How Are Whistleblower Rewards Calculated?

Anyone considering blowing the whistle should understand how whistleblower rewards are calculated. The Award to the Qui Tam Plaintiff, under 31 U.S.C. Section 3730 D of the False Claims Act, allows a whistleblower to obtain money in a successful case to recover some of the proceeds of a False Claims Act Case. The history behind this award started in 1863 when the original bounty provided in the False Claims Act was enacted. In that version of the law, it was high, a reward a 50 percent bounty on funds recovered by the action of the plaintiff-relator. The original idea was that the plaintiff-relator was supposed to have a high incentive and there was even support for the concept that it should be high enough for someone to report on a co-conspirator. That was the thinking from at least some of the legislators who enacted the first version of the act were concerned.

This is a little bit of contrast with the current version of the law and some current thinking about whistleblowers. The current version of the law allows the courts to substantially reduce any share of the proceeds that a relator might earn, below what is usually statutorily required if that relator was someone who planned or initiated the fraud scheme under which the action was brought. The Department of Justice, in making share awards, may take almost anything into consideration including the actions of the relator to determine the final amount of a reward it may deem proper within statutory parameters.

Difference Between Rewards Under the False Claims Act and Whistleblower Law

There are not many differences between how whistleblower rewards are calculated under the False Claims Act, and whistleblower law, except that the rights and the procedures of the whistleblower under these various laws do change.  A whistleblower of a False Claims Act is supposed to receive 15% to 25% of the case value or the amount paid by the defendant if the government intervenes. And 25% to 30% if the whistleblower goes on by him or herself. Some of the percentages are different under state laws.

The fact is, relators have a little more right to litigate that issue under the False Claims Act than they do with the IRS or SEC whistleblower laws although they do have the right under the SEC whistleblower laws contest the amount of an award and not whether or not they are entitled to it.

Whatever the government collects, the whistleblower gets a share, and that is the general principle. Whistleblowers can also receive attorney’s fees and other court expenses in addition to the damages. The difficulty, of course, is that they cannot receive them until and unless they win. They can receive those kinds of compensations under the False Claims Act.

Whistleblowers Only Get a Percentage Of The Total Damages

A potential whistleblower has to keep in mind the total recovery announced does not translate down to what the relator and whistleblower get. They get a percentage, and that’s great. Sometimes that can be a lot of money, but people need to understand it can take a long time for this litigation to work its way through the system. Whistleblowers basically get everything that they deserve if they get anything because it’s a long, long process. So even though a whistleblower might make a considerable amount of money, it is not easy and these large numbers look a little larger on the first flash than what they wind up being as a result of being a percentage of the case.

Therefore it is important to point out that collection agencies get a percentage of what is owed on an underlying debt a percentage, which is usually very high by whistleblower standards. Although collection agents have a right to their money, whistleblowers have to have evidence work for years on a case and prove at least to someone’s satisfaction that there is a case to get anything.  Collections are already almost by definition proven. A DC lawyer can attempt to make sure that you are receiving the damages that you deserve.

Is the False Claims Act The Only Kind of Case You Can File to Get a Reward As a Whistleblower?

No, it’s not. In addition to the Federal False Claims Act, there are now 29, maybe 30 state False Claims Act with various levels of kinds of claims that one can bring.

There are also two relatively new whistleblower laws that were enacted as a result of the Dodd-Frank legislation; one with the Securities and Exchange Commission (SEC), the other with the Commodity’s Future Trading Commission. These two whistleblower laws don’t work exactly like the Federal False Claims Act, but they do provide rewards if those agencies take the information from the whistleblower and obtain some kind of judgment or action, as a result. The whistleblower gets a reward and that’s a good thing.

Then there’s the IRS whistleblower law to report major tax fraud to the IRS. The IRS provides rewards when they take an action as a result of the whistleblower’s report leads to them collecting money.

Financial Obligations for Defendants

Defendants in a whistleblower case don’t have to pay until they settle or lose a judgment. While, generally speaking, the government’s decision to intervene in a case indicates a high degree of a chance of success, defendants have the right to defend themselves in court. And if they prevail in court, of course, they don’t have to pay.

If they do not prevail, or if they settle, then they would have to pay. But the government’s decision to intervene in a case doesn’t mean that the defense doesn’t have rights to defend themselves against the allegations. For more information on how whistleblower rewards are calculated, schedule a consultation with a knowledgeable lawyer in Washington DC.