Don McKenna: Whistleblower Q and A

When an employee learns that the company they work for is doing something false or illegal, it can put them in a compromising position. Often, employees attempt to correct the wrongdoing internally only to be rebuffed or retaliated against. When internal attempts at correction fail, employees may become whistleblowers under the False Claims Act which rewards persons for reporting false or fraudulent conduct that financially impacts the federal government or other governmental entities.

Activities that are considered false or fraudulent and constitute a potential whistleblower case involve any or all of the following:

  • Bid rigging;
  • Falsification of quality assurance tests;
  • Failure to perform required inspections and tests;
  • Engineering change proposals in sole-source contracts;
  • Failure to report known product defects;
  • Use of unqualified or uncertified personnel on contracts calling for mil-std certified personnel;
  • Double Billing – charging more than once for the same goods or services;
  • Supplying sub-standard equipment and arms to our fighting forces; and,
  • Submitting false service records or samples in order to show better-than-actual performance.

In the Medicare, Medicaid, and Tricare Context:

  • Charging for services not performed;
  • Charging for services that are not medically necessary;
  • Charging for services for which patients do not meet the medical criteria to receive those services, i.e. placing patients on hospice care that are not suffering from a terminal illness from
  • which they will die in the next 180 days;
  • Changing patient diagnosis;
  • Upcoding patient visits;
  • Off-label marketing of pharmaceuticals;
  • Billing for premium equipment but providing inferior equipment;
  • Unbundling of billing codes;
  • Bundling: Billing for a battery of tests when only a single test was ordered;
  • Billing for brand name drugs when only generics were provided;
  • Forging of physician signatures on required medical documentation;
  • False Certifications of Compliance with applicable federal and state laws; and,
  • Paying kickbacks to physicians and other medical providers to refer patients for services in violation of the Stark and Anti-Kickback laws.

When somebody chooses to report this information, they are referred to as a whistleblower. Here, we’ll address a few of the more common questions people have regarding whistleblower claims, protection, and retaliation.

Who Can Become a Whistleblower and File a Qui Tam Lawsuit?

The way an employee reports fraudulent behavior by their company, or an individual, is by filing something called a qui tam action. The term “qui tam” translates into the phrase, “on behalf of the King.” In the United States, a qui tam lawsuit is one that is filed by an individual or an organization on behalf of the federal government and some state and local governments who have enacted their own qui tam statutes. The fraudulent behavior at issue must impact government money. Qui tam statutes do not cover fraud on private or public entities if government funds are not involved.

Anyone who has first-hand information or evidence showing that a company, organization or individual has committed fraud against the government may file a qui tam action. This typically includes employees, past employees, competitors, public interest groups, and local government agencies. Most qui tam actions are filed under the False Claims Act 31 U.S.C. § 3729.

What is a “Relator” and What is Their Role in a Qui Tam Lawsuit?

“Relator” is just another word for a whistleblower. It is technically the person who relates the information or evidence to the government agency. For example, if you suspect that your employer is overcharging the government for the sale of certain goods, you can report that activity to the government. This would make you a relator.

The relator is responsible for submitting the material evidence and information to the government before they file a lawsuit. Once they provide this information, the agency will review and investigate the activity. If they find that fraud has taken place, they will look to recover treble damages and monetary sanctions against the offender. In many circumstances, the relator is entitled to a certain portion of the monies collected. For example, if a whistleblower submits confidential information under the False Claims Act (FCA), they may be entitled to anywhere from 15 to 30 percent of the monies recovered. In Alabama, there is no State False Claims Act. However, you may be eligible for compensation for any qui tam lawsuits filed with the federal government or in other states that do have False Claims Acts.

How Can Whistleblowers Safely Report Fraud and File a Qui Tam Case?

If an employee suspects that fraudulent activity is going on at their company, they must first disclose all their material evidence to the government. They should do this with experienced legal counsel. After the disclosure of evidence, the whistleblower can file a qui tam case under seal in federal court or with the SEC, IRS, and CFTC that accept cases involving their agencies. The whistleblower, or relator, must file a sealed complaint along with a certification to the court. This file will remain under seal for at least sixty (60) days to give the Department of Justice and related government agencies time to investigate the matter before it becomes public knowledge. The seal period can be extended upon motion by the government for good cause. An original and copy of the sealed complaint is to be served on the government confidentially. If the whistleblower breaks this confidentiality, the claim may be dismissed.

What are the Reward and Protections for Whistleblowers?

There are several rewards for a whistleblower and the percentage may depend on the agency involved. Under the general False Claims Act, which covers the vast majority of cases, the award is generally between 15 and 30 percent. However, if a claim is filed under the Dodd-Frank Act for securities and commodities fraud, the whistleblower is eligible to receive between 10 – 30 percent of any monetary sanctions collected. For tax fraud claims, the reward is anywhere from 15 to 30 percent of monies collected. The filing procedures differ for SEC, CFTC, and IRS claims differ from the general False Claims Act. Be sure to consult experienced whistleblower counsel before filing a case.

The good news for potential whistleblowers is that their identity will remain confidential for as long as possible. The claim is initially filed confidentially and under court seal. If the whistleblower’s identity is revealed or detected by the defendant, the employee is protected against any sort of retaliation. Some of the remedies available to a whistleblower who experiences retaliation by an employer include:

  • Two Times Back pay for any time lost due to suspension and/or termination
  • Interest on Back Pay
  • Cost of benefits lost
  • Reinstatement to the position held prior to the qui tam lawsuit
  • Front pay for the time it will take to secure new employment’
  • Attorney’s fees and costs
  • Special damages (limited cases)
  • Mental anguish
  • Out of pocket expenses

If you feel you have been retaliated against after reporting suspected fraud or illegal activity by an employer against a governmental entity, contact Hare, Wynn, Newell, & Newton immediately.

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