Archives for May 2014

FTC Proceedings Against LabMD Stalled by Congressional Investigation

FOR IMMEDIATE RELEASE            CONTACT: Adam Temple, (843) 722-9670

May 30, 2014                                                    

FTC Proceedings Against LabMD Stalled by Congressional Investigation

Tiversa Employee Indicated he Would Take the 5th, House Oversight Committee Investigates Tiversa Dealings with FTC

Congress launched an investigation into Tiversa and their dealings with federal agencies including the FTC which threw a wrench into the FTC’s administrative proceedings against LabMD today.

“An investigation by the House Oversight committee will hopefully bring the accountability and transparency that we have yet to see from the FTC. We will now wait to see what Congress is able to uncover,” said Reed Rubinstein, of Cause of Action.

The investigation was brought to light in FTC proceedings today, which prompted former Tiversa employee and potential trial witness Rick Wallace to indicate his intention to take the 5th, through his attorney.

Tiversa CEO Robert Boback’s attorney asked for more time before his client would testify.

Judge Chappell granted a recess until June 12.


The unofficial transcript from today’s proceedings:

Disclaimer: This is a draft and subject to change and revision by the court – it is not the final transcript.

FTC v. LabMD May 30, 2014 Unofficial Trial Transcript by CauseOfAction

Bloomberg BNA: Groups Push Obama Executive Order To Halt IRS Proposed Section 501(c)(4) Rules

An excerpt from a May 2, 2014 Bloomberg BNA story:

Cause of Action, a conservative government accountability group, is asking the Office of Information and Regulatory Affairs to force the Internal Revenue Service to declare that its proposed rule on limiting the political activities of Section 501(c)(4) organizations is “a significant regulatory action” under an executive order signed by President Barack Obama.


Executive Order 13563, signed by Obama in January 2011, says that in deciding whether and how to regulate, federal agencies should assess all costs and benefits of available regulatory alternatives–including the alternative of not regulating. The order affirms and builds on Executive Order 12866 signed by former President Bill Clinton in 1993 .


Cause of Action said the Office of Management and Budget is attempting to “game the system” by saying the executive orders don’t apply to the 501(c)(4) rules.

Atlanta Journal Constitution: Medical lab battles feds over privacy

Read the full story: Atlanta Journal Constitution

Daugherty said he has spent more than a half-million dollars on the case so far. He’s had help from Cause of Action, a nonprofit group that said it got involved to help a small business with limited resources fight back against unfair regulation.


“I don’t think Congress intended for the FTC to regulate HIPAA,” said Daniel Epstein, the group’s executive director. “If it wanted to, they could authorize a law to do so.”

Warren’s Washington Internet Daily: FTC Testimony in Data Security Case to Address Standards, May Affect Hill Debate, Say Observers

Read the full story: Warren’s Washington Internet Daily

Despite the multiple dismissals, LabMD will continue its legal battle outside the ALJ process, Rubinstein told us. Federal judges have been receptive to LabMD’s argument, he said. Judge William Duffey, presiding over the May 7 hearing in Atlanta, repeatedly berated the FTC’s investigative process as inadequate and “mean-spirited” ( “You are living through a hearing of ‘I’m sorries,'” Duffey told Department of Justice lawyer Perham Gorji, representing the FTC. “It comes from the fundamental refusal of you and your colleagues with candor and with transparency to say, ‘Here is where we are going on this.'” Rubinstein said Duffey’s “utter incredulity at what the FTC has done” is why LabMD must press on. “There’s still a substantial amount of confusion — at least certainly from Judge Duffey’s perspective and from ours — as to exactly what their case is and what they have to prove,” he said.

Cause of Action: “Court Must Hold Chicago Transit Accountable for Fraud”

FOR IMMEDIATE RELEASE            CONTACT: Adam Temple, (843) 722-9670

May 22, 2014                                                    

Cause of Action: “Court Must Hold Chicago Transit Accountable for Fraud”

CTA Seeking Dismissal Over Technicality To Avoid $150 Million Fraud Allegation

 WASHINGTON – The Chicago Transit Authority (CTA) engaged in a potentially years-long fraud, fleecing the American taxpayer, and is now pushing a federal court to follow the Justice Department’s lead and look the other way rather than hold it accountable. Cause of Action (CoA), a government accountability organization that is pursuing False Claims Act litigation against the CTA, filed opposition papers today calling on the U.S. District Court for the Northern District of Illinois to rule against the CTA’s motion to dismiss its claims.

“The Chicago Transit Authority potentially defrauded hard-working American taxpayers of up to $150 million,” said Cause of Action Executive Director Dan Epstein. “To date, no funding has been paid back and the CTA is hoping to avoid any accountability by having this case dismissed on a technicality. The court has an opportunity in this case to defer to how Congress intended accountability to work by allowing these claims to proceed past this threshold stage and get to the merits.  Our hope is that the district court validates the role that the public can play in making government open and honest.”

CTA has likely been overreporting estimated mileage to receive a higher amount of federal grant funding at least as far back as 1982.  As a result, it has potentially obtained up to $150 million at the expense of American taxpayers. After CoA reported this story to the government, the Department of Justice, led by Attorney General Eric Holder, declined to intervene in the case.  CoA then filed the False Claims Act litigation to challenge CTA’s possible fraud.

On March 13, 2014, the CTA moved for the dismissal of CoA’s claims on a procedural technicality.  The court will now decide whether to dismiss the case or elect to hold oral argument prior to deciding.

About Cause of Action:

Cause of Action is a non-profit, nonpartisan government accountability organization that fights to protect economic opportunity when federal regulations, spending and cronyism threaten it. For more information, visit

To schedule an interview with Cause of Action’s Executive Director Dan Epstein, contact Adam Temple, 


Related Documents: Fraud at the Chicago Transit Authority

United States District Court for the North District of Illinois Eastern Division

Memorandum of Points and Authorities in Opposition to Defendant’s Motion to Dismiss (May 22, 2014)

Defendant CTA’s Motion to Dismiss (March 13, 2014)

Complaint for Damages, Injunctive Relief, and Declaratory Judgment (May 8, 2012)



Dan Epstein on the Lars Larson Show 5/20/2014

Cause of Action’s Dan Epstein talks with Lars Larson about how the CPSC’s actions regarding Craig Zucker are not about consumer safety, they’re about punishing an entrepreneur who dared to speak out against the federal government.