Federal and State Law Protects Employee Whistleblowers Who Expose Fraud Against the Government.
Not only is your employer prohibited by law from firing you for reporting illegal activity – but you may also be entitled to a monetary reward from the government for exposing fraud.
Federal and state laws prohibit companies from defrauding the government, including healthcare fraud (e.g, Medicare, Medicaid, TRI-CARE, and more), defense contractor fraud, insurance fraud, securities regulation and financial fraud (e.g, fraud on shareholders), tax fraud, fraud on farm and education programs, and more.
Because nobody wants companies to be able to steal from taxpayer coffers, individuals who report fraud on the government are protected as whistleblowers under state and federal laws, such as the False Claims Act, Dodd-Frank Wall Street Reform and Consumer Protection Act, Sarbanes-Oxley, and more. These whistleblowers (sometimes called “relators”) are entitled to monetary rewards for exposing the fraud.
Violations of these laws and their state equivalents can result in serious monetary penalties. For example, in the case of the False Claims Act, judgments can be up to three times the amount of losses sustained by the government, plus civil fines. Additionally, people and companies can be subject to criminal prosecution for their perpetuation of the fraud.
The False Claims Act allows any individual to act as a whistleblower and sue a company or other person who is defrauding the government on behalf of the federal and/or state governments. In such cases, the whistleblower is referred to as a “relator,” and these cases are known as qui tam lawsuits. Qui tam is a latin for roughly, “in the shoes of the king.”
Any person who has evidence of a fraud occurring against state or federal government may act as a protected whistleblower pursuant the False Claims Act. Very often, individuals with the most knowledge are current employees of companies that are systematically committing the fraud.
For example, a billing or accounting specialist might be aware that a company is billing a government program or entity for services or products not actually provided. Another example might be where an employee is instructed by company management to routinely “up-charge” the government by billing for more than the service or product purchased.
Dodd-Frank, Sarbanes-Oxley, and more protect and allow for individuals who have information about violations of federal securities laws to be protected as whistleblowers. Such individuals may even be also entitled to monetary rewards for exposing securities violations.
For example, a salesperson at a publicly-traded company might discover that company management is lying to investors in an effort to drive up the company’s stock value. If this salesperson follows the proper steps to gain whistleblower status, they may receive a significant monetary reward for doing so.
The False Claims Act requires that individuals who wish to file a qui tam lawsuit to hire an attorney. The attorney will the work with the whistleblower to prepare the lawsuit and the information to be disclosed to the government. Qui tam lawsuits are initially filed “under seal,” meaning that nobody but the federal court, the U.S. government, and the whistleblower and their attorney know of the lawsuit.
During the “seal period,” the government investigates the allegations made in the lawsuit and works with the whistleblower and their attorney to gather more information. At some point, the government makes a decision as to whether or not to “intervene” in the lawsuit and prosecute the wrongdoers itself. If the government does not choose to do so, the seal is lifted and the whistleblower and their attorney may decide whether or not to prosecute the action alone.
For other types of fraud against the government actions, including for violations of federal securities laws, there are various different ways to gain whistleblower status (e.g., a tip to the SEC’s Office of the Whistleblower).
Individuals who are concerned that their employer or some other organization is committing fraud against the government should consider contacting an attorney who specializes in whistleblower law, so as to ensure that they are acting in accordance with all applicable state and federal laws and to ensure that their whistleblower status is protected.