Blog

National Whistleblowers Center Fights Chamber ‘Report’

Tomorrow is National Whistleblower Day and I can think of no better way to celebrate than by reading the report by the National Whistleblowers Center responding to the Chamber of Commerce’s “report” on the False Claims Act.

As the National Whistleblowers Center puts it:

The heart of the law is the recognition that whistleblowers are the key source of information on fraud in government programs. Because whistleblowers often face retaliation, and because the overwhelming majority of insiders are unwilling to risk their careers and jobs to report fraud against taxpayers, the FCA created incentives for employees to blow the whistle. Over time the FCA has been remarkably successful. Unfortunately, this success has generated opponents to the law that are intent on destroying this historically important whistleblower law.

For those keeping score the Chamber of Commerce is the leader of this opposition. While they claim to be fighting fraud they issued a “report” claiming that the False Claims Act is ineffective. Then their report went on to suggest every possible way to eviscerate the law. If you want to fight fraud, you should want to strengthen the False Claims Act, not hurt it.

Since the Chamber issued their report they have been working hard to promote it. Somebody needed to respond. So, the National Whistleblowers Center issued a 25 point report. (Full disclosure, I used to work there.)  You will find a pdf copy of that report here.

Last year 752 cases of fraud were filed under the Federal False Claims Act. That is not a huge number of cases to deal with considering the potential for fraud in a government that had a $3.45 trillion dollar budget in 2013. Yet, it is still by far the most effective law to fight fraud in this country and it is also by far the best and strongest whistleblower law in existence. Despite whining by some, Act’s unique procedure also makes it the least likely to be abused by plaintiffs and it is by no means easy to win a reward.

The act creates liability for fraud. You cannot sustain a case under this law for negligence or even doing a bad job in a contract with the government. A contractor is liable when they commit false claims by essentially lying about what they did for the money. They either ask for money they do not deserve, or they keep money for payments that do not belong to them. See Fact #24 in the Report “The FCA Does Not Permit Recovery for violations of ‘any Fine-Print Regulatory Requirement.’” In such cases, companies often create other harms — such as when they lie to the FDA about a drug being made properly and sell it anyway.  People suffer lifelong illness, debilitating side effects, and, in some cases, die from this kind of fraud.  These are the most serious cases that can be brought in any forum, usually involving the most serious of illegal behavior by companies doing business with the government. Some opponents think internal reporting will suffice in these types of incidents and find it preferable to a law which has proven results.

Check out Fact #12 in the Whistleblowers Center Report showing how companies have used such programs to fire people.

There, of course, is nothing in the False Claims Act to prevent a company from doing the right thing. A company can institute an internal compliance program that actually supports whistleblowers, it is just that the bad companies usually use such a system to fire the whistleblower rather than address the real issue.

A company can also make it clear that they want to do business by competing honestly and winning in the marketplace. Within such a company there will be no cause for fraud. I root for those companies. I want those companies to succeed. Those are the companies that the United States should do business with because those companies will also grow and be able to compete in the global market.  Unfortunately, the Chamber’s position will make it harder for honest companies to thrive.  The Chamber is working to support the companies that rip off the government. Ripping off the government is a profitable business for some, but not one that is likely to make U.S. business as a whole more competitive in the rest of the world.

There will be more reports on the False Claims Act in the next few years. Hopefully those reports will focus on the cases that have made the law so effective and important. The cases that have involved real fraud and whistleblowers are what have made the law indispensable in fighting fraud in this country.