Whistleblower Lawsuits

What is the False Claims Act?

The False Claims Act rewards whistleblowers whose lawsuits recover government funds, and furthermore, provides job protection to whistleblowers because of the professional and personal risks involved in exposing fraud against the government. Whistleblower lawsuits are also known as Qui Tam lawsuits, and can be filed against companies for defrauding the government.

Under the False Claims Act a private citizen may sue an individual or a business for defrauding the government, and recover funds on the government’s behalf. This kind of lawsuit is filed confidentially to protect the whistleblower, and to give the Justice Department time to investigate the allegations.

Government investigations into Qui Tam cases can take years. After a whistleblower and their attorney file a claim with the Justice Department, the government investigates the allegations, and will decide whether it will intervene in the case to recover government money.

In a whistleblower settlement, you could receive as much as 30 percent of the funds recovered through your claim. Claimants usually have a better chance of success if the government joins the lawsuit.

Whistleblowers have the option to pursue these cases without government assistance, though the chances of success in the suit are much higher when the government joins the case. Most successful whistleblower cases are resolved through settlement negotiations. Common defendants in government fraud cases include:

• Hospitals
• Medical device companies
• Nursing homes
• Individual physicians
• Defense Contractors
• Medical Laboratories
• Investment Banks
• Money Managers
• Pharmaceutical companies
• Healthcare affiliates

How Are Whistleblowers Lawsuits Settled?

The amount of the whistleblower reward depends on several factors, including the quality of the case as presented to the Justice Department. If the government chooses to intervene in the case and recovers funds through a settlement or a trial, the whistleblower plaintiff is entitled to 15 to 25 percent of the recovery amount. If the Justice Department elects not to participate and the plaintiff proceeds alone, the maximum award increases to 30 percent.

Because qui tam cases typically involve large government contracts in healthcare, finance or defense, the recovery amounts can be huge, and in turn the awards are quite large. In 2012, in just one case, the government was able to recover $3 billion dollars. The Justice Department recovered over $4.7 Billion from False Claims Act cases in 2016 alone.

This is the third highest annual recovery in False Claims Act history, with an annual average of $4 billion since 2009. Around $2.5 billion came from the health care industry. This is the seventh consecutive year that health care fraud recoveries have exceeded $2 billion.

The next largest recoveries came from the financial industry in the wake of the housing and mortgage fraud crisis. Many companies have taken advantage of government programs and contracts relating to health care, defense and national security, food safety and inspection, federally insured mortgages, highway funds, and agricultural subsidies.

The total recovery from whistleblowers during that period amounts to over $31 billion. As a result, whistleblower plaintiffs have been well-compensated. In 2016, plaintiffs in these types of cases were awarded over $500 million for information and evidence leading to the recovery of government and taxpayer money.

The rate of trying successful fraud cases has accelerated in recent years. Around 60 percent of whistleblower settlements in the last 30 years have come from cases in the last 8 years.

If the government prevails in recovering funds in a case, the whistleblower can receive up to 30 percent of the recovery amount.  Whistleblowers filed hundreds of lawsuits in 2016, and the government awarded plaintiffs $519 million in a variety of cases.

Whistleblower Settlements

• In September, 2012, the IRS awarded a plaintiff over $100 million for information regarding tax fraud at UBS, his former employer.
• In July, 2012, a whistleblower at the drug maker GlaxoSmithKline collected $94 million after exposing manufacturing faults.
• A plaintiff was awarded $84 million in 2012 for reporting that Abbott Laboratories was engaged in off-label promotions of its anti-seizure drug Depakote.
• Bank of America paid mortgage fraud fines to the government in 2012, and the individual who initiated the investigation was awarded$14.5 million.
• In September, 2009, ten Pfizer employees were awarded $102 million for having exposed the illegal promotion of the arthritis drug Bextra.
• In December, 2000, two plaintiffs shared a $100 million reward after they exposed HCA for regularly overbilling Medicare.
• In January, 2004, plaintiffs shared an award of over $8 million after revealing physicians at a California hospital were performing unnecessary cardiac procedures.

Government Fraud Lawsuits

Government Fraud lawsuits often involve healthcare (Medicare and Medicaid), financial security, technology and defense contractors working for different military bodies. Fraud claims also involve contractors winning large infrastructure projects, and institutions that receive large amounts of federal research funding under false pretenses.

Coming forward with information as a whistleblower and filing a lawsuit takes courage. But since the action of coming out against an employer has serious risks, and employees may be putting their career on the line to expose fraud, plaintiffs are covered under the False Claims Act and may be awarded in successful cases.

A whistleblower plaintiff can expect to receive between 15 and 30 percent of the overall recovery of a successful fraud lawsuit. In some cases this can amount to millions of dollars. Ohio whistleblower lawsuits filed against government contractors may involve the following kinds of fraud:

• Illegal kickbacks
• Government regulatory violations
• Falsifying data for funding
• Instances of gross overbilling
• Products not manufactured in accordance with specifications
• Making false statements to win a contract
• Providing products that fail to comply with environmental standards
• Overstating the labor cost for a project
• Destroying records or receipts

Whistleblower Tips & Rewards

The SEC established the Office of the Whistleblower in 2011 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The two largest awards have involved three individuals totaling $83 million, and to two individuals totaling almost $54 million.

The Office of the Whistleblower received 5,282 whistleblower tips in 2018, about 18 percent more than in 2017. Whistleblowers who provide information that helps the SEC collect a minimum or $1 million in fines can potentially receive between 10 and 30 percent of the fine.

The reward percentage for each plaintiffs depends on several factors, and it is prudent to hire a whistleblower protection attorney to maximize the payout from the agency, as well as protect oneself from company retaliation. Payouts generally depend on the significance of the information received as well as the level of cooperation by the individual whistleblower.

Contractor Fraud Lawsuits

• In September, 2017, Pacific Architects & Engineers, Inc. (PAE), settled a whistleblower case for $5 million after allegedly not following proper vetting procedures for its personnel that performed and billed work to the U.S. State Department. An investigation found the company was aware of the requirements and did not comply. The whistleblower, a former PAE manager, received $875,000 for the help in recovering these funds.
• In August, 2017, Huntington Ingalls Industries (HII), a shipbuilder contracted to perform work for the U.S. Navy and Coast Guard, settled with the government to pay $9.2 million in charges after years of allegations of misconduct and charges that it violated the False Claims Act for instances of gross overbilling. The case was helped in large part by a whistleblower, a former HII employee.
• In March, 2017, CA Technologies, a technology-management software company, settled a whistleblower case for $45 million after allegedly making false statements in order to win a government contract, and failed to fully disclose its discounting practices. CA did not provide government customers discounts while they discounted their commercial customers for the same products and services. In 2013, CA paid out an additional $11 million for fraudulently billing public agencies on software contract renewals.
• Duke University and two individual researchers face 2017 claims that they defrauded the government on research grants from the National Institute of Health (NIH). The plaintiff, a former Duke employee, claims the university falsified data to win hundreds of millions of dollars in research grants. Several other research institutions could be at risk when whistleblowers come forward to expose similar instances of fraud.

Types of Whistleblower Settlements

For many employees and whistleblowers, coming forward and filing a qui tam lawsuit takes courage, and has its own risks involved in the process. Employees may put their entire career on the line to expose fraud. As a result, under the False Claims Act, plaintiffs are awarded in successful whistleblower lawsuits.

Recovered funds for government agencies usually involve the following kinds of fraud:

• Kickbacks
• Off-label marketing
• FDA regulation violations
• Medicare fraud
• Financial fraud claims
• Overbilling
• Products not manufactured in accordance with contract specifications
• Charging for new parts and selling used parts
• Making false statements to win a contract
• Providing products that fail to comply with environmental standards
• Overstating the labor cost for a project
• Destroying contract records
• Tax Fraud—unreported income, unauthorized tax deductions and other tactics
• Real Estate Fraud—illegal property acquisition
• Insurance Fraud—filing duplicate or undocumented insurance claims for Medicare or Medicaid reimbursements
• Overbilling healthcare services

Employer Retaliation

Once a person has evidence of fraud against the government and decides to take action, they are advised to find an experienced lawyer to assist in the complex process. The work done by your lawyer will be essential to the success of the case and will be a major factor in determining whether you will receive a reward, and the amount of the reward.

An award for exposing fraud is alluring; however, it is important to consider the implications of coming forward against your employer. Whistleblowers often pay a price for doing what they think is the right and ethical thing to do.

Employees who expose their company may be fired, demoted and discriminated against at work for speaking out. Such retaliation by your employer is illegal. If you experience this kind of behavior, a Whistleblower attorney can help by filing a discrimination or wrongful termination lawsuit.

There are several risks involved with coming forward against your employer and filing a whistleblower complaint. Employers have been known to retaliate against whistleblowers, which is illegal, though no less common. Hiring a Qui Tam attorney may be important in not only obtaining a large reward, but also in protecting you from retaliation.

Exposing fraud not only recovers taxpayers money and punishes a deceptive company, but it can result in a large settlement and reward for a plaintiff. It is important to know the widespread implications of coming forward, however, and to contact a whistleblower protection attorney to discuss.

Whistleblowers must have the courage to do the right and ethical thing and come forward. Employees may face retaliation, but that is illegal, and a whistleblower protection attorney can assist you in the challenging days after coming forward.