Whistleblowers may reap rewards for exposing fraud

posted on:
May 10, 2013

author:
Kurt Niland

The False Claims Act, passed in 1863 to combat rampant fraud committed by government-contracted individuals and companies, is today the federal government’s most powerful tool in fighting fraud, waste, and other wrongdoing. Every year this type of fraud amounts to billions of dollars in lost taxpayer money.

The FCA’s “teeth” come from its qui tam “whistleblower” provision, which allows people not affiliated with the U.S. government to file lawsuits on behalf of the government when they witness fraud, gross waste, mismanagement, abuse of power, and other wrongdoing representing a substantial financial loss or threat to public health and safety.

Because whistleblowers take giant personal risks when they choose to expose fraud, often facing demotion, termination of job, and other forms of retaliation, the FCA awards plaintiffs who file lawsuits on behalf of the government. They may collect 15-30 percent of the recovery.

The most common type of whistleblower lawsuit involves defrauding the U.S. government by overcharging for goods and services. Pharmaceutical companies, for instance, often overcharge Medicare and Medicaid programs for prescription drugs. Or, they may market drugs to doctors, hospitals, nursing homes, and others for unapproved “off label” purposes for which Medicare and Medicaid are billed.

In 2009, a former Abbott saleswoman filed a whistleblower lawsuit under the False Claims Act, alleging the company fraudulently promoted its anti-seizure drug Depakote to nursing homes and other medical caregivers for multiple, unapproved purposes. The case was settled in 2012 when Abbott pleaded guilty and agreed to pay $1.5 billion to resolve criminal and civil charges – a near record payout.

Defense contractors, who were the main impetus for the enactment of the FCA in the 19th century, are still a major source of fraud and other wrongdoing. Whistleblower cases have also emerged from the aerospace industry, the nuclear power industry, and several other industries in which companies are contracted to provide goods and services to the federal government.

In times where operational budgets and cutbacks are common, it’s more important than ever to recover money that has been unscrupulously taken from American taxpayers. That money can be put back into the programs that benefit the entire country.

For this reason, many whistleblower protections have been strengthened under the FCA and other laws, such as those governing securities fraud under the Securities and Exchange Commission (SEC), and tax fraud under the Internal Revenue Service (IRS).

Whistleblower laws often have the added advantage of empowering employees to police operations and transactions from the inside, which is almost always more effective and affordable than relying on federal regulatory officials to find and correct waste, fraud, and other wrongdoing.

Beasley Allen currently has whistleblower cases filed throughout the United States. For more information, visit the Whistleblower Claims page of our website.

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