Do I Have a Whistleblower Case

This is a threshold question for filing a whistleblower lawsuit under the federal or a state false claims act. There must be some type of fraudulent conduct that resulted in a monetary loss to the government. For example, it could be a healthcare provider that submits claims to Medicare or Medicaid for services that were never provided; a contractor that bills the government for unauthorized expenses; or a company that falsely underreports the value of imported goods to decrease the amount of customs duties owed.

A whistleblower lawsuit can also be based on a “reverse false claim.” A person can be liable for a reverse false claim if they knowingly conceal or knowingly and improperly avoid an obligation to pay money to the government. If, for example, a contractor received an accidental overpayment from the government and knowingly failed to repay the excess amount, it could be liable under the False Claims Act for a reverse false claim.

While a monetary loss is a prerequisite for bringing an action under the False Claims Act, there is no similar requirement for any of the federal agency whistleblower programs, excluding the IRS program. The SEC and CFTC whistleblower programs offer rewards for information involving violations of securities and commodities regulations. A claim under either program could, for example, be based on a violation involving a manipulative trading scheme that would not result in a direct monetary loss to the government.

The Auto Whistleblower Program also pays rewards for information that doesn’t require a monetary loss to the government. NHTSA offers rewards for information that leads to the successful resolution of an enforcement action. The agency accepts information covering a broad range of topics, including potential vehicle safety defects and noncompliance with federal motor vehicle safety standards. However, eligibility for a reward under this program is limited to employees or contractors of a motor vehicle manufacturer, part supplier or dealership.

Firsthand observation of misconduct that forms the basis of a whistleblower claim is generally considered to be a key component in a False Claims Act case. This proposition is intuitively based on the idea that reports from personal knowledge are more reliable than reports that rely on the hearsay statements of others. However, a 2020 study by Harvard Business Review suggests that secondhand reports are often more credible, and more valuable, than firsthand reports.

While conceding that a firsthand account of a single event is usually more reliable, the study’s authors found that a secondhand whistleblower report is less likely to contain the emotion and bias associated with a firsthand account. The study also suggested that a secondhand report was more likely to identify critical issues that involve another employee, such as one who could be part of a fraudulent scheme.

While bringing a qui tam action based solely on secondhand information could be a difficult proposition, when combined with some degree of relevant firsthand information, it could nonetheless serve as a starting point for the government to begin its investigation of the alleged fraud.

While there is no requirement that a whistleblower first make an internal report to management before filing a qui tam complaint, a prompt internal report through a company’s internal compliance process is often considered as a factor in determining the percentage of a recovery to be awarded to a whistleblower.

Notice to the employer is, however, required if the whistleblower intends to pursue a claim under the anti-retaliation provision of the False Claims Act. The Third Circuit Court of Appeals, for example, has held that a relator must put their employer on notice such that the employer fears the employee is considering reporting the fraud to the government or filing a qui tam action against the employer. The Third Circuit’s rationale is obvious — an employer can’t engage in retaliation against an employee unless it first knows that the employee is contemplating a report to the government or a False Claims Act lawsuit.  

Because the laws can vary significantly in each federal circuit, it is important to consult with an experienced whistleblower attorney who can help navigate through the varied rules and requirements of different jurisdictions.

Although there is no strict requirement that a whistleblower have documents or other evidence to support their allegations of fraud, experience has shown that it is difficult to make a compelling case to the government without some form of tangible evidence.

The government has various methods to obtain evidence against a defendant. The availability and accessibility of evidence often depends on the type of case and the nature of the fraud allegations. For example, in a case involving healthcare billing fraud, the government can obtain Medicaid and Medicare claims data from CMS. And in a case involving failure to report price disturbances in a government contract, the Office of Inspector General for GSA can conduct an audit of the contractor. The False Claims Act also authorizes DOJ attorneys to issue civil investigative demands when it believes a defendant has information relevant to its investigation.

If a whistleblower is still employed by the defendant after their qui tam complaint has been filed, it is possible they could obtain documents directly from the company. However, there are many potential pitfalls to gathering evidence from an employer who has been named as a defendant in a False Claims Act case. Adverse consequences can include potential counterclaims by an employer for conversion of documents, breach of contract, and misappropriation of trade secrets. In some circumstances, the whistleblower’s actions could also result in criminal liability.

To avoid potential civil or criminal liability, it is imperative that a whistleblower consult with an experienced attorney before they attempt to gather evidence from their employer.  

This is an important question because eligibility for a reward, or a potential reduction in the amount of an award, is often dependent on the answer.  When the facts that form the basis of a whistleblower’s qui tam complaint have been previously disclosed in a civil or criminal proceeding, a government proceeding, or in the news media, no one other than the “original source” of that information is generally eligible to receive a reward. This prohibition is known as the public disclosure bar.

The question of who is an “original source” is not always easily answered. An original source is not required to have independent knowledge of every element of a False Claim Act violation.  Courts have held that knowledge of any essential element of a violation is sufficient. An original source can also be a person who has knowledge that is independent of, and materially adds to, publicly disclosed allegations of fraud.

An experienced whistleblower attorney can evaluate the evidence and help determine whether someone might qualify as an original source.

This is another threshold question because the statute of limitations to bring an action under the False Claims Act is the longer of either six years from the date when the fraud was committed, or three years after the government knew, or should have known, about the material facts underlying the violation. But in no case can an action be brought more than ten years after a violation has occurred. For a retaliation action under the False Claims Act, the statute of limitations is three years.

The date when the clock starts to run for purposes of the statute of limitations is not always readily ascertainable. An experienced whistleblower attorney can review your circumstances and explain how the statute of limitations might apply in your case.