False Claims Act, Whistleblower & Qui Tam Matters

The United States has a long history of statutorily encouraging whistleblower actions dating back to the presidency of Abraham Lincoln when Congress passed the False Claims Act. The FCA’s purpose was, and continues to be, to a) impose liability on those who defraud the U.S. government (collectively, with state and local governments, the “U.S. government”); b) permit whistleblowers (who are often also referred to as “relators”) to file qui tam actions; c) help fight against public and private corruption; and d) compensate relators for stepping forward and in connection with their efforts in assisting the U.S. government in prosecuting a whistleblower action. The FCA has proven to be an effective tool to enforce anti-corruption and anti-fraud laws in the United States. For example, the United States Department of Justice announced that, for fiscal year 2013, the United States recovered $3.8 billion in settlements and judgments from civil cases concerning fraud against its government and that $2.9 billion of these recoveries — approximately 76 percent — resulted from whistleblower cases.

Please contact Miller Shah LLP online or call 866-540-5505 to arrange a consultation with one of our experienced whistleblower lawyers or email James E. Miller (jmiller@millershah.com), or Laurie Rubinow (lrubinow@millershah.com).

Whistleblower claims in the United States have been expanded beyond the scope of the FCA (generally relating to instances in which the U.S. government is defrauded), and now include potential claims under Dodd-Frank, 15 U.S.C. §78u-6, et seq., the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), 12 U.S.C. § 1833a (discussed in detail below), the Financial Institutions Anti-Fraud Enforcement Act of 1990 (FIAFEA) and the Internal Revenue Service’s whistleblower program. Recent experience has shown that the opportunities for whistleblowing are expanding well beyond the U.S. borders. Indeed, the U.S. government’s enforcement activities are increasingly focusing on non-U.S. companies. For example, the largest health care fraud settlement in U.S. history was in 2012 against a U.K. company, GlaxoSmithKline LLC. Moreover, non-U.S. companies are increasingly becoming one of the focal points of the U.S. government’s other enforcement activities based on whistleblower reports. For example, in fiscal year 2013, out of 3,238 whistleblower tips received by the Securities and Exchange Commission (SEC) under Dodd-Frank (discussed more fully below), 404 tips originated from outside the United States.

Potential whistleblower claims may include:

• Abusive naked short selling
• Accounting fraud
• Auditor complicity in fraud
• Bribery of foreign officials (in violation of the Foreign Corrupt Practices Act)
• False or misleading statements about a company
• Fraudulent conduct or other problems associated with municipal securities transactions or public pension plans
• Fraudulent or unregistered offer or sale of shares or securities, including Ponzi schemes, high-yield investment programs or other investment programs
• Insider trading
• Manipulation of share’s or security’s value, price or volume
• Theft or misappropriation of funds or securities

A violation of the Foreign Corrupt Practices Act can also give rise to a potential whistleblower claim against publicly traded companies. This is because Dodd-Frank applies to violations of securities laws and, pursuant to 15 U.S.C. § 78dd-1, the FCPA is a securities law which governs all U.S. issuers. Under the FCPA’s anti-bribery provision, it is unlawful for certain classes of persons and entities, including U.S. companies and citizens, companies listed on the U.S. stock exchange (including foreign companies whose misconduct touches and concerns the U.S.), or any person acting while in the U.S., to make payments or offers of payments to foreign government officials to assist in obtaining or retaining business. Finally and quite importantly, under Dodd-Frank, the SEC is expressly authorized to impose aiding and abetting liability on any person who “knowingly or recklessly had aided, abetted, counseled, commanded, induced, or procured” a violation of the Securities Exchange Act, Investment Advisers Act or the Investment Company Act. Such a person who provides substantial assistance to another person in the violation of these laws “shall be deemed to be in violation of such provision to the same extent as the person to whom such assistance is provided.”

We have positioned ourselves so that we can help anyone in need. Clients may have seen something that troubled them when working overseas, and we will help them once they bring that information back to the United States. Because the False Claims Act covers so many areas, we will consult with them before moving forward.

Recently, Miller Shah has pursued qui tam claims on behalf of whistleblowers in the banking and financial services industry in conjunction with federal prosecutions under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA).

Enacted in response to the savings and loan crisis of the 1980s, this federal statute has proved instrumental in civil actions relating to bank and mortgage fraud, bribery of loan officers, and false statements to federally insured entities. FIRREA whistleblowers are entitled to a significant portion of any money that the Department of Justice (DOJ) recovers through judgment or settlement.

We collect all the information for the case, and we work with government prosecutors because we have common goals. Whistleblowers want the defendant to be held accountable for any illegal behavior, but we also know that they need to be protected legally during this process. We manage cases “under seal” so that personal information or other sensitive pieces of information do not become a matter of public record.

Our whistleblower attorneys will explain the severity of the situation during a consultation. Whistleblowers may believe that the wrongdoing they uncovered is benign compared to cases heard of in the past, but they must be prepared for a long court battle. Although we hope to preserve anonymity, clients must provide us with as much information as possible while the case is litigated.

If clients believe the case may be too burdensome, they may choose to make an anonymous tip to a federal agency. We will represent them if they are swept up in a federal investigation, and we will record all our interactions to prove that the client brought this information to our attention before the tip was called in. We will help protect one’s identity and help with any retaliations a client may face from current or previous employers.

We also work with clients to understand their goals moving forward. Some clients wish to keep their current jobs, and we will adjust our approach based on what they want. Because whistleblowers are entitled to compensation for their bravery, we work diligently to ensure they are rewarded the money they deserve. Although clients may not have blown the whistle on illegal activity for the money, we understand that the case has likely taken a toll on them.

The strengthened Dodd-Frank law increased incentives for whistleblowers in 1986 by allowing a whistleblower in a successful prosecution to receive 15 to 30 percent of all money the government recovers. We are aware of previous cases in which whistleblowers were paid for their bravery, and we will use this precedent to protect clients’ rights. Clients can start a new life if they are paid appropriately for their brave actions in the face of corporate disdain for the rule of law. We will help clients deal with the press and future employers because they may face discrimination or require assistance to tell their story.

Attorneys at Miller Shah have extensive experience with various types of qui tam lawsuits and whistleblower claims, including the following:

• Anti-Kickback Violations: Illegal kickbacks to medical providers are prohibited under the law. Medical providers are not allowed to have a financial relationship with a health care entity or insurance company that drives referrals.
• Dodd-Frank Whistleblowers: Fraud in the securities industry is illegal, and whistleblowers may be aware of securities violations that happened in their own company or fraud committed by a colleague.
• FIRREA Violations: Fraudulent practices in the banking industry may be caught by government regulators who oversee banks, but these whistleblowers may find that their superiors are complicit in those violations. Complaining to a superior may not deliver favorable results.
• False Claims Act: Fraudulent claims against federal agencies are not allowed under the law. Whistleblowers may be aware of a contractor who is defrauding the government. Do not speak to a supervisor because they may be complicit in the fraud.
• IRS Whistleblowers: Corporate schemes to defraud the U.S. Treasury are handled under this law. If a client blows the whistle on tax fraud or inappropriate government spending, they can save taxpayers money.
• Whistleblower Retaliation: Retaliation in violation of state and federal laws must be taken seriously. Whistleblowers have a right to keep their job and family safe if they blew the whistle on illegal activity.

Our expert attorneys handle whistleblower claims for state agencies, federal agencies, and international businesses. We will explain how the case should be handled, and we will determine the scope of the case. It is easy to understand what to do if a client blows the whistle on a state or federal agency. We, however, must decide on each case if a client blows the whistle on a multinational or foreign company. Let our attorneys review the case before moving forward. Whistleblowers should not approach a state or federal agency if they do not know what to do. We can help clients make the best choice for themselves and their family.

In many instances, False Claims Act cases are filed with the U.S. Attorney General’s office or the DOJ, with Miller Shah lawyers taking the lead or acting as an adjunct to the federal authorities. In some circumstances, we represent the whistleblower in prosecuting the qui tam action independently of the government investigation. Whistleblowers may have approached the federal or state government with information about illegal activity, but they should hire us if they need private representation. We work alongside federal or local prosecutors and protect clients’ interests during the case instead of focusing on a conviction.

The federal False Claims Act has proved to be an effective and powerful tool in fighting Medicare and Medicaid fraud, defense contractor fraud, and other types of fraud perpetrated against the federal government. The qui tam provisions, which allow whistleblowers to file False Claims Act lawsuits against companies and individuals that defraud the government, have been a key ingredient in the False Claims Act’s success, as the federal government has recovered more than $62 billion as a result of qui tam lawsuits since 1986, with whistleblowers’ rewards totaling more than $2.5 billion. In 2019 alone, the government recovered $3 billion through these claims.

Whistleblowers are doing the right thing by coming forward. The money recovered by the government could help people get back to their normal lives and help deter illegal activity in the future. Whistleblowers have prevented more heartache for corporate employees, private citizens, and investors. They deserve that same peace of mind, and we will stand with them every step of the way.

Miller Shah’s attorneys have represented whistleblowers in several significant cases under the False Claims Act. In addition, the firm has significant experience representing clients in qui tam cases brought under similar state laws against companies and individuals accused of defrauding state and local government agencies. The firm currently represents clients in a number of qui tam actions under the False Claims Act and state law, many of which are “under seal.”

The whistleblower attorneys at Miller Shah LLP are ready to discuss potential qui tam claims under the False Claims Act or other federal/state whistleblower laws, including international whistleblowing. Call us today at 866-540-5505 or contact us online for an initial consultation. We handle cases nationwide from our offices in Pennsylvania, New York, California, Florida, New Jersey, and Connecticut.