In 2013, Edward Snowden leaked confidential information about the illegal surveillance of NSA. In 1996, Erin Brockovich earned notoriety through her efforts to spotlight the corporate corruption of an energy company. Watergate, the scandal that crippled the Nixon administration, was led by Mark Felt. Whistleblower cases often have large impacts but start with a single individual. So...
Who exactly is a whistleblower?
A whistleblower (formally known as a relator) is an individual who reveals illegal or unethical information or activity within a private or public organization. In cases involving financial loss to the government, whistleblowers are protected and incentivized by the False Claims Act. Anyone possessing evidence of securities laws violations (via Dodd-Frank Act) or information about harm being done to the general public or to a company’s employees may also be considered a whistleblower. In order to proceed with a case, there must be concrete and specific evidence (not merely suspicion of misconduct, wrongdoing or fraud) and this evidence can not come from public sources the government already has access to (ie an internal memo would be outside of public information).
False Claims Act
Congress enacted the False Claims Act (FCA, a.k.a the Lincoln Law) to provide civil, not criminal, penalties and provide a financial incentive for people to alert the government of people or companies that defraud governmental programs. It also provides limited protection for workers who provide information about defective products and services delivered to the US government. It is the foundation for whistleblowing claims in the US. Common areas of fraud include: misrepresentation in billing (services not actually provided, sub-standard; products not provided, malfunctioning or mislabeled), accepting (and not reporting) overpayment for goods or services, lying about certifications held or legal processes followed, general accounting fraud, and securities or commodities misconduct (such as bribery or insider trading).
A qui tam is shortened from a Latin phrase meaning “he who sues in this matter for the king as well as for himself.” This type of suit results in financial recovery for the federal government. The FCA incentive for relators is 15-30 percent of the total proceeds, sometimes resulting in millions of dollars for the relator. If the relator proves illegal information with governmental assistance, the court decides on a reasonable financial gain that is between 25 and 30 percent. They are also entitled to receive “reasonable attorneys’ fees and costs.”
Following the financial meltdown of 2008, the government established the Dodd-Frank Act to create “common sense” protections for mortgagees and to implement a consumer watchdog for Wall Street. Anyone who provides concrete evidence of violations is covered under the whistleblower protections of this act. Unlike the FCA, the Dodd-Frank Act covers fraud and misconduct that occurs that isn’t related to financial loss for the government.
Steps in a whistleblower complaint
- Gather evidence- Evidence can include emails, billing records, internal, etc. While collecting evidence, the information must remain confidential. If a third-party is informed and films the claim first, you are no longer protected. Additionally, if another person files a claim with overlapping evidence, you may not be eligible for financial benefits.
- Filing complaint- Under the False Claims Act (FCA), the whistleblower must file a complain in court and submit it to the government in addition to a Disclosure Statement that explains the alleged misconduct. The whistleblower’s attorney will set up a meeting with the appropriate government agency to present evidence.
- Government investigation- If the government decides to investigate, the government usually has a 60-day period in which they look at the evidence and conduct interviews
- Trial- You will be asked to testify in court. If the government takes the whistleblower case to trial, the whistleblower usually recovers financial proceeds.
- No government trial- If the government decides not to take the claim to court, the whistleblower has the option to continue the case on behalf of the government. However, most of these cases fail.
Whistleblower Protection Act of 1989 protects federal employees from retaliation after filing a whistleblowing complaint. Retaliation involves such activities like firing, demotion or other types of discrimination. Employees can file complaints of what reasonably evidences the following:
- A violation of the law, rule or regulation
- Gross mismanagement
- Gross waste of funds
- Abuse of authority
- Substantial danger to public health or safety
The False Claims Act has many different protections for whistleblowers. President Obama issued a directive in 2012 titled "Protecting Whistleblowers with Access to Classified Information" to protect employees in the Intelligence Community or those who have access to classified information and can report waste, fraud or abuse.
Proceeds are the total amount recovered by the government in a relator’s qui tam suit. If a case goes to court, the jury decides the total amount of damage suffered by the government.
Usually whistleblower cases result in a settlement with the defendant. The settlement takes into account the amount of damages and civil penalties and is agreed upon by both sides. The judge then approves the settlement. The relator is still entitled to receive attorneys’ fees and costs.
Under the False Claims Act, Dodd-Frank Act and the IRS Whistleblower law, the whistleblower is entitled to 15-30% of the government’s recovery. In order to qualify for the reward, the whistleblower must provide evidence that ends in a successful prosecution, and they must have obtained the evidence from a publically available source.
- Statute of Limitations. Depending upon the type of whistleblower claim you are filing under, there are various time limits that may apply to your case. For Dodd-Frank cases, the SEC or the CFTC must be contacted within three years of the offense. Other industry-specific cases or state False Claims Act complaints have time limits that start as soon as 30 days. That’s why it is essential to contact an attorney as soon as you have evidence.
- Who can file. Most of the time, “first to file” applies to these cases. While there are times where multiple whistleblowers may have a joint case, it is always best to contact an attorney as soon as possible. Someone with experience in these cases will be able to instruct you on how to proceed.
You think you have a whistleblower case. So where do you begin?
These cases are often complex, will be against a large entity, and will be time-consuming. For all of these reasons, it is vital to find an experienced attorney who will be able to help you throughout the duration of the whistleblower case.