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Whistleblower Lawsuit

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Whistleblower claims are allegations of improper practices, illegal activity, or fraud brought against organizations, agencies, or businesses. Usually, the whistleblower is a private or public employee. Still, it can be any person who reports misconduct or fraud that has been committed by a private entity or individual against an agency of the government.

The U.S government has recovered around $62 billion from whistleblower lawsuits between 1986 and 2019. The government paid $265 million to the individuals who exposed the false claims and fraud. Out of the $3 billion in settlement money reported in 2019 by the U.S. government, more than $2.1 billion originated from lawsuits filed under the False Claims Act’s qui tam provisions. Since 1986, the number of qui tam lawsuits has increased significantly, with an average of over 12 new cases each week.

While the financial rewards of whistleblower lawsuits against companies can be immense, the risks and challenges whistleblowers must face on a personal level are just as substantial. Fortunately, several laws establish whistleblower protection for those who often suffer threats of retaliation from companies.

Learn more about whistleblower protections and how whistleblowers can earn rewards in qui tam lawsuits.

What is a Whistleblower?

“Whistleblower” is a term for an employee who alleges that his or her employer is violating the law, according to Cornell Law School. The employer can be a public or private organization, and whistleblowers often tip off law enforcement or other government agencies of wrongdoing.

A qui tam whistleblower is a private citizen who reports acts of fraud against the United States government. The Latin term qui tam is short for the phrase “qui tam pro domino rege quam pro se ipso in hac parte sequitur,” which means “who brings the action for the king as well as himself.”

These types of whistleblowers were defined under the qui tam statute of the False Claims Act. The qui tam provision also allows citizens who reported fraud against the government to be rewarded with a percentage of the funds recovered by the government.

Who Qualifies as a Whistleblower?

Anyone with evidence that a company defrauded the government can qualify as a whistleblower under the False Claims Act. Some of the people who commonly file whistleblower lawsuits include current employees, former employees, competitors, consultants, contractors, auditors, and analysts.

A person must know about fraud and be able to provide hard evidence. The information must also be original and not gleaned from any public sources. Fraud against states or other companies does not qualify under the False Claims Act. However, most states have their False Claims provisions.

According to the American Bar Association, at least four actions can be considered violations under the False Claims Act.

  • A company knowingly makes a false or fraudulent claim to the federal government for payment.
  • A company uses an invalid record or statement to have a claim paid by the government.
  • A company conspires with others to have a false or fraudulent claim paid by the government.
  • A company uses a false record or statement to get out of paying money to the government.

The sectors where qui tam lawsuits come from range from the healthcare industry to the financial industry.

False Claims Act of 1863

During the Civil War, a law was enacted giving regular citizens the right to sue an entity on the government’s behalf. This law is called the False Claims Act of 1863.

  • History – While Abraham Lincoln was president, he found it necessary to address the rampant cheating commonly taking place during the Civil War by government contractors. His actions resulted in the creation of The False Claims Act of 1863. This law is sometimes called The Lincoln Law and has gained the reputation of being a powerful tool to fight government corruption and private corporate corruption.
  • Purpose – When reading the words “false claims” in the very name of the law, one can rightly surmise that its purpose is to stop entities and individuals from submitting fraudulent claims for payment by the government. Additionally, the law prohibits the avoidance of payments due to the government.
  • Coverage – Within this law are whistleblower protections for employees, agents, and contractors to keep them from being demoted, threatened, discharged, suspended, or discriminated against during employment.
  • Protections – The False Claims Act of 1863 offers assurances that a whistleblower need not fear reprisals for lodging a legal claim about government fraud. Other federal laws exist that provide more specific protections for reporting illegal activity in industries such as financial institutions, banks, and airlines. Many states also have laws guaranteeing whistleblowers protection from adverse reprisals for stepping forward.
  • Exclusions – Under the False Claims Act, certain claims are excluded. Tax claims, for example, cannot be brought under the IRS Code. However, whistleblowers are allowed to bring federal tax claims through the IRS Tax Whistleblower Program. Additionally, individual state laws cover specific state tax claims.
  • Penalties – The penalty for violating the False Claims Act is equal to three times more than the total of the government’s damages, with an additional $11,000 added for each false claim.

What Types of Conduct are Typically Reported?

The types of nefarious conduct uncovered by whistleblowers can fall into many different categories. Among the different ones are:

  • Defense Contractor and Military Fraud – The massive size and financial worth of defense contracts make them particularly appealing for individuals and entities looking to skim finances from the government through fraudulent activity. Typical behaviors include padding invoices and contracts, overcharging, and supplying inferior items in place of ones agreed upon in a contract.
  • Health Care Industry Fraud – Illegal activity within this realm runs the gambit from drug wholesale companies and doctors to pharmaceutical giants and insurance companies. Medicaid and Medicare are rife with fraud and are frequently the subject of whistleblower lawsuits.
  • Environmental Fraud – The problematic nature of trying to watch for environmental misconduct makes it hard for the government to catch each instance. For this reason, a whistleblower can be the only link to uncovering this form of illegal activity. Reports of conduct that violates federal environmental regulations can lead to penalties being levied against the perpetrators.
  • Financial Fraud – Within the scope of this type of fraud, discrepancies surrounding pension funds and mortgages are frequently found. Falsifying information is an illegal activity often reported by whistleblowers. Securities fraud is rampant to such a degree that the Securities and Exchange Commission has created a specific whistleblower program.

Risks For Whistleblowers

Reporting fraud is a practice with high rewards and high risks. If the government joins a qui tam case, a whistleblower can receive between 15 percent and 25 percent of what the government recovers. If the government decides not to join the case, a whistleblower may receive 25 to 30 percent of the money recovered.

This may sound like a small amount of money, but whistleblower cases often deal with millions of dollars. For example, in 2012, a whistleblower who accused subprime lender Countrywide Financial of fraudulent activity against the government helped recover $25 billion along with several other whistleblowers. He received a $14.5 million reward.

Whistleblower Retaliation

Despite the potential for high rewards, whistleblowers also take significant risks when pursuing qui tam cases. A spokesman for Taxpayers Against Fraud estimates that 80 percent of cases filed under the False Claims Act result in no rewards for whistleblowers. In many cases, the federal government will not join the lawsuit, putting more of a burden on the plaintiffs and their whistleblower lawyers.

On top of all that, whistleblowers are often subject to retaliation. Retaliation against whistleblowers can manifest itself in different ways. If an employer finds out about a lawsuit, it might fire, demote, suspend, threaten, or harass the employee. For example, a supervisor might issue reprimands or reassign the employee to less desirable job duties. More severe punishments are sometimes lawsuits against whistleblowers for revealing information to the government. Companies might also discourage other organizations from hiring an individual. It is recommended that individuals experiencing such treatment contact a whistleblower retaliation lawyer to help fight back against unjust acts.

Whistleblower Protections Under the False Claims Act

Because whistleblowers serve an essential role in society, several laws have provisions that protect them from retaliation by employers. Under the False Claims Act, a whistleblower is entitled to relief if they are “discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment.”

The relief means the employee shall be reinstated with the same seniority status, issued extra back pay with interest, and compensation for additional damages like attorneys’ fees.

The government wants to ensure that citizens feel compelled to report fraud against the government without fear of retaliation. Congress strengthened the whistleblower protection provision in 1986 for this very reason.

“The Committee recognizes that few individuals will expose fraud if they fear their disclosures will lead to harassment, demotion, loss of employment, or any other form of retaliation,” a report said. “With the provi­sions in section 3434, the Committee seeks to halt companies and individuals from using the threat of economic retaliation to silence ‘whistleblowers,’ as well as assure those who may be considering exposing fraud that they are legally protected from retaliatory acts.”

An experienced whistleblower retaliation lawyer can help individuals understand their rights and protections under the False Claims Act.

Can a Government Worker be a Whistleblower?

Absolutely. A government worker may certainly expose wrongdoing in the government. Through the Whistleblower Protection Act, the federal government assures protection for individuals who disclose unlawful acts and unethical behavior conducted by the U.S. government. Some forms of illegal activity reported include:

  • Abuse of authority
  • A significant danger to public safety or health
  • Gross mismanagement
  • Violation of rules, regulations or lawsuits
  • Gross waste of finances

Any federal employee who has uncovered potential fraud or illegal activity by the federal government and reprimanded afterward should contact our whistleblower lawyers at The Eichholz Law Firm. We provide a no-risk, no-cost evaluation for individuals who may have been demoted, fired, harassed, or received a pay cut as punishment.

Filing a Whistleblower Lawsuit

The term “qui tam” is used with this type of lawsuit. It means that any person filing a whistleblower lawsuit can potentially receive financial compensation if specific conditions are met.

The first step that a whistleblower needs to take is to consult with a whistleblower lawyer who has experience handling qui tam lawsuits. During this consultation, a determination can be made as to:

  • Whether a case truly exists
  • Whether there will be any possible criminal or civil liability for stepping forward
  • The amount of compensation the whistleblower may expect to recover
  • The potential length of time the case could take

Secondly, the whistleblower lawyer will file a suit in federal court alleging fraud has occurred against the government. Legal pleading and the evidence provided will be filed under seal, so only the judge and the government can view it.

Ultimately, the government will examine the information and determine whether or not to pursue action. There is a minimum of 60 days allowed for this process. Should the government decide not to join the claim, the Relator (whistleblower) may still move forward with the lawsuit.

Whistleblower Lawsuit Statute of Limitations

A whistleblower is given specific lengths of time to file a lawsuit under the qui tam provision. In general, the case must be filed before these deadlines:

  • Six years from the date the false claim was made
  • Three years from the time the correct federal official received notification of the potentially fraudulent activity
  • No more than ten years from the time the fraudulent activity occurred

However, there is a provision called the Wartime Suspension of Limitations Act that essentially stops the clock from running where time limits are involved in whistleblower lawsuits if the U.S. is at war. On October 16, 2002, Congress put into law the Iraq War Resolution, and courts have subsequently ruled that the whistleblower statute of limitations has been put on hold (tolled) since that date. Thus, a whistleblower may step forward under this legal interpretation with information on a fraudulent scheme between the occurring date and now.

How Can a Whistleblower Lawyer Help?

Given the complexity of this type of lawsuit, one should choose a legal firm with the highest level of experience in litigating whistleblower lawsuits. Our legal team can help with various types of cases ranging from defense contractor fraud to healthcare fraud.

Our legal team has the resources and experience to:

  • Thoroughly evaluate your claim and evidence
  • File a suit or submit information through the appropriate program
  • Work to involve the government in the case, thus increasing the potential for success
  • Pursue maximum compensation
  • Be a formidable force for you in the legal system

Your lawsuit will be filed confidentially and not viewed by the general public nor the accused.

Examples of Whistleblower Lawsuits

Whistleblower lawsuits run the gamut — dealing with all types of industries. Here are a few examples of past whistleblower lawsuits.

Citigroup 2011

One of the quickest turnarounds for a whistleblower lawsuit came in 2011 when Sherry Hunt filed a lawsuit under the False Claims Act against Citigroup, one of the country’s largest banks. She was a vice president and quality assurance manager at the bank but was pressured to hide the truth about poor loans.

By 2012, the federal government had joined the lawsuit, and Citigroup agreed to pay $158.3 million to settle. Hunt received around 20 percent of the settlement money, which was $31 million.

Northrop Grumman 2009

Northrop Grumman Corporation agreed to a $325 million settlement with the Justice Department over claims that it sold the government faulty satellites. TRW, which was later acquired by Northrop, tried to silence the subcontractor and whistleblower Robert Ferro from disclosing his findings. Ferro was awarded $48.8 million for bringing the faulty electronic components to the government’s attention8.

Former employee James Holzrichter also filed a qui tam lawsuit against Northrop Grumman for defrauding the government. Although his complaint was filed in 1989, he did not receive a $6.2 million financial reward until 2005.

Bank of America 2014

After the financial crisis of 2008, a former employee of a property appraisal company for Bank of America worked with federal prosecutors7 to bring a case against the bank. Robert Madsen claimed that the bank used improper appraisal practices to overstate the values of homes, costing the federal government billions. Madsen turned over thousands of pages of documents and sat down for multiple interviews with prosecutors.

Madsen’s work, along with the help of four other whistleblowers, earned the federal government a $16.65 billion settlement with Bank of America. As a result of his participation, he received a $56 million reward.

Contact Our Whistleblower Lawyers

Navigating the world of whistleblower lawsuits is complicated and stressful. Wrong moves along the way can result in cases being thrown out of court or prevent the federal government from involving itself in qui tam cases.

Employers might have the desire to retaliate against employees who have filed lawsuits against them. Although this is illegal, employees may not have the knowledge or experience to get their job back or receive additional relief. This is where a qualified whistleblower retaliation lawyer can help fight back against illegal treatment.

If you are thinking about filing a whistleblower lawsuit, contact our legal team immediately to learn more about the next steps, the risks involved, and possible reward amounts.

Please seek the advice of a medical professional before making health care decisions.
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