The False Claims Act (FCA), 31 U.S.C. § 3729 et seq., provides liability for triple damages and a penalty ranging from $5,500 to $11,000 per claim for anyone who knowingly submits or causes the submission of a false or fraudulent claim to the United States. Additionally, the FCA contains a provision which permits a private person to bring a lawsuit on behalf of the United States when such person has knowledge that the defendant has knowingly submitted fraudulent claims to the government for reimbursement. This newsletter will provide you with information about government intervention in whistleblower cases, recent enforcement actions, and recommendations to minimize the likelihood of becoming a target of a whistleblower’s case.
When Does the Department of Justice Join the Case?
The FCA requires that the Department of Justice investigate an allegation of a violation of the FCA. Typically, other law enforcement agencies, such as the Office of the Inspector General, assist in the investigation. At the conclusion of the investigation, the Department of Justice must choose from one of the following options:
Intervene in one or more counts of the pending action. This intervention expresses the government’s intention to participate as a plaintiff in prosecuting those parts of the complaint. Fewer than 25% of filed whistleblower actions result in an intervention by the Department of Justice.
Decline to intervene in one or all counts of the pending action. If the government declines to intervene, the whistleblower and his or her attorney may prosecute the action on behalf of the United States, but the United States is not a party to the proceedings apart from its right to any recovery. This option is frequently used by whistleblowers and their attorneys.
Move to dismiss the complaint, either because there is no case, or the case conflicts with significant interests of the United States.
Government Efforts to Recover Funds
Since 1987, whistleblower cases have brought in about $16 billion to the Department of Justice. In comparison, non-whistleblower cases have only recovered $5 billion. Of the $16 billion recovered through whistleblower initiated cases, 36% of the sum recovered has come since 2009, demonstrating a significant increase in role of whistleblowers in recent years.
Additionally, in 2011, the federal government prosecuted 417 whistleblower cases, which is nearly double the number of cases prosecuted only three years prior. On April 24, 2013, the Centers for Medicare & Medicaid Services (CMS) announced a proposed rule that would increase rewards paid to whistleblowers whose tips lead to the successful recovery of funds. CMS is proposing to increase the potential reward to 15% of the final amount collected, with a maximum reward of $9.9 million.
With incentives for whistleblowers increasing, it is more important than ever to have open and candid communication with staff. Most whistleblowers try to report fraud to their supervisors and go to the government as they grow frustrated when nothing is done about the complaint and the fraud continues. The following are steps that can be taken to ensure effective communication between staff members and management to minimize whistleblower risk.
Establish a culture that encourages open communication. Keeping your office door open does not create an open door policy. Staff members should feel comfortable to address concerns with their supervisors.
Utilize performance evaluations to obtain feedback from employees regarding job satisfaction and concerns they may have that impede their ability to effectively perform their duties.
Conduct exit interviews to obtain information about the company’s strengths and areas for improvement. Employees leaving the company may be more candid and willing to address difficult topics.
Publicize the ability to make anonymous reports through the Compliance Hotline.
Reinforce the company’s non-retaliation policy for good faith reporting.