Introduction to the Whistleblower Laws: Expand Your Practice

by Alexa Drago on April 22, 2014

By Guest Blogger, Shauna Itri 

The federal False Claims Act, codified at 31 U.S.C. 3729, et seq. and pendent state False Claims Acts, (collectively “FCAs”) places power within the hands of private citizens to file a lawsuit if they have knowledge of fraud or dishonesty in transactions with the government. The citizens that bring a case on behalf of the government are called “whistleblowers.” Whistleblowers, who can be employees, former employees, and/or competitors, are provided with a financial reward if the suit is successful.  The reward to the whistleblower is normally between 15% and 25% of the amount recovered.

In addition to the FCAs, there are two other well-known statutes that incentivize whistleblowers: the IRS Whistleblower statute which provides rewards to whistleblowers for exposing significant underpayments of tax and/or violations of the internal revenue laws, and the Securities and Exchange Commission (“SEC”) Whistleblower Statute which provides rewards for whistleblowers who expose securities violations (note: not related to government money like the FCAs).

As solo practitioners, employment lawyers or lawyers working in small firms who are exposed to a variety of different types of claims and cases, it is important be alert to information your clients might possess which could give rise to a fraud on the federal or state governments or give rise to a claim under the IRS and SEC.  Thus, it is important to learn how to spot a potential case.

Many cases under the FCAs involved healthcare fraud (Medicare/Medicaid), such fraud includes up-coding, billing for unneeded procedures or services, off label marketing of drugs or devices, providing kickbacks for referrals, and selling and manufacturing defective devices.  Other types of claims under the FCAs include, financial industry fraud, such as mortgage fraud, making false certifications to receive TARP funds, FEMA fraud, etc.

Cases under the FCAs can result in prolonged, complex and expensive litigation.  Prior to bringing a case under the FCA, whistleblowers and their attorneys must have the financial resources and substantial evidence that the defendant committed fraud.  Additionally, often times government regulations are unclear and defendants’ interpretation of the regulation is fair and not knowingly fraudulent.

Shauna Itri (sitri@bm.net) is an attorney at Berger& Montague, PC in Philadelphia, Pennsylvania.



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