The results are in. According to data released by the U.S. Department of Justice, last year was a record year for whistleblowers (called “relators”) under the federal False Claims Act. Since 2009, the Justice Department has recovered more than $14.5 billion under the Act.
The False Claims Act, sometimes called a “qui tam” or the whistleblower law, is a federal law that dates all the way back to the U.S. Civil War. President Lincoln was worried about the ability to prosecute people who defrauded the Union Army. Because the national treasury was already seriously depleted by the war, there simply wasn’t enough money to hire more attorneys. During the war, the army was often sold defective goods yet the federal government was stretched to thin to sue vendors who delivered shoddy or defective products.
Lincoln and Congress teamed up to pass the False Claims Act. That law allows ordinary citizens to file suits in the name of the government. If successful, the whistleblower (or relator) gets to keep a percentage of whatever is recovered by the government. To qualify, however, the relator must have original information about a fraud involving a federal program.
Bad mortgage underwriting where the mortgages are federally insureded? Violation. Using foreign steel to build a federally funded bridge project? Violation. (US law requires public works projects to use American made steel and goods.) Billing Medicare for services medically unnecessary or services never provided to patients? Also a violation.
Of the $14.5 billion collected over the past 4 years, almost $11 billion was from cases involving fraud against federal health care programs such as Medicare.
Money recovered goes back to the federal agency that was defrauded, which in turn saves money for taxpayers, and sends a powerful message to potential scammers. False claims act violations can result in triple damages further deterring fraudulent behavior.
The official 2012 statistics from the Justice Department reveal:
In 2012, the Department reported record recoveries of $5 billion under the False Claims Act. These numbers include a record setting recovery of more than $3 billion in matters alleging fraud against government health care programs.
Also in 2012, the Department reports a record 647 relator (whistleblower) cases filed under the False Claims Act. This represents a nearly 50% increase since 2009, when 433 such matters were filed with the Department.
2012 also saw two of the Department’s top five recoveries against companies that were alleged to have promoted pharmaceuticals for treatment of certain illnesses that had not been approved by the Food and Drug Administration. These consisted of a record $3 billion recovery from pharmaceutical giant, GlaxoSmithKline and a recovery of $1.5 billion from Abbott Laboratories Inc. to resolve claims stemming from the company’s promotion of the prescription drug Depakote for uses not approved as safe and effective by the FDA.
While taxpayers and the government were certainly winners, the relators were also big winners. On average, whistleblowers receive 20% of whatever is collected by the government. Considering the government collected $5 billion last year, there are some mighty happy whistleblowers.
As much as we applaud the award provisions of the law, most of the whistleblowers we represent are coming to us to stop fraud and seek justice. Certainly the money helps, however.
We believe that whistleblowers are government’s most effective weapon in the government’s battle to detect fraud. We also believe that whistleblowers are genuine heroes. Everyone complains about fraud and government waste. But whistleblowers stand up and take action.
To become a whistleblower under the federal and most state false claims acts, one must have original source information about a fraud involving tax dollars or a government program. Generally, it is only the first person who files a claim that collects a reward. To qualify, the whistleblower must submit a summary of their knowledge to the government and file a lawsuit in court. Those lawsuits are “sealed” meaning they are kept secret while the government investigates.
If you think you qualify, give us a call. Our whistleblower lawyers have helped people across the United States stop fraud and collect the maximum possible award. Currently we represent the whistleblower in the largest pending false claims act case against a bank or lender anywhere in the U.S.; HUD’s $2.4 billion complaint against Allied Home Mortgage.
Obviously not all cases have losses in the billions of dollars but the US government is very interested in pursuing false claims act cases. To learn if you may qualify for a whistleblower claim, contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct). All inquiries are kept in strict confidence.
Post by Brian Mahany, Esq.
Photo by Dave Winer –