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Myths About Whistleblowers

One of the myths that can sometimes keep potential whistleblowers from coming forward is the myth that internal reporting solves all issues. There may be some very big companies out there with strong and protected internal reporting mechanism, which will protect the whistleblower and keep them anonymous, and allow the company to clean house and do the right thing via an internal reporting mechanism.

Even those companies would not have such internal reporting mechanisms if it were not for the possibility of an external reporting mechanism that would allow a whistleblower to go to the government and provide real information that the government could act upon. While reporting internally may seem easier, filing a whistleblower case is one of the best ways to ensure that those attempting to defraud the government are held accountable for their actions.

The Necessity of Whistleblower Laws

The myth that internal reporting solves all issues is not only false, it can also be harmful. There must be whistleblower laws to allow whistleblowers to go to someone outside the chain of command of their own company in order to be able to be successful whistleblowers. The False Claims Act allows a whistleblower to go to the government with information and, if the government is the defrauded party, to report wrongdoing, and the government can hopefully pursue the claims. Most of the other whistleblower reward laws, sometimes withprocedural hurdles, also allow a whistleblower to go them at some point.

External Reporting

The SEC, CFTC, and IRS Whistleblower Programs all also provide an external way for whistleblowers to report. Internal whistleblower reporting has a place, but it cannot be and should not be a substitute for further external action. It may be extremely surprising to some people how few cases are filed in the federal government and how few lawyers there are out there who pursue these cases on a full plan basis. The myth that there is a huge False Claims Act machine is seriously overblown.

The average number of False Claims Act cases filed in federal court in a year is somewhere just north of 700. Keeping in mind that the federal government spends trillions of dollars in any given year and that the vast majority of those cases are healthcare-related, that means that the rest of the government spending is for defense, customs enforcement, and all manners of contracting, and there may be 150 to 200 cases a year total. This is not a large number of cases and there is always room for good cases to be filed. Everybody who works in these matters, both the government and private attorneys, are always going to hear what a whistleblower may know in an attempt to support the whistleblower and their claim(s).

Whistleblower Protection As a Myth

Besides the myth that internal reporting solves all issues, there is another myth that persists in discussions of whistleblowing, and that is the concept of whistleblower protection. It is not entirely a myth to talk about whistleblower protection, it is just more or less the wrong word. Whistleblower protection, statutes, laws, and the anti-retaliation provision of the False Claims Act all allow a relator to sue if they have been retaliated against, either for reporting fraud or for attempting to prevent fraudulent activity from occurring. These laws are important and can provide great relief for clients and for whistleblowers, but they do not necessarily stop retaliation from occurring initially.

They may provide a tremendous incentive to companies from retaliating against anyone, so in that sense they may provide an overall protection, but nobody enjoys being the subject of retaliation merely to be able to sue under a whistleblower anti-retaliation provision. Suffice it to say, these laws are not protection. The best protection for whistleblowers would be increased understanding of their value to society and the reason they should be honored for providing us with information that protects everyone.

Whistleblowers put their reputations and their careers at risk when they come forward. Despite the sacrifices that relators make when they come forward, there are certain misconceptions about whistleblowers and whistleblower motivations that persist. Chief among them is the idea that whistleblowers come forward with intentionally frivolous claims, and that whistleblowers come forward for purely selfish reasons. However, that is not the case, and often whistleblowers are not even aware of the potential for a reward when they come forward.

Frivolous Claims Filed By Disgruntled Employees

There is a myth that there are a great deal of so-called frivolous cases filed by so-called disgruntled employees and relators who wish to file these cases, with or without an attorney. It is not part of the program for anyone in this process to do this, and there is an expanding number of reasons why. The relators’ bar won a major victory in Universal Health Services vs. Escobar, which upholds an implied certification as a theory of liability under the Federal False Claims Act. It says that if someone bills the government for something, that bill implies something and often that can be the basis of a successful suit.

In the process of making that determination, the Supreme Court reviewed the False Claims Act and noted correctly that only material false claims are really actionable under the law. This is something that has been playing out in courts and has been the heart of decision-making by relators’ counsel and by the government as to what type of cases to pursue. Fraud, false claims, and treble damages are part of this law, and materiality has always been an issue when making such allegations and attempting to obtain such damages.

This law is only meant to be used in serious cases when the government has lost something or has been defrauded as a result of these actions. As a result, there just are not very many frivolous allegations brought forward. In addition, there are in fact reverse attorney’s fees available under the False Claims Act if one pursues the case that is filed and declined by the government, and found to be filed frivolously.

Myths About Greed

One of the most interesting myths about Qui Tam and False Claims Act cases is the idea that relators are greedy. This is particularly odd, because when the law was first enacted, the senators and congresspeople who were enacting it essentially wanted relators to be greedy. There was a 50 percent relator share available for a successful case, the idea behind which was to provide a major incentive for people to blow the whistle and bring important information forward to the government. The congresspeople responsible for the act specifically stated in Senate testimony that they wanted relators to have an incentive to bring allegations against co-conspirators.

Ironically enough, it is those who are attempting to defraud the government who are greedy, not the people who are telling the truth. Yet they are the ones who would defend fraud, accuse whistleblowers of greed and begrudge the people who tell the truth a share of the proceeds, which are only earned upon success. The reality is that most of the whistleblowers come forward before they even realize they have the potential to collect a claim. Often, they will complain at work and suffer serious retaliation, and only then look to find out what their rights really are.

These are not issues that whistleblowers can easily keep to themselves and only talk to their counsel about. This is a demanding process that requires patience, as no cases are resolved overnight. In fact, it can take several years to resolve False Claim Act allegation, so no serious counsel tells clients to enter into it lightly.

The Difficulty of Being a Whistleblower

There is little truth to the misconceptions about whistleblowers being frivolous and greedy. In fact, attorneys go to great lengths to be sure that people who come forward are doing so in order to expose corruption, and it really is not easy to be a relator in a False Claims Act case. Contrary to every instinct in a whistleblower’s body, that whistleblower must maintain the seal of the court and keep their allegations confidential during the government investigation. It can be a very isolating experience.

When a relator makes such serious allegations which may have cost them a job, involve public safety, or of course involve huge amounts of money stolen from the federal government, it is difficult to remain quiet and wait for the system to work. A skilled whistleblower attorney can guide individuals through the process.