Republicans stepped up their criticism of Assistant Attorney General Tom Perez on Tuesday, saying he misled the Senate about a controversial whistleblower case at his confirmation hearing for Secretary of Labor.
Senator Chuck Grassley (R-Iowa), a longtime defender of whistleblower laws, is among a group of Republicans in Congress who say their oversight investigation already has uncovered an inappropriate quid pro quo deal orchestrated by Perez in the Minnesota whistleblower case last year. Perez leads the U.S. Justice Department's Civil Rights Division.
Republicans say their investigation found the Justice Department had agreed to a "secret deal" to not join the whistleblower case against the city of St. Paul, ultimately dooming the case. In exchange, the city dropped its appeal in the U.S. Supreme Court in an unrelated case that could have affected the department's ability to use the disparate impact theory in fair housing cases.
On Tuesday, the day before a Senate committee votes on Perez's nomination, Grassley released two documents that appear to contradict Perez's testimony last month about the deal. Perez had testified that the department's expert attorney on the False Claims Act—the now deceased Mike Hertz—had an "immediate and visceral reaction that it was a weak case."
In one document, DOJ attorney Elizabeth Taylor's notes about a meeting on the deal, Hertz is quoted as saying, "Odd—looks like buying off St. Paul. Should be whether there are legit reasons to decline as past practice." In another document, Taylor wrote to a top Justice Department official with more of Hertz's complaints.
"He's concerned about the recommendation that we decline to intervene in two qui tam cases against St. Paul," Taylor wrote.
Grassley, testifying at a House subcommittee hearing on Capitol Hill today, said it makes it clear that career lawyers considered it a strong case. "These documents appear to show that Mr. Hertz's primary concern was not the strength of the case, as Mr. Perez led my Senate colleagues to believe," Grassley said. "Mr. Hertz was concerned that the quid pro quo Mr. Perez ultimately arranged was improper."
Democrats have dismissed the allegations as a political campaign against a President Barack Obama's cabinet nominee with views Republicans don't agree with, and cited letters from "a host of other legal experts" and whistleblower attorneys who called the case weak.
Shelly Slade, a partner at Vogel, Slade & Goldstein in Washington and a member of the Board of Directors of Taxpayers Against Fraud Education Fund, testified Tuesday that she sees "nothing the least bit untoward or unusual" about the Justice Department considering "broad programmatic interests of the United States in deciding not to intervene."
Slade, who worked with Hertz, also said she did not think damages would have reached $200 million, and there were serious risks about it even being a whistleblower case.
"If my law firm had been contacted about taking on this case, we would have rejected it," Slade said. The DOJ actions "does not in any fashion deter me or the other members of my law firm from bringing qui tam cases."
At Perez's confirmation hearing last month, Perez said it was St. Paul, and not the Justice Department, that first brought up the possibility of a global settlement. Perez said he consulted with ethics and professionalism experts in the Justice Department, who said it was appropriate as long as Tony West, then the Civil Division chief, retained the ultimate decision on the deal.
Perez said Hertz "had a very immediate and visceral reaction that it was a weak case" before deciding not to join the whistleblower's suit. DOJ also declined to dismiss the case, which let the whistleblower have his day in court.
Grassley also took issue with that during Tuesday's hearing. "They have the guts to say we didn't do anything improper because Mr. Newell had his day in court," Grassley testified. "The city knew if the United States did not join the case it would likely get dismissed."
And he said there would be long-standing effects on whistleblower cases. "The result is that the department has demonstrated to future qui tam whistleblowers that they might be helped, but only if a defendant doesn't have something else the department wants in exchange," Grassley said.
At the same hearing, Representative Darrell Issa (R-Calif.) played a voicemail left by Perez, who apparently tells attorneys declining to intervene in the whistleblower case to "make sure it doesn’t make any mention" of the Supreme Court case, Magner v. Gallagher.
The whistleblower in the case, Fredrick Newell, testified along with his lawyer that he was kept in the dark about the deal. "He was the relator on this case and yet he was not told," his attorney said.
The Senate Committee on Health, Education, Labor and Pensions is scheduled to vote on Perez’s nomination Wednesday. Republicans are expected to raise these concerns again at that time.