Do Cash-for-Whistleblower Programs Really Work?

Exchanging cash for information has been done for a long time. Only on July 30, 1778, however, did the practice become protected by law. The Continental Congress enacted the world’s first whistleblower law on that date in response to the pleas of two men jailed for alleging the commander-in-chief of the Continental Navy was corrupt.

The History of Whistleblower Protection Programs

During the American Civil War, fraud in government contracts was pervasive. Corrupt contractors sold the Union Army defective guns and ammunition, feeble horses and mules, and rancid food. To encourage people to come forward to inform on the corrupt contractors as available law enforcement officers were few, Congress passed the False Claims Act (FCA) on March 2, 1863. Whistleblower protection was created.

The False Claims Act has been the federal government’s primary tool for combating fraud in connection with federal programs and expenditures. This is especially true since the FCA was revamped in 1986 primarily due to the abuses in the defense contracting industry. The amendments significantly expanded the role of whistleblowers, increased financial incentives, and reduced barriers to bringing actions against persons or entities alleged to have submitted fraudulent claims against the federal government.

Over time, whistleblower programs have gained momentum as a regulatory tool to combat corporate misconduct in areas such as financial fraud, government procurement fraud, health care fraud and tax fraud.

Do Today’s Cash-for-Information Whistleblower Programs Work?

A recent Harvard University Business School and University of California at San Diego study on the effects of whistleblowing and consequences on whistleblowers used information from more than 5,000 whistleblower lawsuits to determine whether or not cash-for-information programs are actually effective.

The study had access to all FCA whistleblower lawsuits filed with district courts, used decisions by Courts of Appeals, as well as used direct information from approximately 1,600 publicly disclosed whistleblowers to measure the effectiveness of these programs.

Critics argued that cash-for-information programs only motivate employees to file meritless allegations that waste resources of regulators and accused firms alike. They also argue that these programs give employees an incentive to share information directly with regulators rather than report problems internally first.

But proponents of cash-for-information programs point to the large number of tips that regulators receive from whistleblowers and the success in terms of cases and penalties imposed on corporations. They argue that cash-for-information programs help to expose corporate fraud and highlight that these programs simply compensate employee whistleblowers for taking the risk of reporting wrongdoing to the authorities.

In analyzing the data, the researchers found:

  • Whistleblowers file a greater number (+6.9%) of lawsuits in treated district courts following decisions that increase financial incentives for whistleblowing. They also found no corresponding decrease in the fraction of allegations reported internally before lawsuits are filed.
  • The U.S. Department of Justice (DOJ) increases the length of an investigation by 36.5% for the average whistleblower allegation filed in treated courts, which suggests that the information brought forward is more valuable, in turn warranting more of the DOJ’s time to build a winnable case versus dismissing cases with outright meritless claims.
  • The percentage of DOJ-intervened lawsuits and settled lawsuits increased. In particular, an appeals court decision that increases financial incentives for whistleblowing was found to increase the percentage of intervened cases by 3.2% and settled cases by 3%.

Three U.S. Courts of Appeals decisions were most significant to the study. One decision by the 9th Circuit created an incentive for whistleblowers and defendants to trade a wide release of liability for a larger settlement. The decision was that the DOJ may only influence a settlement between a whistleblower and defendant where it had intervened previously.

Another decision by the 8th Circuit allows whistleblowers to revise their claims upward throughout the investigation process and legal proceedings, which increases the total recovery.

The last decision by the 7th Circuit stated that penalties in excess of damages are allowed, which increases the total recovery and financial incentives for whistleblowers to file cases in that circuit.

Who Can File a False Claims Suit?

Private persons, called “relators,” are allowed to file suit for FCA violations on behalf of the government, called qui tam actions. Relators can be employees, customers, shareholders, or suppliers.

The qui tam provisions of the FCA, known as the “Lincoln Law,” were motivated by the recognition that the government lacks sufficient information, as compared to private citizens, to pursue all those who submit fraudulent claims to the government. As such, individuals are encouraged to share their firsthand knowledge of frauds and violations against the government with the appropriate officials.

Why are the FCA and qui tam Provisions Important?

Every citizen is affected when the government is defrauded, or laws are violated for personal gain. These fraudulent actions hurt all taxpayers because the excesses by those taking advantage of the government are paid for in increased costs for services and increased taxes. The federal government has limited resources, and it depends upon private citizens to help.

Lung Cancer Screening Boosts 20-Year Survival Rate to 80%

Lung cancer is the leading cause of cancer death for both men and women in the U.S., accounting for nearly 25 percent of all deaths from the disease. Although this statistic may be grim, the results of a new international study provide hope. In the study, researchers discovered that regular screening for lung cancer using a CT scan enables early identification of the disease, in turn significantly impacting the long-term survival rate.

Currently, lung cancer screening is limited to people deemed to be high risk. However, there has been some discussion regarding whether screening should be extended to people exposed to asbestos or second-hand smoke.

What is the Survival Rate for Lung Cancer?

According to the American Lung Association, lung cancer has a five-year survival rate of 18.6 percent. This is far lower than many other types of cancer, such as colorectal (64.5 percent), breast (89.6 percent), and prostate (98.2 percent). Survival rate refers to the percentage of people who survive a certain type and stage of cancer for a specific amount of time.

By the time symptoms appear, lung cancer is often advanced. Currently, only 16 percent of lung cancer is caught early and more than half of people die within a year of diagnosis. This underscores the importance of detecting lung cancer at an early stage through an annual screening program.

About the Lung Cancer Research Study

For the study, named the International Early Lung Cancer Action Program, researchers examined lung cancer survival rates for over 87,000 participants. Of those participants, 1,285 were screened using a low-dose CT scan. Performed annually, the screening allowed for the early detection of lung cancer. Of the 1,285 participants who were screened, 83 percent were diagnosed with early-stage cancer (stage one). Their overall 20-year survival rate was 80 percent.

The survival rate of participants also depended on the classification of their lung nodule. A solitary lung nodule is a small abnormal area measuring up to three centimeters in size. A pulmonary lesion greater than three centimeters is classified as a lung mass. Nodules are further classified as solid, subsolid (part-solid), or nonsolid.

Classification of Lung Cancer Nodules

  • Solid nodules completely obscure the entire lung parenchyma (the portion of the lung involved in gas transfer) within it.
  • Subsolid nodules have sections that are solid.
  • Nonsolid nodules have no solid parts.

In the study, researchers found that the long-term survival rate was 100 percent for participants who had a nonsolid or part-solid nodule consistency. The long-term survival rate for participants with a solid nodule consistency was 73 percent. The researchers further reported that there were no lung cancer deaths for participants with part-solid and nonsolid nodules.

If lung cancer is small enough and can be surgically removed, patients can be effectively cured long-term.

What is the Link Between Asbestos Exposure and Lung Cancer?

According to the International Agency for Research on Cancer (IARC), there is evidence that exposure to asbestos causes lung cancer and mesothelioma (a rare cancer of the thin membranes that line the chest and abdomen), as well as other types of cancer, including cancers of the larynx and ovaries. It is thought that most mesotheliomas are due to asbestos exposure.

Asbestos exposure may also increase the risk of asbestosis, an inflammatory condition affecting the lungs that may cause permanent lung damage, as well as other non-malignant lung and pleural disorders.

Asbestos has been classified as a known human carcinogen (a substance that causes cancer) by the U.S. Department of Health and Human Services (HHS), the U.S. Environmental Protection Agency (EPA), and IARC.

Whistleblowers and Rewards: Why It Matters

In 2021, the U.S. Department of Justice recuperated $5.6 billion from False Claims Act (FCA) cases. Whistleblowers played an important role in this recovery.

Who Are Whistleblowers?

Private citizens, called “relators,‚Äù are allowed to file suit for FCA violations on behalf of the government. These are known as¬†qui tam¬†actions. Anyone can become a whistleblower to report fraud to federal officials.

Whistleblowers have supported justice in the United States from the beginning of its history. In 1778, the Continental Congress enacted the first law protecting whistleblowers and provided funds for the successful legal defense of two men who had accused the commander of the Continental Navy of war profiteering and other crimes.

During the Civil War, when dishonest dealers were selling poor-quality goods to the Union Army, President Abraham Lincoln signed the FCA in 1863, a law Congress had passed to encourage citizens to report fraud against government agencies. Since then, the U.S. government has used the FCA to deal with fraud by imposing significant penalties on anyone who submits a false claim to the government.

Although the FCA also empowered the government to financially reward the people who report the misconduct, payment of these rewards was optional. In 1986, the FCA was significantly updated, with increased penalties and mandatory rewards for whistleblowers. Health care fraud and tax fraud are among the areas covered by provisions in the FCA.

[wkp_callout]

Do Cash-for-Information Whistleblower Programs Work?

Prior to the 1986 revision of the FCA, because rewards to whistleblowers were optional and hence not paid, whistleblowers were hesitant to step forth. The revision increased payment and made it mandatory and thus created a more successful system. Whistleblowers know they will be compensated for taking a big personal risk to report fraud. And because payment is a percentage of the penalties imposed, the more significant the case, the more the whistleblower will be paid. The government wins, too. Since the 1986 FCA revision, cases initiated by whistleblowers have brought in $100 billion in fines and penalties.

Former U.S. Assistant Attorney General Stuart Delery said the revised FCA was “the most powerful tool the American people have to protect the government from fraud,‚Äù attributing its success to the “commitment advocacy‚Äù of participating whistleblowers.

When other government agencies, such as the Internal Revenue Service and the Securities and Exchange Commission, revised their laws and made whistleblower payouts mandatory, their rates of success also improved.

“If you want effective anti-fraud programs, we need whistleblowers,‚Äù said Stephen M. Kohn, Executive Director of the National Whistleblower Center.

How Do We Fight Fraud Against Taxpayers and Shareholders? 

Seek justice on behalf of taxpayers with the help of our experienced attorneys. Our Dallas, Texas, whistleblower team has battled corporate giants for 20 years, aggressively fighting to hold corporations, individuals, and other entities accountable for fraud committed against the government. If you believe you have a whistleblower case, we can help.

Nearly 150 Groups Call Better Whistleblower Protections

Prior to 2009, there were no government protections for whistleblowers who exposed wrongdoing or abuse of power with regard to government contractors and grantees. This changed when President Barack Obama signed the Fraud Enforcement and Recovery Act of 2009, which protects whistleblowers who expose fraud in federal contracting. The new law provided whistleblower protections to those who work for contractors, while also providing new funds for the government to investigate fraud. The Inspectors General credited the whistleblower protections with minimizing fraud and waste.

However, the law has since been gutted after coming under attack. Its safeguards are outdated and no longer match global best practices when it comes to whistleblower protections. As a result, the United States’ ability to fight corruption has been weakened.

Given the recent unprecedented surge in government spending, an amendment to the National Defense Authorization Act for Fiscal Year 2022 has been proposed by Senator Elizabeth Warren, D-Mass.

Why is an Amendment being Proposed? 

The proposed amendment arrives in the wake of new government spending to address the effects of COVID-19 as well as domestic priorities such as infrastructure spending, which could exceed trillions of dollars. Much of this new federal spending will go to contractors and grantees. This rise in government spending requires oversight and instituting the right measures to minimize fraud, waste, and abuse, including robust whistleblower protections.

What are the Details of the Proposed Amendment?

Senator Warren’s proposed amendment would modernize outdated whistleblower laws for government contractors and grantee employees. The amendment would apply to all new multi-trillion-dollar spending and all federal coronavirus relief programs. The proposed whistleblower amendment would:

  • Protect government contractors and grantees from retaliation for blowing the whistle (not just their employees)
  • Protect public health workers excluded from coverage under the Affordable Care Act
  • End the international loophole for U.S. contractor whistleblowers working in foreign locations
  • Strengthen confidentiality protections for whistleblowers

These whistleblower protections would ensure that U.S. whistleblower laws are in line with global best practices.

Coalition Calls on Congress to Support Amendment

A coalition of almost 150 organizations supports Senator Warren’s proposed amendment and is calling on Congress to ensure better protections for contractors and grantees who blow the whistle on misconduct.

The coalition is comprised of groups as diverse as “Beyond Pesticides,” “Center for Policing Equity,” and “National Center for Law and Economic Justice,” among many others.

The coalition sent a letter to Congress expressing support for the proposed amendment, and its desire to act as a co-sponsor. A representative from the National Taxpayers Union noted that whistleblower protections are taxpayer protections because more government spending leads to greater potential for abuse of power and waste of taxpayer funds.

For example, a Boston University assistant professor calculated that based on past spending, five percent of the trillions of dollars in a budget blueprint for a proposed government infrastructure package could be lost to fraud.

How Does the False Claims Act Work?

Last year, whistleblowers led the way to over $1.6 billion in False Claims Act recoveries, continuing a long legacy of ordinary citizens fighting for what’s right since the United States’ first qui tam whistleblower law was passed in 1778. But how do whistleblower laws work, and why do they matter? Fraud on the government takes many forms, but its result is the same‚Äîhigh cost to taxpayers and damage to the foundation on which our free society is built.

What’s Behind Most Whistleblower Cases?

Many of today’s whistleblowers operate under the provisions of the False Claims Act (31 U.S.C. §§ 3729–3733, also called the “Lincoln Law” or “FCA”), one of the federal government’s primary tools used to combat fraud. The Act’s “qui tam” provisions allow a private citizen to sue on behalf of the government. These whistleblowers, called “relators” under the FCA, may be awarded 15 to 30 percent of the government’s recovery in their case, and in 2021 alone, they received $237 million in relator share awards.

What Counts as Fraud Under the False Claims Act?

The False Claims Act applies to fraud involving any federally-funded contract or program, except in cases of tax fraud. That can include defense contractors, health care providers, pharmaceutical companies, mortgage lenders, and telecommunications companies. In fact, we’ve worked on all kinds of whistleblower qui tam cases. It is impossible to list all the types of cases prosecuted under the False Claims Act, but here’s a general idea:

  • Billing for goods and services not delivered or rendered
  • Obtaining any federal contract through kickbacks or bribes
  • Shifting expenses from one fixed-price federal contract to another
  • Providing inferior or defective products to the government
  • Defective testing of products
  • Double billing
  • Upcoding healthcare charges using a different code for a more expensive treatment
  • Billing for healthcare tests not performed
  • Providing kickbacks for the referral of Medicare, Medicaid or other federally funded healthcare program beneficiaries.
  • Billing for non-FDA approved drugs or devices
  • Illegal marketing of prescription drugs and medical devices

History of the False Claims Act
One of the first whistleblower laws came into existence to protect soldiers in the Continental Army seeking protection when blowing the whistle on their superior’s illegal behavior. The current False Claims Act was passed into law during the Civil War. The contractors used by the Union Army often cut corners when providing necessities like uniforms, shoes, guns, gunpowder, and horses. “Soldiers complained about shoddy uniforms that would dissolve in the rain. They would get horses that were withered, that were weak and in some cases blind,‚Äù said Mark Greenbaum, an attorney who studies the Civil War era.

All of the government’s resources were being put towards the war effort. Without enough inspectors to ferret out the fraud, Congress created a law that provided an incentive for individuals to shine the light on fraud, giving whistleblowers a portion of any fine it collected based on their allegations.

It came to prominence again in the 1980s, when stories about military spending, including $400 hammers and $600 toilet seats, began to surface. Congress strengthened the law and defense industry whistleblowers began to come forward. Eventually, individuals in the pharmaceutical and health care industries brought more cases as well.

Importance of Whistleblowers Today
The False Claims Act is alive and well today. It’s critical to fighting fraud involving government spending on defense, health care, medical devices, prescription drugs, and much more. The False Claims Act is all but useless without brave whistleblowers. The government needs the help of everyday people to assist in uncovering and prosecuting fraud.

Our attorneys represent whistleblowers who expose fraud and false claims against the government. Our lawyers representing qui tam whistleblowers in False Claims Act matters have worked on cases including government contractor and procurement fraud, health care fraud, and higher-education fraud. They also represent whistleblowers who report securities fraud to the SEC, including Foreign Corrupt Practices Act (FCPA) violations.

The False Claims Act: 7 Fast Facts

Our nation’s primary whistleblower law, the False Claims Act allows individuals to file qui tam lawsuits on behalf of the government ‚Äî and it recovers billions of taxpayer dollars every year. But how much do you really know about the FCA?

7 Fast False Claims Act Facts

    1. Our Whistleblower Law is Over 150 Years Old. The United States’ first qui tam whistleblower law was passed in 1778. But today’s whistleblowers operate under the provisions of the False Claims Act, enacted in 1863 and considered to be one of the most effective tools of the federal government to combat fraud.
    2. Every Week in 2020, 13 Qui Tam Lawsuits Were Filed by Whistleblowers, on Average. The FCA’s qui tam provisions allow a private person, called a relator, to sue on behalf of the government, alleging that others are submitting false or fraudulent claims with the government in areas such as healthcare or defense. This past year, a significant portion of all False Claims Act cases were started by whistleblowers‚Äîa total of 672 qui tam suits.
    3. Whistleblower Relators May Receive up to 30 Percent of the Government’s Recovery: The False Claims Act’s qui tam provisions provide for incentives for the relator, so that they may receive part of the proceeds recovered in the case, typically between 15-30%. From 1986 to 2018, whistleblowers received over $7 billion in awards.
    4. Since 1986, False Claims Act Cases Have Recovered More Than $64 Billion in Taxpayer Money. And 70 percent of that came from cases filed by qui tam whistleblowers. In 2020, whistleblowers led the way to $1.6 billion in recoveries, continuing a long legacy of ordinary citizens fighting for what’s right.
    5. Over 80 Percent of 2020 False Claims Act Recoveries Came in Healthcare Cases. But healthcare fraud isn’t the only area the False Claims Act covers. Taxpayer money was also recovered in areas of defense, national security, import tariffs, small business programs and finance. The False Claims Act applies to fraud involving any federally funded contract or program, except in cases of tax fraud, so it’s difficult to list all the types of cases prosecuted under the False Claims Act historically. We’ve worked on all kinds of whistleblower qui tam cases.
    6. Whistleblowers Are Protected from Retaliation. The government encourages reporting of fraudulent activity by providing whistleblower protections for those who litigate or otherwise attempt to stop False Claims Act violations. The anti-retaliation protections shield qui tam whistleblowers from harassment, demotion, loss of employment, and any other form of discrimination in the terms or conditions of employment based on lawful acts done by the whistleblower to report or stop FCA violations.
    7. Relators Should File their False Claims Act Complaint Quickly. The False Claims Act incentivizes whistleblowers to file their case promptly, and the first to file a case generally bars later whistleblowers from sharing in the government’s recovery.

Now that you know a little more about the False Claims Act, it’s important to mention that many states have their own versions. These state laws also allow whistleblowers to report fraud and recover a portion of the recovery from the action.

How Do Whistleblower Laws Work?

In 2018, whistleblowers led the way to $2.1B in False Claims Act recoveries, continuing a long legacy of ordinary citizens fighting for what’s right since the United States’ first qui tam whistleblower law was passed in 1778.

What’s Behind Whistleblower Qui Tam Cases? 

Today’s whistleblowers operate under the provisions of the False Claims Act (31 U.S.C. §§ 3729–3733, also called the “Lincoln Law”), one of the federal government’s primary tools used to combat fraud. The Act’s “qui tam” provisions allow a private citizen to sue on behalf of the government. These “relators” may even be awarded 15 to 30 percent of recovery.

What Counts as Fraud Under Whistleblower Laws? 

The False Claims Act applies to fraud involving any federally funded contract or program, except in cases of tax fraud. That can include defense contractors, health care providers, pharmaceutical companies, mortgage lenders, and telecommunications companies. In fact, we’ve worked on all kinds of whistleblower qui tam cases. It is impossible to list all the types of cases prosecuted under the False Claims Act, but here’s a general idea:

  • Billing for goods and services not delivered or rendered
  • Obtaining any federal contract through kickbacks or bribes
  • Shifting expenses from one fixed-price federal contract to another
  • Providing inferior or defective products to the government
  • Defective testing of products
  • Double billing
  • Upcoding healthcare charges using a different code for a more expensive treatment
  • Billing for healthcare tests not performed
  • Providing kickbacks for the referral of Medicare, Medicaid or other federally funded healthcare program beneficiaries.
  • Billing for non-FDA approved drugs or devices
  • Illegal marketing of prescription drugs and medical devices

History of the False Claims Act

One of the first whistleblower laws came into existence to protect soldiers in the Continental Army seeking protection when blowing the whistle on their superior’s illegal behavior. The current False Claims Act was passed into law during the Civil War. The contractors used by the Union Army often cut corners when providing necessities like uniforms, shoes, guns, gunpowder, and horses. “Soldiers complained about shoddy uniforms that would dissolve in the rain. They would get horses that were withered, that were weak and in some cases blind,” said Mark Greenbaum, an attorney who studies the Civil War era.

All of the government’s resources were being put towards the war effort. Without enough inspectors to ferret out the fraud, Congress created a law that provided an incentive for individuals to shine the light on fraud, giving whistleblowers a portion of any fine it collected based on their allegations.

It came to prominence again in the 1980s, when stories about military spending, including $400 hammers and $600 toilet seats, began to surface. Congress strengthened the law and defense industry whistleblowers began to come forward. Eventually, individuals in the pharmaceutical and health care industries brought more cases as well.

Importance of Whistleblowers Today

The False Claims Act is alive and well today. It’s critical to fighting fraud in defense, health care, medical devices and prescription drugs — and more!

The False Claims Act is all but useless without whistleblowers. The government needs the help of everyday men and women to assist in uncovering and prosecuting fraud.

Have you witnessed fraud committed against the government? Contact us now for a confidential case review.

What Are Qui Tam Whistleblower Laws?

In the United States, ordinary people can file lawsuits targeting fraud committed at federal taxpayers’ expense. It’s a centuries-old American tradition dating to 1778. Today’s whistleblowers operate under the provisions of the False Claims Act, enacted in 1863 and considered to be one of the most effective tools of the federal government to combat fraud.¬†

From 1986 to 2020, the False Claims Act recovered more than $64 billion in taxpayer money.

In 2020 alone, there were 672 False Claims Act cases filed by whistleblowers, leading to over $1.6 billion in recoveries for federal programs like Medicare and Medicaid, continuing a long legacy of ordinary people fighting for what’s right. On average, more than 12 qui tam lawsuits were filed by whistleblowers every week.¬†

The False Claim Act’s qui tam provision provides for incentives for the whistleblower, called a “relator,‚Äù under the False Claims Act so that he or she is entitled to receive part of the proceeds of a victory on behalf of the government. While the amount of the relator’s award varies based on the circumstances of each case, from 1986 to 2020, whistleblowers received over $7.8 billion in awards.¬†

The False Claims Act is useless without whistleblowers. The government needs the help of everyday men and women to assist in uncovering and prosecuting fraud.

Types of Qui Tam Whistleblower Cases

Over 80 percent of 2020 recoveries came in healthcare. But healthcare fraud isn’t the only area the False Claims Act covers. The False Claims Act applies to fraud involving any federally funded contract or program, except in cases of tax fraud. In 2020, taxpayer money was also recovered in areas of defense, national security, mineral rights, small business programs, U.S. postal service, and education.

We’ve worked on all kinds of whistleblower qui tam cases. It’s impossible to list all the types of cases prosecuted under the False Claims Act, but here’s a general idea:

  • Medicare, Medicaid & TRICARE Fraud
  • Defense & Homeland Security Contract Fraud
  • Education & Research Fraud
  • Government Contractor & Procurement Fraud