Whistleblower FAQ's | Pope McGlamry

Who is a whistleblower?

A whistleblower is an individual who calls attention to wrongdoing against the government, such as fraud, bribery, kickbacks, and many other illegal activities. In most instances, the reporting individual need not be an employee of the company—the whistleblower may be a competitor, a third-party business partner, trader or market observer, investor, academic or even a fraud victim. A whistleblower may run the risk of retaliation from the company, but numerous state and federal statutes protect whistleblowers once they report the wrongful conduct.

What is the False Claims Act?

The False Claims Act, also known as the “Lincoln Law,” was enacted in 1863 during the Civil War to combat the growing fraud perpetrated by companies that sold goods to the Union army.

The False Claims Act has been amended several times to more effectively combat waste, fraud, and abuse in federal spending. Along with the recovery of funds for the government, the False Claims Act also provides financial incentives to whistleblowers by entitling him or her to a portion of the funds recovered from the company by the government.

More recently, the IRS Whistleblower Rewards Program and Dodd-Frank Wall Street Reform and Consumer Protection Act were signed into law. Section 922 of the Dodd-Frank Financial Reform Act now provides rewards to whistleblowers by the Securities Exchange Commission (SEC). Section 748 provides for similar rewards by the Commodity Futures Trading Commission (CFTC).

What is a qui tam lawsuit?

Qui tam comes from a Latin phrase (qui tam pro domino rege quam pro se ipso in hac parte sequitur) which means "who sues in this matter for the king as well as for himself." Qui tam lawsuits can be filed under several federal laws but the most common is the False Claims Act (FCA), which penalizes individuals and companies for filing false claims in government-funded programs.

Under the False Claims Act, a whistleblower is referred to as the “relator”. The qui tam relator brings the civil lawsuit on behalf of the United States, in the name of the United States. The action can also be filed in the name of one or more states when applicable. The Complaint must be filed “in camera” and “under seal” and must remain sealed for at least 60 days. After the government is served with the Complaint and a disclosure statement of all material evidence and information the relator possesses is delivered to the government, the government will investigate the relator’s allegations. The seal is frequently extended for months or even years while the government conducts its investigation.

Ultimately the government must decide whether it will intervene in, or pursue, a case. If the government elects to intervene, it assumes primary responsibility for prosecuting the case. If the government declines to intervene, the qui tam relator has the right to “conduct the action” and proceed on their own. If the relator prosecutes the case without the government, the relator is typically entitled to a larger share of any recovery, generally 25-30% of the recovery in non-intervened cases.

What is the procedure for submitting a claim to the SEC?

A whistleblower filing a Dodd-Frank Act or Commodity Exchange Act related claim is an individual who provides information to the SEC that relates to a possible violation of federal securities laws or rules that has already occurred, is ongoing, or is about to occur. Only whistleblowers who provide information “voluntarily” are entitled to awards. Information will not be considered voluntary unless it is submitted “prior to receiving a request, inquiry, or demand” from a governmental agency or self-regulatory board.

An individual must file a Tip, Complaint or Referral (“TCR”) Form provided by the SEC, and can file either online or by mailing or faxing the same to the SEC. When the case is complete, and if the case had over $1 million in final sanctions, the SEC posts a “Notice of Covered Action” on its website. The whistleblower then has 90 days to apply for an award by filling out Form WB-APP and submitting it to the SEC by midnight on the claim due date. A whistleblower who has submitted his or her tip anonymously must disclose his or her identity to the SEC prior to the payment of an award.

What types of rewards are made to whistleblowers?

As a reward for reporting the fraud, whistleblowers can be awarded a share of 15% to 30% of any recovery that the government receives under the False Claims Act. If the government intervenes in the qui tam filing, the whistleblower can be entitled to 15% to 25% of the funds. If the government declines to intervene and the whistleblower successfully proceeds with the suit, the reward can increase to 25% to 30% of the recovery. Although there is no precise formula, the Senate Finance Committee and the Department of Justice have issued guidelines that impact the precise share that a whistleblower receives.

Whistleblower actions filed under the Dodd-Frank Wall Street Reform and Consumer Protection Act can also lead to monetary rewards. Under these Acts, an individual who provides the SEC with direct, independent, and original information leading to an enforcement action that results in over $1 million in monetary sanctions is eligible to receive an award of 10% to 30% of the amount collected.

Can a private individual receive an award for blowing the whistle?

Yes, but only if the individual files a qui tam lawsuit. Notifying the government of the false claim without filing suit does not qualify one to receive a financial award.

Will Pope McGlamry take a whistleblower case if I don’t live in Georgia?

Yes, Pope McGlamry represents whistleblowers nationwide and internationally.

Is there a charge for an initial consultation with Pope McGlamry?

No. We will give your case a thorough evaluation at no cost to you.

Do Pope McGlamry's whistleblower lawyers charge a fee to take the case?

In whistleblower cases, Pope McGlamry works on a contingency fee basis, meaning there is only a fee and expenses if the case is successful. The False Claims Act also provides for statutory attorneys’ fees and expenses.

Can I file a qui tam suit anonymously?

Under the False Claims Act, when the case is initially filed and under seal during the government’s investigation, the relator’s identity will remain confidential. However, there are instances when the case can become partially unsealed thereby identifying the relator so that negotiations with the defendant can occur. Once the seal is lifted, the relator’s name will be revealed.

Under the Dodd-Frank Act and Commodity Futures Trading Commission, the SEC vows to protect whistleblowers’ identities “to the fullest extent possible.” However, there are sometimes limits on the ability to shield a whistleblower’s identity when that information is necessary for an administrative or court proceeding.

How soon should I file a lawsuit after uncovering fraud?

As soon as possible. If another whistleblower files a case before you, your case may be dismissed. If the knowledge you have about the fraud becomes public knowledge, your case may also be dismissed. Additionally, there is a six-year statute of limitations on false claims cases, after which a suit cannot be brought before the court.

What laws protect whistleblowers from retaliation?

There are a variety of both state and federal laws that protect whistleblowers from retaliation, from the False Claims Act, to Dodd-Frank, to the Occupational Safety and Health Act. This is why it is important to have qualified legal advice to navigate all the possible laws that apply.

What sort of whistleblower activity is protected?

Actions taken by a whistleblower to stop, report or testify about activities that are illegal or violate public policy are protected against retaliation by employers. Section 3730(h) of the False Claims Act provides that any employee, contractor, or agent who is “discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done…in furtherance of a [qui tam] action” is entitled to relief including reinstatement, two times the amount of back pay, interest on the back pay, special damages, including litigation costs and attorney’s fees.

Relief from retaliatory actions has a three year statute of limitations under the False Claims Act and a lawsuit must be brought within 3 years of when the retaliation occurred.

How does an employee prove discrimination or retaliation?

Though case specific, retaliation can take many forms such as:

Demotion
Denying promotion
Reducing hours or pay
Intimidation, harassment or threats
Denial of benefits
Disciplining
Termination

Such activities can be shown to be retaliatory for many reasons, including:

The activity happened shortly after the protected conduct;
The employee’s treatment does not match the treatment of the employee prior to the protected conduct;
The employee’s treatment does not match the treatment of similarly situated employees;
Work performance that was considered satisfactory or exceptional abruptly changes to unacceptable;
The employer has knowledge of the protected conduct;
The employer displays hostility to the protected conduct; and
The reason given for the activity is based on false accusations against the employee.