Why Whistleblower Laws Work

Incentivized whistleblower laws work because whistleblowers bring hidden information to the government’s attention and their lawyers act as “force multipliers” when cases are investigated and prosecuted.  Because successful whistleblowers are awarded 10 to 30 percent of the sum recovered, whistleblowers and their lawyers are incentivized to investigate frauds in a timely manner, to find as much fraud as possible, and to present evidence of fraud to the government in way in which it can be easily understood and prosecuted.  Unlike a government hot line, a False Claims Act, SEC, IRS, or CFTC whistleblower case must be investigated; they cannot be ignored.

Talking Points About Successful Whistleblower Programs

  • Incentivized Whistleblower Programs Are Not Tip Lines
    Whistleblower cases are evidence-driven, and if a whistleblower hopes to collect an award, he or she has to bring sizeable and specific evidence of fraud to the U.S. government.

  • Whistleblowing is Not Easy or Fast
    Blowing the whistle on corporate fraud is not for the faint of heart. In many cases, the whistleblower will find it difficult or impossible to work in his or her field again, and the financial and emotional strains of litigation can be severe. In addition, a whistleblower lawsuit may take several years to achieve resolution. Indeed, some cases have taken more than a decade.

  • Cheaters Pay Whistleblower Awards
    Companies cheating the U.S. government pay whistleblower rewards – not one dime comes from U.S. taxpayers.  The reason for this is FCA, SEC, IRS, and CFTC whistleblower programs are structured so that that the government can be made whole, not only by recouping the cost of whistleblower awards, but also by recovering the cost of investigations, prosecutions, and lost interest. 

  • Big Cases Require Big Investments
    Big fraud cases prosecuted under the FCA, SEC, IRS, and CFTC whistleblower programs often require many years of litigation and investigation.  For example, the whistleblower in the first Columbia-HCA fraud case spent 13 years pursuing his False Claims Act lawsuit.  The law firm that spearheaded that case invested more than 85,000 hours developing the evidence and working with the U.S. Department of Justice to bring that case.  In the end, the various frauds perpetrated by Columbia-HCA returned over $1.4 billion to the U.S. Treasury.

  • Frivolous Lawsuits are Discouraged
    Because private lawyers who work on FCA, SEC, IRS, and CFTC whistleblower programs work on a contingency basis, they only get paid if they win. This means that they are unlikely to invest time, money, and energy building a case that they themselves do not feel will be productive. In addition, under the False Claims Act, a complainant can be required to pay the defendants attorney’s fees if the court finds that the claim was frivolous or brought primarily for purposes of harassment.

  • Routine Mistakes and Errors are Not Prosecuted
    The FCA, SEC, IRS, and CFTC whistleblower programs are not designed to be used to correct minor mistakes or errors, as these frauds are not systematic and rarely amount to large sums of money. In addition, the False Claims Act has a scienter, or knowledge requirement, which means that a contractor must submits claims knowing they are false, in deliberate ignorance of whether they are true or false, or in reckless disregard of whether they are true or false.

  • The Power of Deterrence
    No one knows, or could conceivably know, the full extent of fraud perpetrated against government. That said, we know that the amount of fraud is large and that the opportunities for engaging in fraud are growing due to expanding federal and state budgets. The good news is that, thanks to the False Claims Act, more and more companies doing business with the federal and states governments are thinking twice before engaging in fraud. Indeed, most of the “compliance” industry we see today is a byproduct of the False Claims Act.

  • Whistleblower Programs Change How Corrupt Businesses Operate
    Whistleblower-initiated prosecutions, settlements and judgments often have a ripple effect across industries where frauds have become an entrenched part of the business model. From hospitals to drug companies, and from oil companies and defense contractors to Wall Street trading firms, whistleblower-initiated prosecutions are a clear sign that the government is no longer winking at liars, thieves and cheats.