Understanding the Four Key Whistleblower Statutes Under Federal Law

Understanding the Four Key Whistleblower Statutes Under Federal Law

Our blog often discusses litigation surrounding the False Claims Act, which is the hallmark whistleblower statute in the United States. Enacted during the Civil War, the FCA and its incentivizing qui tam provisions paved the way for other government entities to advocate for Congress to enact similar provisions in their anti-fraud statutes. In this article, we briefly explore the FCA, as well as three other similar whistleblower statutes modeled after the FCA that are drafted to entice those with firsthand knowledge of fraud to come forward in exchange for a percentage of the subsequent award recovered by the United States.

False Claims Act

The FCA has recovered billions of dollars from scam artists engaging in healthcare, defense and other types of fraud against taxpayers. Under the FCA, a whistleblower who comes forward with new information of fraud that has not been revealed to the general public can recover up to 30 percent of the recovery. The whistleblower is also known as the relator and often works closely with the Department of Justice to bring fraud to light. However, not every FCA case involves the DOJ as it sometimes declines to intervene. In these cases, whistleblowers proceed with an investigation individually with the help of a whistleblower attorney.

 The IRS is another government entity with a strong interest in eliminating and deterring fraud. As such, Congress enacted a whistleblower program under the TRHA that provides whistleblowers with the opportunity to receive 15 to 30 percent of any amount recouped to the IRS from those engaging in scams to evade or unlawfully reduce tax liability. There are two paths to recovering as a whistleblower under TRHA depending upon the amount of outstanding tax liability shrouding the defendant. The first applies to taxpayers with total tax liability, inclusive of penalties and fines, exceeding $2 million and allows for a whistleblower award up to 30 percent. The second applies to those whistleblowers whose cases do not meet the $2 million threshold and are only eligible for a 15 percent recovery up to $10 million.

Dodd Frank Act

In 2010, Congress enacted the Dodd Frank Wall Street Reform and Consumer Protection Act in response to the financial meltdown of 2008. Within the act are whistleblower provisions pertaining to financial transactions covered by the Securities and Exchange Commission (SEC). Specifically, any individual with original information about fraud in the securities markets amounting to at least $1 million, the whistleblower stands to receive between 10 and 30 percent of the total amount recovered. The law does not require the whistleblower to be an employer or insider in order to be eligible.

The Dodd Frank also protects Americans against fraud perpetuated in the commodities trading market. A whistleblower with original information about misconduct in the commodity futures trading market, which includes products like oil, grains or other unprocessed goods, could receive a percentage of the amount recovered provided the penalty exceeds at least $1 million.

Incentivizing Integrity

The purpose of the qui tam whistleblower provisions is to entice those with certain information to come forward and report fraud. Fraud raises prices for all Americans and, in certain situations, costs the American taxpayer. It is normal to feel apprehension and fear when making the decision to come forward, which is why working with an experienced qui tam attorney is the best decision for many plaintiffs.

By |2019-11-13T10:44:57-05:00November 29th, 2013|False Claims Act Information|