False Claims Act & Whistleblower Cases
Every year, our federal, state and local governments are defrauded out of billions of dollars by dishonest contractors, business people and other cheats. To combat this fraud, lawmakers have enacted laws to encourage people who know about government fraud to “blow the whistle” by reporting this wrongdoing.
Companies who cheat the government are subject to penalties of up to three times the amount of their fraudulent billings. Moreover, the whistleblower who reports the fraud can receive a reward of up to 15% to 30% of the funds recovered by the government.
There are three laws that whistleblowers commonly use to report fraud to the Government.
The False Claims Act
First, the False Claims Act, 31 USC §§ 3729 – 3733, prohibits government contractors and other persons or companies who do business with the government from submitting false claims for payment, making false statements in connection with false claims, knowingly retaining or keeping any overpayments of government money, or conspiring to do any of the above.
If a whistleblower knows about government fraud, the False Claims Act allows that whistleblower to file a lawsuit against the wrongdoer under seal. The Government then investigates the whistleblower’s allegations and makes a decision to either (a) take over the lawsuit, or (b) allow the whistleblower to continue the lawsuit on his or her own. In either event, if the lawsuit is successful, the whistleblower receives a share of any proceeds recovered in the lawsuit. To learn more, see the Frequently Asked Questions below.
The SEC Whistleblower Law
The Securities and Exchange Commission, also known as the SEC, has its own whistleblower law at 15 U.S.C. § 78u-6. If a whistleblower knows about a person, business or company that is committing securities fraud, the whistleblower can report that information to the SEC and earn a reward.
Unlike the False Claims Act, the whistleblower need not file a lawsuit to report the information. Instead, the SEC has established a Whistleblower Office to receive and review reports of fraud. If the whistleblower’s information leads to a penalty or fine against the fraudster, the whistleblower can be entitled to a share of any fines or penalties recovered. To learn more, see the Frequently Asked Questions below.
The IRS Whistleblower Law
The Internal Revenue Service, also known as the IRS, has its own whistleblower law at 26 USC § 7623. Under that law, the IRS is authorized to pay rewards to whistleblowers who help detect and prosecute tax cheats, when the amount of unpaid taxes in dispute is more than $2 million. The IRS has established a Whistleblower Office to collect and evaluate information received from IRS whistleblowers. These whistleblowers must report their information using IRS Form 211. If the whistleblower’s information leads to a recovery, the whistleblower may be entitled to a portion of that recovery as a reward. To learn more, see the Frequently Asked Questions below.
Frequently Asked Questions
- What is the False Claims Act?
- What does “qui tam” mean?
- What is a “Relator”?
- What does “Original Source” mean?
- What compensation can a Relator/Whistleblower earn?
- Can a whistleblower be fired?
- What is procurement fraud?
- What is set-aside contract fraud?
- What is healthcare fraud?
- What is the Stark Law?
- What is the Anti-kickback Statute?
- What are some common healthcare fraud schemes?
- What is a medical necessity claim?
- What is upcoding?
- What is pharmaceutical fraud?
- What is a CGMP Violation?
- Does the False Claims Act apply to state and local government?
- What is state government fraud?
- What is local government fraud?
- What is education fraud?
- Are whistleblowers protected?
- Should a whistleblower sign a severance agreement?
- What is the IRS Whistleblower Program?
- What is the SEC Whistleblower Program?
- What protections are there if I alert the authorities that my employer is cheating on Medicare or Medicaid?
- If I inform on my employer, am I entitled to a reward?
- How do I know if I have a whistleblower case?
- What are some common areas of fraud that are prosecuted under the False Claims Act?
- What is a Sham Medical Director Agreement?