Whistleblower Cases

Whistle with red rope 

1.   What is a whistleblower case?

In plain language, a whistleblower is a person who knows about a company cheating the government and decides to “blow the whistle” on the company. Some common types of government fraud include Medicare or Medicaid fraud, fraud in the sale of equipment to the military or other government agency, and cheating the government out of customs import duties. The “False Claims Act,” a law that goes back to the time of Abraham Lincoln, encourages citizens to come forward with information regarding fraud committed on the U.S. government by rewarding them with a percentage of the money recovered by the government as a result of the whistleblower.

2.  Who can be a whistleblower?

Often whistleblowers are current or former employees of a company who learned of their employer’s fraudulent conduct during their employment. However, a whistleblower does not have to be a current or former employee. It can be anyone with knowledge that has not been reported in the media or that is already the subject of a Government investigation. The fraud often consists of fraudulent representations made to obtain payments from a Government program, or fraud designed to decrease a company’s payments to the Government.

3.  What are the legal rights of a whistleblower?

Whistleblowers are protected by a variety of federal and state statutes, the most prominent of which is the False Claims Act, which provides a means for whistleblowers to receive an award when they are responsible for reporting fraud to the Government via a False Claims Act qui tam lawsuit. Additionally, the False Claims Act includes provisions that protect whistleblowers from being punished (e.g., demoted or terminated) in retaliation for protected whistleblower-related activity.

4.   How can I find out if I have a good whistleblower case?

Send us an email at cory@coryfeinlaw.com, or call with information about your potential case. We will maintain the confidentiality of the information you provide and respond promptly. There is no cost to you for this consultation. If we take your case, we will take it on a “contingent” basis, meaning you will not have to pay us anything and our recovery, if any, will come only from the proceeds of the case.

5.   Should I bring a whistleblower case?   What’s involved?   What’s in it for me?

In a whistleblower case, the lawyers do most of the work, but serving as a “relator” (the legal term for a person bringing a whistleblower case) does require some work. While all cases are different, typically the relator has to gather any documents he has that are relevant to the case and provide information to assist the government’s investigation. The government attorneys will typically schedule a meeting with the relator and his attorney to get facts about the alleged fraud to help the government’s investigation. If the case proceeds to settlement talks, the relator will have the opportunity to provide input.

When a whistleblower case settles, the relator is entitled to a percentage of the money recovered by the government, between 15% and 30%, depending on various factors. Awards to whistleblowers regularly exceed $1 million.

 

6.  What does qui tam mean?

The term “Qui Tam” comes from the Latin phrase “qui tam pro domino rege quam pro se ipso in hac parte sequitur,” meaning a person who sues on behalf of the king as well as on behalf of himself. The term reflects the fact that a whistleblower seeks to recover damages for the Government rather than for himself, and is entitled to a share of the recovery as an award for coming forward with information that makes the recovery possible.

 

7. What is the False Claims Act?

The False Claims Act is the federal statute that permits whistleblowers to sue on behalf of the Government, and to recover a share of any recovery obtained by the Government. There is also a Texas statute, called the Texas Medicaid Fraud Prevention Act, which provides rights for whistleblowers with knowledge of fraud against the Texas Medicaid program.

 

8. What are the most common FCA violations?

The majority of FCA claims involve health-care fraud on the Medicare, Medicaid and similar Government health-care programs. Other common types of FCA violations include military procurement fraud related to the sale of equipment to the U.S. military, import fraud involving false statements to customs in order to avoid or reduce the payment of import duties, and fraud by recipients of federal grants.

 

9.  What is the process for litigating qui tam/whistleblower cases?

A qui tam case is a unique type of litigation. Unlike most cases, which are served on the defendant after they are filed, qui tam cases are filed under seal and served only on the Department of Justice and U.S. Attorney’s office. The Government investigates the case in secret, usually for several months. Eventually the case is unsealed and served on the defendant. The Government has the option to intervene in the lawsuit or to decline intervention. If the Government declines, the whistleblower and his or her attorney have the option to pursue the declined case without the Government.

 

10.  What makes a good False Claims Act case?

A good False Claims Act case is one where the whistleblower has meaningful information, that has not been reported by the media and is not already the subject of a Government investigation, which suggests that a person or company is defrauding the Government. The fraud can take several forms including both improperly obtaining money from the Government, and improperly avoiding or reducing a company’s obligation to pay money to the Government. The fraud should be substantial enough that a large sum of money (or large number of fraudulent transactions) is involved, and the persons or companies involved should have the means to fund a large payment to the Government.

11.  What is the “First-to-File” rule?

The First-to-File rule often results in an award only being paid to the whistleblower who files the first case about a particular fraud. Because of this rule, it is imperative that a whistleblower act quickly when he or she believes she has information that could support a whistleblower case. A whistleblower with a potential multi-million dollar case could receive nothing if somebody else files suit first. 

 

12.  What damages/recovery can be sought in a whistleblower case?

The damages sought by the Government can take the form of three times the actual damages suffered by the Government as a result of the fraud, and/or a statutory penalty for each fraudulent act. The current range for the statutory penalty is between $10,957 and $21,916 per fraudulent act. The whistleblower is entitled to an award of a percentage of the value received by the Government in the case, generally in the range of 15-30%. The whistleblower is also entitled to any damages resulting from the company’s retaliation against the whistleblower (such as a demotion or firing), as a result of his or her whistleblowing activity.

 

13.  Is there a statute of limitations on whistleblower cases?

Generally, the statute of limitations on a False Claims Act whistleblower case is 6 years after the violation, and 3 years after the facts supporting the case were known or should have been known. However, because of the First-to-File rule, a whistleblower cannot assume that he will be protected as long as he files within these limitations. If somebody believes he has knowledge of facts that may support a whistleblower case, he should contact an attorney immediately. If somebody else files first, a whistleblower’s case could become worthless.

 

14.  Do I need an attorney to be a whistleblower?

Whistleblowers need an attorney in order to maintain their right to a share of the Government’s recovery. There have been instances where a whistleblower reports fraud directly to a Government official, without retaining an attorney and filing a False Claims Act case, and recovers nothing despite enabling the Government to recover millions of dollars.

 

15.  What advice do you have for people considering being a whistleblower?

People considering being a whistleblower should consult with an attorney experienced in representing whistleblowers, and should do so without delay. Reputable and experienced whistleblower attorneys never charge a fee for an initial consultation and the consultation is completely confidential. If the attorney is retained, he will take the case on a contingency fee basis so the whistleblower need not worry about having to pay for the attorney’s time or for any expenses of the litigation. The attorney will answer all of the potential whistleblower’s questions, and after weighing the benefits and drawbacks, the potential whistleblower can always decide not to pursue the case.

16.  Are there any pitfalls or consequences to being a whistleblower?

The main pitfalls of being a whistleblower are that there is a time commitment and, at some point, the case will be unsealed and will become a matter of public record.

The time commitment varies widely. In many cases, almost all the work is done by the whistleblower’s attorney and the Government’s attorneys and investigators. In these cases, the whistleblower simply provides his attorney with the information he knows (and any supporting documents), reviews and approves the drafted complaint and disclosures, and has an in-person meeting with his attorney and the Government’s lawyers and investigators to discuss the case. In other cases, the whistleblower may take a more active role in assisting his attorney and the Government in the investigation and prosecution of the case.

As for the case becoming public record, this does not necessarily mean that the case will be reported on TV or in the newspaper. The vast majority of whistleblower cases are litigated with little media attention and are known mostly to lawyers who specialize in qui tam litigation and monitor case filings and opinions. Nevertheless, some people are dissuaded from becoming a whistleblower by the fear that they will be unable to get another job in their industry because potential new employers will know that they were a whistleblower in the past and will avoid hiring them as a result. This fear is based on two assumptions (that potential new employers will know about their prior status as a whistleblower, and will not want to hire them as a result). While these assumptions may be true in some instances, one should not assume that they are true in most cases. As stated above, not all potential employers research court records to see if potential hires have even been whistleblowers before. (If you know any HR employees in your industry, you may be able to ask if this is a routine part of pre-employment screening.) Additionally, an ethical and honest company (the kind you want to work for in the future) should not be dissuaded from hiring an ethical and honest person who did the right thing by refusing to tolerate fraud on the Government, which is essentially the same as committing fraud on the U.S. taxpayers.

 

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