Whistleblower Lawsuits

Whistleblower Lawsuits Help Government Recover Payments Procured Through Fraud

A whistleblower can be any person who “blows the whistle” on his or her employer or other business or organization for wrongdoing. When a whistleblower reports wrongdoing that is defrauding the federal government out of money, it falls under the False Claims Act, and that individual may bring a “qui tam” lawsuit against the wrongdoer on behalf of the government.

Whistleblower (“qui tam”) lawsuits are brought by individuals and seek to recover money for the government. Typically, the whistleblower will receive 15-25 percent of the total recovery. Additionally, whistleblowers are specifically protected from employer retaliation.

In recent years, the government has ramped up efforts to recover monies paid based on fraudulent claims. Whistleblower cases have become a crucial weapon for state and federal governments in combating fraud and containing healthcare costs. In 2012 alone, almost $5 billion was recovered by the United States Department of Justice through qui tam lawsuits.

The False Claims Act targets those who knowingly make or cause to be made false or fraudulent claims and those who knowingly make or use false records or statements in support of a false or fraudulent claim. The Act also provides for punishment of those who knowingly make false claims to evade obligations owed to the government, including taxes. The Act provides for penalties ranging from $5,500 to $11,000 per false claim.

The False Claims Act empowers ordinary citizens to become plaintiffs in lawsuits against those who defraud the government. Whistleblower suits are used as the vehicle for the government to recover money that was paid by a government agency or entity based on a fraudulent claim. The individuals who report the fraud and bring the qui tam lawsuit are called “relators.” A relator files a sealed complaint against the wrongdoing entity on behalf of themselves and the government and submits information to the Department of Justice.

A similar provision exists under the North Carolina qui tam statute and provides for the information to be shared with the North Carolina attorney general. The Department of Justice or the attorney general decide whether to take over the claim by intervening, settle the claim, or move to dismiss it. Relators stand to get a substantial portion of the proceeds from either a successful lawsuit or a settlement. Whistleblower provisions cover fraud and other illegal activity in a number of different areas, including financial transactions, medical and pharmaceutical sales, healthcare, and taxes. In most cases, whistleblowers are ordinary individuals who by virtue of their employment come across some evidence that their employer or some other business with which they deal is committing fraud against the government.

Qui tam litigation is a specialized area of the law, and potential whistleblowers should be careful to select a qualified attorney. Not many lawyers have experience in qui tam litigation. At a minimum, a person should seek an attorney with experience in federal civil litigation. Martin & Jones is currently handling qui tam litigation.