December 19, 2013 False Claims Act Information
Importance of Whistleblowers, Part II: Recovery and the Need for a Whistleblower Attorney
Retaliation by an employer can be one of the harsh realities of blowing the whistle on fraud. As we previously reported, the National Whistleblower Center (“NWC”) submitted a 2013 report to Congress on the various effects of workplace retaliation on the likelihood of employees to come forward with allegations of misconduct. A whopping 40 percent of workers report they would not come forward with fraud if suspected, and nearly that many failed to disclose actual fraud in the workplace. However, statistics reveal that both corporate compliance programs and government regulatory agencies rely on tips from internal employees in order to properly and thoroughly police misconduct, so it is more important than ever for employees to feel comfortable coming forward.
In today’s post, we continue to examine the NWC’s report, particularly the portions dealing with the effect of the False Claims Act (“FCA”) on an employee’s decision to report. The FCA, which is widely heralded as one of the most important pieces of anti-fraud legislation in history, works to incentivize integrity by offering relators a percentage of any amounts recovered on behalf of taxpayers.
Effect of the FCA on Employee Disclosure
The FCA has undergone several transformations over the years. When enacted in 1863, it contained several qui tam provisions designed to allow plaintiffs the opportunity to receive a percentage of the amount recovered by the lawsuit. This provision was removed in 1943, but thankfully restored in 1986 and further strengthened in 2009 and 2010. According to the Department of Justice, individual reporters are the “single most important source of information permitted the United States to recover funds from corrupt contractors.” By comparison, in 1986 the U.S. recovered approximately $86.5 million from fraudulent contractors, all without the help of qui tam plaintiffs. In 2012, the U.S. recovered $4.95 billion from FCA settlements and awards, 68 percent of which derived from qui tam complaints.
In an interesting study included in the report, the University of Chicago took a look at whether whistleblower reward programs actually work. Despite concluding that employees have the best access to corporate fraud information, 82 percent experience retaliation in the form of termination, resignation under duress or demotion. The study concluded that:
“[a] natural implication of our findings is that the use of monetary rewards providing positive incentives for whistle blowing is the possibility of expanding the role for monetary incentives.”
The reasons for this are abundantly clear- while anti-whistleblowing activists falsely portray whistleblowers as greedy or just seeking money, the truth is that the rewards don’t so much provide an incentive, but take away the negative disincentive. Fear of losing your livelihood is scary, especially if one has a family. But if more people can have those fears mitigated with the possibility of compensation, it removes a huge barrier to fraud detection and prevention. A qualified and dedicated whistleblower attorney can help you with this.
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