Damages and Penalties in Whistleblower Cases

The following is taken from an interview with a DC whistleblower lawyer as they discuss damages and penalties in whistleblower cases. Call today for more information.

With respect to the False Claims Act, damages are generally damages to the government or the government’s loss. It’s a little unusual. In most kinds of lawsuits, civil lawsuits, the damages are monetary losses or something that you can claim to be the equivalent of a monetary loss suffered by the person suing. Of course, there can damages suffered by whistleblowers personally if they are the subject of retaliation. But when we’re talking about whistleblower damages under the False Claims Act, for the underlying case, we are really talking about damages to the federal or to the state government.

Violations of securities law can also result in prosecutions. In those cases damages to investors can be the subject of an action undertaken by the SEC on the basis of information from a whistleblower act. When that happens a whistleblower may obtain a share of the government’s action as a reward.

Damages in whistleblower law are interesting because they don’t relate, at least in the underlying action, to a damage suffered by the person bringing the case or reporting the violation. This relationship makes whistleblower cases very unusual under civil law.

Can Companies or Individuals Be Sent to Jail in Whistleblower Cases?

Individuals are not sent to jail directly under the authority of the False Claims Act because the False Claims Act is a civil law. However, the Department of Justice has made it clear that they will review False Claims Act cases to see if there are criminal violations involved. And they reserve the right to charge fraudsters with criminal violations.

We, as private attorneys, have no say whatsoever in what the government does with the information with respect to a criminal prosecution. There’s been a lot of news lately that the Attorney General’s Office may now be prosecuting (or may be considering prosecuting) financial issues with more frequency with respect to criminal actions, and that could potentially change the landscape of False Claims litigation.

There was a lot of discussion about this topic when the financial crisis hit in 2007. However, there really wasn’t much in the way of criminal prosecutions, for the financial crisis that occurred back then.

Of course, despite high profile politicians telling us that companies are people, I’m not aware of an incident in which a company has gone to jail. Companies have been debarred from doing business with the government as a result of findings in a whistleblower case. In addition, companies can be suspended from trading under SEC laws.