Federal and state whistleblower laws allow individuals or entities who know of fraud involving or affecting the government to bring their allegations to the attention of government prosecutors and share in any ultimate recovery by the government. These laws also protect whistleblowers from retaliation by their employers or others.
The best known and most widely used whistleblower provision is found in the qui tam parts of the federal False Claims Act (the "FCA"). Originally enacted in 1863 in response to widespread abuses by government contractors during the Civil War, it was known as the "Informer's Law" or "Lincoln's Law" after President Abraham Lincoln. It allows any person who observes fraud in government programs to sue on behalf of the United States and share in any financial recovery. In effect, the whistleblower acts as a private attorney general who represents the interests of the United States, and is known as a "relator". The law was used very little until 1986, when amendments strengthened the law and increased monetary rewards for whistleblowers. Further amendments in 2009 and 2010 in response to fraud in the financial and housing markets and the reform of health care further bolstered the impact of the FCA. The whistleblower is generally entitled to a reward of between 15%-25% of the government's recovery.
Many states (and some cities) also have FCAs with whistleblower (qui tam) provisions to protect against fraud in programs they fund. (For example, about half of all Medicaid money comes from the states). These laws track the federal law fairly closely. Over twenty-five states and two major cities currently have FCA laws, including California, New York and New York City, Texas, Florida, Illinois and the City of Chicago, Michigan, Virginia, and Massachusetts. More governments are expected to pass similar laws.
In addition to the FCAs, Congress has enacted or strengthened whistleblower laws to help recover monies from people or companies who are committing bank or financial institution fraud, tax fraud, or who are violating laws regulating the securities, commodities, and options markets. As with the FCA, whistleblowers are entitled to share in any recovery by the government, although the percentage ranges vary some depending on the program. The Department of Justice (DOJ) is in charge of enforcing the bank and financial institution fraud whistleblower laws (as it is the FCA).The Internal Revenue Service ("IRS"), the Securities and Exchange Commission ("SEC"), and the Commodity Futures Trading Commission ("CFTC") all now have established whistleblower offices and programs offering rewards in return for successful tips.
As of 2011, the United States has recovered over $30 billion in FCA cases, with the vast majority resulting from whistleblower cases. Relators have been paid over $3.4 billion in shares or rewards under the FCA. The IRS Whistleblower Program has paid out over $30 million in rewards. The SEC and CFTC Whistleblower Programs are in the early stages, but the SEC has recently begun recovering money and sharing rewards with whistleblowers. Some states such as Texas and California have had significant FCA qui tam recoveries as well.
While the defense contracting industry was the principal focus of whistleblower litigation under the False Claims Act in the early days, the breadth of whistleblower litigation whether under a False Claims Act or another law, has markedly expanded, and any industry that directly or indirectly receives government funding and/or participates in government programs may fall within the scope of these laws. The industries or sectors that have been among the targets of whistleblower and FCA lawsuits include:
- health care providers
- defense and homeland security contractors
- banking, housing, and financial institutions
- colleges and universities receiving student aid, research grants and/or other federal funds
- participants in federal insurance and lending programs
- recipients of subsidies, grants, loans, and other forms of aid
- and an array of others
Contact the Whistleblower Law Collaborative
The lawyers at Thomas & Associates and Durrell Law Office have joined forces to create the Whistleblower Law Collaborative. The firm serves clients nationwide. Call toll free at 877-341-5952 to arrange a free initial phone consultation with an experienced nationwide whistleblower, qui tam attorney located in Boston, Massachusetts.
