Whistleblower

Filing a whistleblower case has several potential rewards. The most important is doing the right thing by reporting fraud on the taxpayers. Many whistleblowers are deeply troubled by the fraudulent conduct they have witnessed. By filing a case, the government is alerted to the fraud and can shut it down. Even cases that do not result in a major settlement can influence behavior and stop bad actors from taking advantage of the taxpayers.

There are also financial benefits in successful cases. Many whistleblowers risk reputational and career harm when they report fraud. The purpose of the statute and the financial rewards to whistleblowers is to encourage people to come forward despite those risks. If whistleblower claims are successful, the whistleblower is entitled to receive between 15% and 30% of the ultimate recovery. In addition, whistleblowers also can recover their attorney’s fees and any expenses incurred in bringing the case. In the modern era of False Claims Act litigation since 1986, the federal government has paid over a billion dollars to whistleblowers in federal cases. In 2020 and 2021, the federal government paid qui tam relators over $500 million in settled False Claims Act cases.

The federal False Claims Act and most state acts provide for two types of damages. First, the government can recover three times the actual loss it suffered because of the defendant’s fraud. These treble damages are intended to punish and deter similar bad conduct by the defendant and others. Second, the government can recover penalties for each false claim submitted to the government. Depending on when the conduct occurred, those per-claim penalties can range from $5,500 to $25,076.00 for each claim submitted in violation of the False Claims Act.

The combination of treble damages and per-claim penalties can result in some of the largest verdicts and settlements the government obtains against wrongdoers. That is particularly true in cases involving large corporations who are largely dependent on government payments, like hospitals, medical device manufacturers, and defense contractors.

Unlike other types of plaintiffs, a qui tam relator must be represented by a lawyer. Hiring an experienced whistleblower attorney is one of the most important decisions you make as a whistleblower. False Claims Act cases involve unique procedures and rules that can trip up an inexperienced attorney and potentially bar your recovery. Speaking to an experienced whistleblower lawyer who can effectively put together and properly file your case may mean the difference between receiving an award and getting nothing.

The experienced whistleblower attorneys at Cannella Snyder have represented whistleblowers from all over the country in several different cases. Those cases included cases for Medicare and Medicaid fraud, prescription drug fraud, medical kickbacks, loan fraud, cybersecurity, and others. In 2017, Cannella Snyder attorneys were part of the team that recovered $108 million in the largest settlement in a non-intervened qui tam case in the country. We have represented whistleblower clients in the district court, have argued precedent-setting appeals, and have even pursued defendants through bankruptcy proceedings. We are currently litigating several cases and represent whistleblowers in matters still under investigation by the government.

If you believe you have knowledge of fraud on the government, you should contact an attorney immediately so the attorney can assess and file your claims. Under the federal False Claims Act and many state False Claims Acts, a qui tam relator is not entitled to share in recovery if they are not the first person to file the claim. Because False Claims Act cases are under seal and hidden from public view during the government’s investigation, there usually is no way to tell if there are pending cases related to the fraud. The best practice is to have a lawyer investigate the claims quickly and file the case as soon as possible.

In addition, public disclosures in case filings or discussions of fraud in the media can limit your ability to move forward with a case. Although public disclosure is no longer a guaranteed bar to the claims, it can give the defendant a potential defense to your claims.

Finally, statutes of limitation (which set how long a person must file a case) may limit the time you have to file your case. In general, the federal false claims act allows for the recovery of damages going back up to six years (and sometimes beyond). Employment retaliation claims have a shorter statute of limitation and must be filed within three years of the retaliatory behavior.

THERE IS NO BENEFIT TO WAITING. The best course of action is to contact an experienced whistleblower attorney as soon as you believe you have learned of fraud in the government. That attorney will advise you on your rights and propose the best path forward.

Anyone with personal knowledge of fraud on the government may bring a whistleblower case. The more documentation of the fraud that you have, the more likely that the case may proceed and be successful. It is not required that a whistleblower work at the company that is sued if he or she has personal knowledge of fraud.

There are some limitations on who may bring a claim. A person may not bring a claim based on fraud that has already been alleged in a filed suit. This “first to file” rule bars a whistleblower from receiving any share of the recovery if there is a lawsuit already pending that is based on the same allegations. Unfortunately, because the cases remain under seal and secret during the government’s investigation, there is often no way to know for sure whether another case has been filed. That is why it is important to consult with an experienced whistleblower attorney soon after discovering potential fraud on the government. Getting the case filed quickly may be the difference between receiving an award and receiving nothing.

A whistleblower also can be barred from recovering a portion of the proceeds if the court determines the whistleblower planned and initiated the fraud. Even if not barred, a whistleblower’s share of the recovery can be reduced if he or she planned or initiated the violations.

Finally, the federal False Claims Act and state false claims acts bar some government employees from bringing claims. The federal statute precludes members of the military from bringing claims arising out of their service against other service members. Similarly, claims against members of Congress, judges, or senior executive branch officials cannot be brought if they are based on evidence known to the government. State false claims acts also provide some limitations. For example, the Georgia Taxpayer Protection False Claims Act precludes any public employee or official from filing a case based on allegations within the scope of their employment or based on facts learned in their employment.

The best claims are those based on clear evidence. The better the documentation you have, the greater the chance of recovery. Sometimes a whistleblower may know about one piece of a fraudulent scheme without knowing every necessary piece of information. Contacting an experienced whistleblower attorney can help you determine if you have enough information to file a valid claim. An experienced attorney can also help you determine if there are other sources of information that could help you put together a complete case.

The best cases also involve proof that the defendant knew that it was lying to the government when it sought payment from the government. But the False Claims Act does not require that the defendant intends to defraud the government. Instead, the statute only requires that defendants act knowingly. A defendant acts “knowingly” if it has either actual knowledge of the fraud, acts in deliberate ignorance of the fraud, or acts in reckless disregard of the fraud. The intent standard covers the “ostrich in the sand” situation where a company knows or reasonably should know that fraud is occurring, and it does nothing to stop the fraud.

Valid claims are based on fraudulent representations that are material to the government’s decisions. Material representations are about important issues – not just paperwork violations or inconsequential mistakes. In recent years, courts have focused more on the materiality of the fraud at issue and have limited claims that courts have found to be based on insignificant violations. The best rule of thumb is if the government would refuse to pay a claim if it knew the truth, then the fraud is likely material. An experienced False Claims Act attorney can help you determine if you have evidence of material fraud.

Before a whistleblower case is filed, the whistleblower must consult and retain an attorney. Unlike other cases, which allow pro se representation, a whistleblower must be represented by an attorney. The attorney will investigate the claim and put together a complaint—the legal document that starts a lawsuit—and a separate disclosure of the evidence. The attorney will contact the Department of Justice to discuss the case and to disclose the filing to the government.

After making those disclosures to the government, the case is filed under seal—which means that only the government and the court know that the case has been filed. A failure to file the case under seal can doom even a valid claim immediately. The purpose of the seal is to allow the government to investigate the claims and determine whether it will intervene and take over the case. The False Claims Act gives the government 60 days to investigate, but the government almost always seeks extensions of time to investigate. In practice, most cases remain under investigation and under seal for around 2-3 years depending on the court.

During its investigation, the government will interview the whistleblower. It is an opportunity for you to tell your story to the government and to answer initial questions. An experienced whistleblower attorney will work with you to prepare for the interview. After the interview, the government will usually serve document requests on the defendant and may interview other witnesses. In some cases, the government will partner with the whistleblower attorney to help formulate an investigation strategy and to review documents and other evidence produced by the defendant.

After the government completes its investigation, it will decide whether to intervene and take over the case. If the government intervenes, it will control the litigation. The whistleblower and his/her counsel will remain involved in the case, but the government decides how best to proceed, whether to settle and other major strategic decisions. Nearly all cases where the government intervenes end in a settlement. Many times, the government negotiates a settlement before the case is unsealed. When the case resolves, either through settlement or judgment, the whistleblower in an intervened case is entitled to between 15-25% of the recovery, and a recovery of reasonable attorneys’ fees and expenses. The share of recovery is based on how much help the whistleblower gave to the government along the way and the quality of the information provided.

The government can also decline to intervene in the case. If the government declines to take over the case, the whistleblower can continue the case on behalf of the government after the case is unsealed. The whistleblower and her attorney will make all strategic decisions and pursue the case without excessive government oversight. The government must consent to any settlements that are negotiated, but it is the whistleblower and their counsel who largely decide if and when to settle. If there is a recovery either through settlement or a paid judgment in a non-intervened case, then the whistleblower is entitled to between 25-30% of the recovery, and a recovery of reasonable attorneys’ fees and expenses. When deciding which attorney to retain, one consideration is whether the attorney has handled declined cases. Some lawyers do not litigate cases that are declined by the government. Cannella Snyder has been lead and co-counsel on declined cases, and it knows how to push those cases to resolution.

Whistleblower cases tend to take longer than most normal civil cases. On average, the cases last around five years, with the first two to three years dedicated to the government’s investigation. Of course, some cases take longer or resolve more quickly. It is important to understand though that the chance of a quick resolution of a whistleblower case is very low.

Concerns about the fallout at the workplace are common among whistleblowers. Many whistleblowers are justifiably worried about what might happen if their employer finds out that they have reported fraud. The federal and state False Claims Acts have provisions protecting whistleblowers from retaliation by their employers for taking acts related to a False Claims Act case. Under the federal statute, a whistleblower is entitled to be made whole if they have been fired, demoted, suspended, threatened, harassed, or otherwise discriminated against by their employer for engaging in protected conduct. Being “made whole” can include reinstatement, double back pay, interest, general damages, litigation costs, and attorneys’ fees. So, while an employer might act against a whistleblower, the federal and state statutes provide additional remedies for adverse employment actions.

All Cannella Snyder’s whistleblower cases are handled on a contingency basis. That means you pay nothing out of pocket to retain the firm or for expenses incurred during the case. We get paid only if there is a recovery. If there is, we receive a percentage of the recovery, attorney’s fees, and recoup the expenses we paid. At Cannella Snyder, there are no upfront costs or consultation fees. And if there is no recovery, you owe the firm nothing.