Case EvaluationSpeak to a Whistleblower
What is the Whistleblower Law?
The Whistleblower Law is also referred to by its proper name, the False Claims Act. It consists of sections 3729 through 3733 of 31 U.S.C. of the Federal Code. It was originally enacted in 1863 on the urging of President Abraham Lincoln to combat unscrupulous defense contractors selling poor quality supplies to the military during the Civil War. The qui tam provision of the False Claims Act permits persons and entities with information about fraud being committed against federal programs or contracts to sue the wrongdoer on behalf of the government. If they prevail, they are rewarded with a percentage of the damages. Several states have passed similar laws concerning fraud in state government contracts.
What Types of Violations are prohibited under the False Claims Act?
- Purposely making a false or fraudulent claim for any type of payment to the federal government;
- Using a false or fraudulent record or statement to request payment of a claim by the federal government;
- Conspiring with others to secure payment of a false or fraudulent claim by the federal government;
- Using a false record or statement to conceal, avoid, or decrease an obligation to pay money or transmit property to the federal government.
Who Can File a Qui Tam Action?
- It is not enough that a whistleblower have a suspicion of fraud; they must actually have knowledge that fraud was committed. For example, they should be able to provide specific details such as where, when and who was responsible.
- The whistleblower must have evidence of the fraud that did not come from a public source like a newspaper, TV, magazine, radio, court record, public record or Freedom of Information Act request.
- The fraud or False Claim must involve the improper taking of Federal money, or in the case of a state False Claim, state money.
- The False Claim may involve a County or City defrauding the Federal government, but not a State defrauding the Federal government.
- The company or individual that made the false claims on the government must have done so knowingly, not unintentionally.
- False Claim cases normally must be filed within six years of the violation.
- The fraud needs to be of a significant amount and the company or individual that defrauded the government must have the means to pay back the stolen money and the associated fines.
Where Do I file a Whistleblower lawsuit?
A False Claims lawsuit must be filed confidentially under seal in a federal district court. However, if someone has already filed suit based on the same information, you can no longer bring a lawsuit. Also, under most circumstances, a whistleblower has six years from the date of the violation to file the suit.
The person filing the lawsuit, known as the relator, or their attorney, must then serve the U.S. Attorney General and U.S. Attorney in the district in which the complaint is brought with a copy of the complaint as well as a written statement disclosing all evidence and information the relator has in their possession.
After the lawsuit is filed with the court under seal, it cannot be viewed by the public and neither the relator nor their attorney can discuss the case with anyone other than the government officials investigating the case. The defendant – the company or person accused of committing fraud – is not even informed of the lawsuit.
While the case is under seal, which initially last for 60 days but is often extended for years or more, the government investigates the fraud charges without alerting the defendant.
Once the investigation is over and the seal is lifted, the government will decide if it wants to join in the lawsuit or let the whistleblower proceed with the case on their own. If the government intervenes, the case is handled jointly by them and the relator’s attorney.
What are the Penalties for a guilty company under the False Claims Act?
The False Claims Act requires that an individual or company who is found to have defrauded the government pay a penalty equal to three times the amount the government lost in paying the false claim. In addition, the person or enterprise faces a $5,000 to $10,000 penalty for each false claim.
The government sometimes decides to settle a case by agreeing to forgive the civil penalties and accepting two to three times the amount of damages. Even in these situations the defendant must pay the hourly fees and costs of the whistleblower’s attorney.
In order to recover money under the Act, you must file a qui tam lawsuit. It is not enough for you to merely inform the government about the violation. You can only receive an award if the government recovers money from the defendant as a result of your suit.
How long do I have to file a Whistleblower Lawsuit?
Under the False Claims Act, a qui tam whistleblower lawsuit will not be allowed unless it is filed earlier than:
Six years from the date the fraud or violation of the Act is committed; or
Three years after the date the government knows or should have known about the violation, but in no event longer than ten years after the violation of the Act.
- (One Federal Court District has interpreted the latter provision as requiring that the action be filed no later than three years after the qui tam plaintiff discovers the violation rather than when the government knows, or should have known about the violation.)
Do I have protection from discrimination if I file a Whistleblower lawsuit?
Yes. The False Claims Act has a provision that protects any whistleblower from being discharged, demoted, harassed, or otherwise discriminated against because of lawful acts taken by an employee to pursue a qui tam lawsuit.
Under Section 3730(h) of the Act, any employee discriminated against may be entitled to reinstatement, double back pay and compensation for any special damages such as attorneys fees and litigation costs.
Please be advised, however, that some of the courts currently disagree about the scope of whistleblower protection under Section 3730(h). Also, several states have wrongful discharge or other employment laws that may provide other remedies for such discrimination.
The time limit for filing a False Claims Act retaliation case is different than it is for filing an actual whistleblower case. A discrimination or retaliation case must be filed under the time limits similar to the closest state statute.
Can I file a Whistleblower case for fraud against a State government?
In many cases, Yes. Because of the overwhelming success of the Federal False Claims Act, at least 27 states have passed their own False Claims Acts that allow private individuals to file lawsuits against companies committing fraud and recover a portion of the damages or a “finders’ fee” type reward.
These laws often allow for rewards for reporting fraud on state, local, and municipal governments. Check out or section on State False Claims Acts or contact us today for a confidential evaluation of your case.
Can I recover a whistleblower reward for reporting Tax Fraud?
Yes. The new part of the Tax Relief and Health Act of 2006 known as the tax fraud whistleblower law is modeled after the False Claims act in that it provides for the same reward as other whistleblower cases if the Tax Fraud meets certain criteria.
The main provisions of the law include:
- Whistleblowers may be rewarded 15 percent to 30 percent of the amount the IRS collects as a result of information about tax fraud provided to the IRS.
- To qualify, the whistleblowers must provide information about tax fraud or tax underpayments that exceeds $2 million (counting tax, penalties and interest).
- The annual income of an individual committing tax fraud must exceed $200,000.
- If a reward from the IRS does not adequately recognize a whistleblower’s contribution, the whistleblower may appeal the reward amount to the U.S. Tax Court.
- If the whistleblower initiated or planned the tax fraud, the IRS may reduce or deny a reward. A reward also may be reduced if the whistleblower’s allegations have been previously disclosed.
- As in the old law, the IRS will keep the whistleblower’s identity confidential.
If you have any information about possible tax fraud or underpayment by a company or individual, contact us today for a confidential evaluation.
How much can I receive as an award for filing a Whistleblower lawsuit?
Rewards for relators (whistleblowers) who file successful lawsuits under the False Claims Act range from 15 to 30 percent of the total recovery from the guilty party, whether it comes from a court verdict or settlement.
If the Government intervenes in the lawsuit and helps with the prosecution, the relator is normally eligible to receive from 15 percent to 25 percent of the recovery, depending on how much they contribute to the prosecution of the lawsuit.
If the Government chooses not to intervene in the lawsuit and the relator and their attorney proceed on their own, they can receive between 25 to 30 percent of the recovery.
Since the law was changed in 1986, over $2.2 billion has been paid to whistleblowers in rewards for bringing False Claim lawsuits.
Can two or more people join together to file a whistleblower lawsuit?
Yes. More than one person or entity can join together to file a Qui Tam False Claim lawsuit.
If I have already told the government about the fraud, do I lose my right to file a Whistleblower Qui Tam lawsuit?
No. Informing the government of suspected fraud does not prevent you from later filing a Qui Tam lawsuit. Whistleblowercenter.com encourages people to report anything they foresee as fraud against the government, even if it does not result in a lawsuit or reward for the individual. Sometimes, doing so may save taxpayers money in the long run or prevent wasteful government practices in the future.