much money and corruption in our government.    We’re tired of compromise in aviation safety by the Federal Aviation Administration.  We now learn from the Transportation Department Inspector General that near misses are up over fifty percent.

You know there is something wrong when every week for a month controllers are being caught falling asleep on the job, watching movies, or bringing the First Lady’s airplane up close and personal with the flying public.  And more recently the Second Lady’s plane was on a crash course with another plane out of Chicago O’Hare airport.  Somebody is going to pay.  Only it will not be the FAA.  They’ll find a suitable scapegoat.  And if anyone speaks up, he will be fired or retaliated against.

Over and over, when the FAA is caught asleep at the wheel, those in charge rattle their sabers, fire low level individuals and allow the management that refuses to play by the rules to stay in power.  Soon it all slouches back into a comfy system because the FAA does not like oversight, does not tolerate whistleblowers, and will say whatever it takes for the cameras to stop rolling and the members of Congress to stop having hearings.  I know because I shined the light on FAA malfeasance and cover up for five years when I headed the independent oversight agency United States Office of Special Counsel (OSC).

In several rounds of near-misses of aircraft, Air Traffic Controller Anne Whiteman learned that blowing the whistle on FAA malfeasance did not pay.  She was proved right in two separate investigations by my office, one in 2005 (featured on Oprah show), one in 2007 with a second  whistleblower in her control facility.  During that round, she revealed cover ups of serious near misses, including controllers playing chicken with planes, and the FAA lying about  fixing the problem.  In the second round, FAA tried to shift blame to pilots in order to cover up safety violations and keep those safety numbers from edging up.  After the Inspector General and press revealed the seriousness of the cover ups, the FAA swore it had taken care of the problems, the wrongdoers, and would no longer cover up near misses and incidents that endangered passengers.  But they hadn’t.

Anne Whiteman was retaliated against so often she felt she had to retire.  Threats to her life, removal of privileges of employment, attempts to find dirt on her, and harassment by management and rank and file alike took their toll.  Now the third round is upon us, and we are seeing no sign that the house cleans itself.  OSC also experienced several rounds with FAA on cover up of fraudulent mechanics certificates for FAA safety mechanics.  In that case, the whistleblower experienced retaliation as well.

Witness another example of a repeat problem in the grounding a month ago of some 300 scheduled flights, and hundreds of aircraft due to the five-foot fuselage hole and depressurization of the Southwest Airlines flight 812 in Yuma, Arizona.  We brought these problems to light in 2007 and in 2008, Congressional hearings, OSC’s investigation, and Inspector General’s findings  showed a cover up of the structural fatigue cracks in the ageing Boeing 737-300, 700 and other 737 series.  Our whistleblowers, like Anne Whiteman, came forward and revealed a wide scale cover up of FAA and Southwest Airlines refusing to comply with Airworthiness Directives (ADs) requiring regular inspections of the fuselage of these Boeing 737s for just the type of holes or cracks that appeared in the recent depressurization of flight 812.

Whistleblowers Bobby Boutris and Doug Peters reported to OSC that they as FAA maintenance inspectors were being stopped from enforcing this AD by FAA management under the so-called partnership program with the airlines.  We found a violation of the AD and retaliation against Boutris and Peters for their efforts to uphold this important safety regulation.  There was a revolving door problem of FAA safety inspectors being invited into cushier jobs with the very airlines they were supposed to oversee.  We referred the case to the Inspector General of the Department of Transportation, Calvin Scovell III, for fuller investigation and correction of the problems, which he confirmed had occurred.  Massive attention was paid, a high level FAA executive had to leave his job, 1000 planes were grounded, a whole fleet of Boeing 737s were mothballed, and still Southwest and other Airlines were allowed to let slide these dangers.

I found that powerful interests in government don’t like oversight one bit, and they retaliate and come after you.  Is this the kind of oversight and aviation industry we want in America?   Consider that in the face of ongoing problems with structural fatigue in the old 737, and in  Boeing’s Next Generation or NG 737, which is also facing non-conforming parts creating the very same structural integrity problems in the news.  So did the FAA or Inspector General of the Transportation Department look into this?  Not at all.  FAA has gone into business with Boeing to develop the Next Gen or NG warning system and, so far, has tried to sweep the 737 NG structural problems under the rug.  FAA is paying Boeing billions to develop and implement this NG system.  Is this what America expects of its public officials, to get in bed with Boeing or other large aviation interests?

John Adams said, “Good government is an empire of laws.”  But what happens when officials won’t enforce those laws?  We, the citizens, have to join with vigorous representatives who are not merely beholden to lobbyists or industry.  They have tried to silence the whistleblowers, silence their critics.  But their voices will be heard.  That is if weren’t not asleep at the switch. 

Hon. Scott J. Bloch was Special Counsel over the U.S. Office of Special Counsel from December of 2003 until December of 2008 and now practices law on behalf of aviation and other whistleblowers, injured government contractors, and private and public employees, in Washington, D.C.

 

DBA Insurer CNA Faces Criminal Probe

U.S. insurer faces criminal probe over Iraqis’ unpaid death benefits

By T Christian Miller at ProPublica May 23, 2011 and The LA Times

An administrative law judge has referred a U.S. insurance company for criminal investigation after the firm failed to pay benefits owed to survivors of Iraqi translators killed while working for the American government.

Under a federally funded program, Chicago-based CNA Financial Corp. provides insurance coverage to contractors killed or injured while working overseas for the United States. The slain translators were helping to train Iraqi police recruits.

Instead of paying out benefits, however, CNA withheld information from the federal government and avoided making payments to nine families who lost relatives in a 2006 attack, according to court files and interviews. One widow lost her home, unable to keep up payments after her son and other translators were ambushed by insurgents in the southern city of Basrah, one of her attorneys said.

In a ruling this week, administrative law Judge Daniel Solomon ordered CNA to begin making payments to the families. In an unusual move highlighting the government’s concern over potential fraud, the judge also told the Labor Department, which oversees the program, to investigate whether the insurance carrier should face criminal charges. A Labor spokesman said the agency would “fully investigate” the allegations to determine whether to ask the Justice Department to prosecute the case.

CNA said it was also looking into the case.

“We are investigating the matter and will take all appropriate actions,” said Katrina Parker, a company spokeswoman.

Attorneys for the families said they believe CNA withheld documents to avoid making payments.

“These were people who helped the U.S. in Iraq,” said Agnieszka Fryszman, an attorney for the families. “Their families were kicked to the curb when they were most in need of help.”

CNA’s failure to pay out benefits underscores the continuing problems with the Defense Base Act, essentially the workers compensation system for overseas federal contractors.

The system was little-used until the wars in Iraq and Afghanistan sent hundreds of thousands of private contractors onto the battlefield. All told, the government has paid out nearly $1.5 billion in premiums since 2001.

Reporting in 2009 by ProPublica, the Los Angeles Times and ABC’s 20/20 [1] revealed deep flaws in the program. Workers fought long battles for medical care, including such things as prosthetic devices and treatment for post-traumatic stress disorder. Foreign workers, including Iraqi and Afghan translators, often did not receive payments or treatment. The Labor Department seldom took action to enforce the law. One official called the system a “fiasco.”

Congress subsequently held hearings [2] that showed that American insurers were reaping large profits from the program. Documents showed that CNA reported the highest profits margins, taking in nearly 50 percent more in premiums than it paid out in benefits.

The case decided this week began on Oct. 29, 2006, when insurgents boarded a bus and killed 17 Iraqi-born translators working in Basrah for Sallyport Global Services, a logistics and security contractor. The insurgents later scattered their bodies around the city.

Under the law, CNA was responsible for paying death benefits to the translators’ dependents. CNA paid when translators had children and spouses, according to interviews and court records, but not to other survivors. Several translators had no children, but supported parents or other family members.

In such cases, the Labor Department demands proof that survivors relied on contractors’ earnings. CNA hired investigators who interviewed nine families, confirmed their eligibility, and even set up bank accounts. But CNA withheld portions of the investigators’ findings when it submitted the claims to the Labor Department, court records show.

One CNA file shows that the slain translator had supported his mother, a widow, since his father was killed in the Iraq-Iran war. The town council even issued a statement of support, confirming the translator was his mother’s “sole provider.” Another CNA file shows that another translator killed in the ambush was sole support for his family, which “could be described as very poor.”

But those pages were missing from the information CNA submitted to the Labor Department. As a result, Labor officials accepted CNA’s declaration that there were no dependents to pay in any of the nine cases.

The translators’ attorneys at Cohen Milstein, a well-known Washington firm doing pro bono work on the case, estimated that CNA owed a total of about $500,000 to the nine families. Instead, CNA paid about $45,000 into a special federal fund set up to help support the workers compensation system.

The company subsequently recovered some of that money plus additional fees under an obscure law—the War Hazards Compensation Act—that allows insurance carriers to recoup costs for contractors killed in hostile acts, court documents show.

In one case, CNA paid $5,000 into the special fund and $518 to a translator’s family for burial expenses, but was reimbursed $9,289 by the federal government for investigating and handling the claims.

A Sallyport official said the company believed that CNA had made payments to all of the translators’ families except one, which declined to accept money because of security concerns.

In an emailed statement, the company declined further comment due to the litigation. It said it would “continue to monitor the situation and support the families within our remit.”

 

Bloch takes on FAA Aviation Safety Whistleblower Cases

On FAA Cover Up Special Counsel stories, it was reported that Scott Bloch took on the federal government’s cover up of near misses at Air Traffic Control facilities and other cover ups, revealing a culture of fraud in the FAA.