With data breaches and other cybercrimes rising to all-time highs, government contractors could find themselves on the wrong side of a False Claims Act whistleblower lawsuit if they fail to take the strongest possible cybersecurity measures.

There has been a staggering number of serious data breaches in the last couple of years that have exposed the personal and financial information of millions of U.S. consumers to hackers. This stolen information puts consumers at risk of identity theft, phishing and ransomware scams, and other nefarious schemes that could range from bothersome to devastating.

Just as much is at stake when the U.S. government is the consumer. Improperly guarded computer networks and other cybersecurity lapses are not only costly to U.S. taxpayers, they can also be a matter of national security.

For the past several years, the federal government has been holding contractors and their subcontractors to more stringent cybersecurity standards. Businesses that want to do business with the federal government are required to properly safeguard and maintain their computer networks.

Contractors that fail to comply with their contractual obligations or misrepresent their compliance are prime targets for a whistleblower lawsuit. And this is what is happening. According to Law.com, the first of these False Claims Act lawsuits, brought by whistleblowers with the inside scoop, are “bubbling to the surface.”

These early lawsuits are just a rippling tide. The cases behind them will form a “tsunami” of FCA litigation, Law.com predicts.

The U.S. government in May refused to dismiss a whistleblower complaint alleging Aerojet Rocketdyne Holdings Inc. lied to the government that it was complying with the Department of Defense’s cybersecurity standards.

The ruling sent out a clear message that a private party in witness to cybersecurity lapses can have a viable False Claims Act case against a government contractor or subcontractor.

Another FCA case concluded in July when Cisco agreed to pay to the U.S. $8.6 million to resolve a whistleblower lawsuit. The lawsuit accused the tech company of selling the U.S. surveillance cameras with known security vulnerabilities that exposed government agencies and major airports to hackers.

One expert told Law.com that government contractors, and all companies that store sensitive data, need to continually assess their security measures and document their compliance with government standards.

In its 2019 Midyear Quickview Data Breach Report, the cybersecurity firm Risked Based Security said that 2019 is on track to being the “worst year on record” for data breach activity.

According to the report, the number of 2019 data breaches is already up by 54% over last year, with months left to go. The number of records exposed in those breaches is up by 52%. More than 3,800 data breaches were reported in the first half of 2019, exposing 4.1 billion records and compromising the personal and financial information of millions of consumers.

Beasley Allen has an experienced group of lawyers dedicated to handling whistleblower cases. The lawyers on our firm’s Whistleblower Litigation Team are Larry Golston, Lance Gould and Paul Evans. These lawyers will be glad to discuss any potential whistleblower claim either in person or by phone.

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