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A lawyer who claims he was fired from his post as associate general counsel at the Philadelphia Housing Authority in April because he refused to hide “misuse of public funds” from federal regulators has filed a whistleblower’s suit in U.S. Eastern District Court. In the suit, attorney Michael Pileggi claims that soon after he was promoted to the associate general counsel post in May 2001, he learned that PHA had spent “hundreds of thousands of dollars” in legal fees defending employment discrimination suits that would have been covered by insurance if the insurer had been informed of the suits in time. Pileggi claims that when lawyers from the U.S. Department of Housing and Urban Development began asking about the escalating costs of defending the employment cases, Pileggi told his bosses that he did not intend to keep quiet about the internal mishaps that resulted in forfeiting the insurance coverage. The suit alleges that attorney Marc Woolley, PHA’s former General Manager of Human Resources, failed to notify the Housing Authority Risk Retention Group of approximately 20 to 25 pending employment cases. “As a result of Defendant Woolley’s failure to inform HARRG with regard to the aforesaid cases, HARRG was not bound to provide insurance coverage to Defendant PHA against the non-reported claims and disclosed coverage,” the suit said. Pileggi claims that just one day after he declared that he would not keep the insurance coverage problems a secret, PHA officials told him that he was fired for violating the agency’s residency requirement. The plaintiff was fired, PHA has said, because he was in violation of the city’s public employee residency requirement. Pileggi claims the charges were trumped up and that PHA ignored his proof that he lives, votes and pays taxes in Philadelphia, and that the property he owns in New Jersey is not his primary residence. Pileggi’s lawyer, Sidney L. Gold of Lovitz & Gold, contends that PHA’s stated reason was a pretext designed to hide the fact that Pileggi was ousted because he was about to blow the whistle. But PHA’s lawyer, James Eisenhower of Ballard Spahr Andrews & Ingersoll, said in an interview yesterday that Pileggi was on notice for months that he was in violation of the residency requirement and that his failure to comply with the rule was the true and only reason he was fired. The suit alleged PHA had previously taken a relaxed approach to enforcing the residency requirement by allowing Woolley, who lived in Delaware, to cure the problem within 90 days. By contrast, the suit said, Pileggi was told that PHA had a “zero tolerance” policy toward violations of the rule. But Eisenhower said PHA always knew about the residency issues of the employee from Delaware, Marc Woolley, since he was a former associate in the Wilmington office of Saul Ewing. Unlike Pileggi, Eisenhower said, Woolley cured the problem by establishing residency in Philadelphia within the time limit. Eisenhower said he cannot comment on the specific facts in Pileggi’s complaint because he has not yet seen it. But Eisenhower said he questions whether the whistleblower claim has any basis because he does not believe Pileggi can prove that there was any misuse of funds. “As far as I know, HARRG [the insurer] never denied coverage for failure to provide notice of the employment cases,” Eisenhower said.

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