Origins of Whistleblower Incentives 

Whistleblowing is a serious undertaking that could have repercussions on a person’s professional and personal life. The origins of whistleblower incentives stem from the government’s efforts to mitigate these repercussions and encourage people to come forward.

There are several whistleblower incentive laws out there now, including federal laws and state laws. Sometimes people call them bounties for providing the government with valuable information. They vary in terms of what a whistleblower must do to obtain the incentive or reward, and they vary also in the amount that a whistleblower might be entitled to collect based on the same principle. If an individual wishes to come forward, and wants to better understand how they can benefit from doing so, they should speak with an experienced whistleblower lawyer today.

First Whistleblower Reward Laws

The first whistleblower reward law, the initial False Claim Act,  was enacted during the Civil War. Back then, the incentive was designed to be high enough so that whistleblowers would report co-conspirators. Those who wanted to incentivize the reporting of fraud were much more concerned about getting them reports than they were about whether or not a whistleblower got a lot of money. They wanted to be sure that a whistleblower was compensated well enough to incentivize the reporting of the fraud.

Modern Perceptions of Whistleblower Incentives

While the origins of whistleblower incentives were grounded in the idea that people needed to be incentivized in order to report others, modern perceptions of whistleblowing incentives are quite different. Nowadays, the idea that a whistleblower should be incentivized to report fraud is almost something that all of society is concerned about defending. Many defense cases have come up acting as if incentivizing reporting fraud and telling the truth is somehow a bad idea.

The government did not look at it that way initially. They gave a 50% reward when the first whistleblower reward law was enacted. Now, of course with one or two state exceptions, few whistleblower incentives are that high.

Current Whistleblowing Rewards

The Federal False Claims Act provides whistleblower incentives from 15% to 30% for cases filed by a whistleblower leading to a successful recovery. That is a bit misleading, because the vast majority of cases under which a whistleblower reward is actually awarded fall into the category of cases which are intervened upon or taken over by the United States government and prosecuted by them, and that falls into the 15% to 25% category.

In order to obtain 25% to 30%, a whistleblower must see a case through fruition without the assistance of the government, and the odds of success, under those circumstances, are lower than if the government intervenes.By the time a whistleblower gets to that point, they already would have informed the government about the allegations. The initial incentive to provide that information to the government already would have done its job. Whistleblowers are compensated at the higher level for taking the additional work, time, and effort of prosecuting the case on their own.

Value of Whistleblowing Incentives

Whistleblower incentives have proven their worth to the government. They have been the most strikingly successful in obtaining information for the government of any tool available to expose fraud. As an example, while the government did collect $3.4 billion in whistleblower cases filed by an individual under the False Claims Act, it collected only about $300 million based on False Claims Act cases which the government pursued without the aid of or information from a whistleblower.

It has always been the case that whistleblowers are the key people with the information that can expose fraud. The early adopters of the False Claims Act back in 1853 understood this. They established the idea of awarding whistleblowers back then, and it is clear that whistleblower incentives are at least part of what makes these laws successful and work for the government to expose fraud. While the origins of whistleblower incentives may have relied on people’s self-interest, whistleblower incentives now serve as a reward, to those who are brave enough to come forward.