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  • Writer's pictureJames A. Gustino

Before Committing to Blowing the Whistle, Know This

The False Claims Act ("FCA") is the government’s most powerful and effective weapon for combatting fraud in federal healthcare programs (e.g., Medicare, Medicaid). The FCA is designed with strong incentives for whistleblowers to come forward to report and prosecute fraud occurring in their organizations. This includes significant financial incentives for employees to report and prosecute suits to recover taxpayer funds lost to fraud, i.e., 15-30% of any recovery realized (either through judgment or settlement). And given the obvious and highly sensitive dynamic involved in exposing the fraudulent activity of one's employer, the FCA provides that whistleblower complaints are filed “under seal,” i.e., they are not accessible to employers, their legal counsel, or interested members of the public. Additionally, there are significant financial and injunctive remedies available under the FCA should an employer engage in any retaliatory conduct against a suspected whistleblower.


For those employees contemplating taking action under the FCA, know that the law is novel and complex, there are relatively few attorneys with significant experience in prosecuting FCA cases, whistleblowers must satisfy multiple substantive and procedural requirements to participate in any recovery, and must be prepared to fully cooperate with the government’s investigatory and enforcement efforts.


Moreover, should at the conclusion of the government's investigation the U.S. Attorney decline to intervene (which often occurs due to resource constraints and should not be construed as a negative legal assessment concerning the merits of the claim), whistleblowers and their legal counsel must be fully prepared to prosecute the litigation. The good news is that, under those circumstances, a settlement or judgment entered in favor of the whistleblower as the government's "agent" produces a far higher recovery for those undertaking those efforts than is typically awarded when the government prosecutes the action (i.e., 25-30% vs. 15-18% of the total amount recovered).


Since 1986, when significant amendments were made to strengthen its provisions, total recoveries under the FCA have exceeded $75 billion. This total includes all types of fraud involving government contracts, healthcare, procurement, and other sectors where the government reimburses services or provides funds​ (Justice.gov)​. The year-to-year recoveries vary significantly, with some recent examples including over $2 billion in fiscal year 2022​ (Justice.gov)​ and more than $2.68 billion in fiscal year 2023​ (Justice.gov)​.


For those employees with knowledge that fraudulent claims have been submitted by their employers to federal governmental programs, reporting that fraud is an important civic responsibility. Fraud and abuse under federal contracts, grants, and programs cost taxpayers hundreds of billions of dollars per year—and the government simply doesn’t have the resources necessary to investigate and uncover all fraudulent claims on its own initiative. Accordingly, the role that whistleblowers play Is absolutely critical in combating taxpayer fraud (in addition to being the morally right thing to do).


As an introduction to the FCA, which follows is a brief list of matters to keep in mind if you are contemplating becoming a whistleblower:


1. Preliminarily, You Need to Determine Whether You are Authorized to Bring an FCA Claim and Participate in any Recovery


While the lion's share of potential whistleblowers encounter no disqualifications, exceptions may apply if the employee was personally engaged in the fraudulent conduct being challenged (unless that personal involvement was discontinued at some meaningful juncture). Furthermore, you must possess “original information” concerning the fraudulent activities of your employer that you are prepared to share with the government. If the government already is aware of the fraudulent activities in question -- either because another employee reported those same activities in advance of you or if the government otherwise is actively investigating the matter when you make your disclosures, you may not be eligible to file suit and participate in any recovery.


2. Before Contacting the Government to Report Fraudulent Activity Engaged in by your Employer, it is Strongly Advised that You Engage an Experienced FCA Attorney to Guide You Through the Process (and Answer All of Your Questions to Your Satisfaction)


Typically, attorneys who represent whistleblowers do so on a pure contingency fee basis, and the client is not expected to contribute financially to the prosecution of the claim. Experienced FCA attorneys provide highly valuable services in: (1) assessing an employee's eligibility to pursue an FCA case; (2) preparing detailed complaints and comprehensive written disclosures of the evidence of the fraudulent activity, the known witnesses having knowledge of some aspect of the fraudulent activity, the statutory bases for imposing employer liability for that conduct, and the financial and other remedies available to the employee; (3) communicating comfortably and credibly with the U.S. Attorney assigned to the case (and it is imperative that your FCA attorney have excellent relations with the U.S. Attorney's office responsible for the investigative efforts); (4) responding to any and all questions that you may have concerning the substantive law and the pertinent procedures that arise throughout the case; and (5) making referrals to experienced tax attorneys for additional guidance should a significant recovery be realized.


3. Your Attorney Can (and Should) Reach out to the US Attorney in Advance of the Filing of Your FCA Lawsuit


This enables your attorney to confirm in advance whether another employee may have "beaten you to the punch" in providing the “original information” necessary to qualify as an FCA whistleblower. By having experienced FCA counsel represent you at this early stage, this will also formally document your status as a whistleblower entitled to the protections of the FCA should such a need thereafter arise. This will also ensure that your identity remains undisclosed while your attorney communicates with the U.S. Attorney and, assuming your information concerning your employer's fraudulent activity is found to be "original," you and your attorney can move a swiftly as possible to file and serve your FCA complaint.


4. Your Attorney Can Assist You in Differentiating Between Evidence Collection Efforts That are Lawful vs. Those That are Prohibited


This is absolutely critical to the successful prosecution of an FCA case since the unlawful removal and/or copying of employer records could expose you to liability in certain circumstances, as well as hurt your credibility as a witness in the case. An experienced FCA attorney will be able to provide you with sound counsel in this regard.


5. You Should Be Prepared to Play an Active Role in All Stages of the Process


From the government’s investigation to its decisions regarding intervention and compensation, you and your attorney should be ready, willing and able to take an active role in all phases of the process. Indeed, while the U.S. Attorney's office considers multiple variables in determining the appropriate percentage of the recovery to award the whistleblower, often the greatest weight is given to the degree of assistance that the whistleblower provided and its impact upon the successful outcome of the case.


I hope this overview is helpful to many exploring these issues for the first time, and welcome any further inquiries that you may have.

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