There are recent whistleblower trends that has seen an increase in the number of cases that have been filed. Whistleblower law was gone for a long part of the country’s history, but it was basically resuscitated in 1986 by amendments to the False Claims Act. So the modern history of this law is not very long. Likely for the first five years of that, there were few cases and most were still under seal. So, it’s taken quite a while for people to really understand that they have this right to file cases now. In addition, there’s starting to be a little bit more of a general understanding, not amongst everybody, but amongst lawyers and employment lawyers in particular, that there’s an option out there and a potential way for people to file and do something as a whistleblower.
In recent years, there have been some dramatic pieces of legislation like the Dodd-Frank Act, which created two new whistleblower laws. It seems that this also brought into the public consciousness the idea that you could be a whistleblower and that whistleblowing is a good idea under the right circumstances. It can be an idea that can provide you with an award, or at least reinforce that whistleblowing should be protected under the law.
Those kinds of ideas are still relatively new and fight against the sort of idea mentioned previously, which is that whistleblowing is still dangerous and that some people don’t like whistleblowers. But there’s starting to be a recognition that whistleblowing is really the most powerful way of fighting fraud.
While the law does go back to the Lincoln administration, it was dormant for many years. Lawyers are starting to see a sort of a maturing in the legal community of understanding that whistleblowing should be supported.
The Worst Kinds of Cases
Unfortunately, there have been a lot of cases under the False Claims Act that does not simply rip off the government in a straight financial sense. That is not to say that financial cases, like accounting cases or lying about bills, are not good cases. Those are strong False Claims Act cases.
But there’s also been a sort of a subset of False Claims Act cases that have involved real harm to individual people, like cases of defective products that police or military servicemembers have relied upon that might have gotten them killed. The most obvious and important danger in this subset involves the healthcare context: when someone is selling defective pharmaceuticals, or pharmaceuticals that were approved through some kind of fraudulent process that doesn’t really say whether they can work, or medical devices that don’t really do what they’re purported to do and cause patients harm.
Obviously, some of the most egregious false claims are those related to any type of medical facility that is providing horrific care. Not only is that a situation in which the government is harmed, but obviously people who are relying in good faith on programs that the government is funding are also getting harmed as well.
Recent Changes in Whistleblower Law
There have been two or three major changes to whistleblower law in recent years that likely factor into this increasing trend of cases. Over time, DC whistleblower lawyers and defendants have gotten creative and tougher in fighting False Claims Act cases. As a result, there were two major amendments to the False Claims Act in 2009 and 2010, both of which strengthened the False Claims Act and fought back a little bit on some of the progress that the defense was making.
Those were the Fraud Enforcement Recovery Act of 2009 and provisions of the Affordable Care Act; both included important provisions to strengthen the False Claims Act. In addition, the IRS enacted a whistleblower provision. Initially, there wasn’t really an IRS whistleblower office and you couldn’t sue for tax fraud under the False Claims Act. There were very few options available for a whistleblower who wanted to report tax fraud.
Fortunately, that’s not the case anymore. Under the Dodd-Frank legislation, two new whistleblower offices were created to report security violations and securities law. You can file with the Securities and Exchange Commission, and there is a similar law through the Commodity Futures Trading Commission.
Those are some major advancements under whistleblower law: new whistleblower offices and new options available to whistleblowers. In addition, quite a few states have enacted their own False Claims Acts. There certainly were not 29 states plus the District of Columbia with their own False Claims Act when the Federal False Claims Act was first established. There has certainly been an expansion in the idea of rewarding whistleblowers for information that may help states recover money.