Evaluating the merits of a potential case before blowing the whistle are critical.  Even if something does not seem “right,” there needs to be solid legal and factual support for a False Claims Act claim to be successful.   

Every fraudulent scheme is unique, and has its own twists and turns.  While there are no set factors or criteria that we use in evaluating a case, we look at:

• What is the nature of the fraud? What government rules or regulations are being violated?

• How can we prove the fraud?  The pleading requirements require identification of the who, what, when, where and how.  This evidence cannot be generic.  The nature of the fraud must be described in detail.  Supporting documents, such as internal emails, patient records, invoices, contract documents and other relevant documents, are critical to a successful case. 

• Confidentiality and the HIPPA Exception:  We ensure that all information we receive in evaluating a case remains confidential.  Healthcare whistleblowers are particularly concerned about their obligations to maintain patient confidentiality under HIPAA (the Health Insurance Portability and Accountability Act of 1996). HIPPA permits a whistleblower to provide evidence of fraud to an attorney if the whistleblower believes in “good faith” that the health care provider “has engaged in conduct that is unlawful or otherwise violates professional or clinical standards, or that the care, services, or conditions provided by the covered entity potentially endangers one or more patients, workers, or the pubic.”  This exception allows potential whistleblowers to provide critical documents, such as patient records, to an attorney without fear of violating HIPAA.

• The whistleblower’s knowledge and involvement in the fraud. How did the whistleblower learn about the fraud?  Was he or she involved in planning or initiating the fraud?  What actions were taken to try and stop the fraud?

• What is the Government’s Likely Interest In The Case?  While all fraud against the government is offensive and unacceptable, certain types of fraud are more likely to be pursued by the government.  Is the type of fraud one that the government has targeted?  Is the public being put at risk by the fraud?

• How much is the case worth?  Does the amount of damage to the government justify the resources required for a successful case?  And is the potential recovery worth the risk of becoming a whistleblower? 

• What are the potential defendant’s finances?  The damages in a False Claims Act case can be significant.  Will the defendant have the resources to pay?

• Pragmatic Considerations.  Is the case too risky or too small to put the whistleblower at risk by reporting the fraud?

We spend hours at no cost to our clients evaluating a case before making the decision on how to proceed.  We do this because we recognize that making the decision to blow the whistle is not an easy one, and not without risk.  We believe are clients need to full understand that if they decide to blow the whistle, they have signed up for a long, time consuming journey. 

The False Claims Act’s Qui Tam provisions allow individuals, who are known as “relators,” to act as a private Attorneys General on behalf of the United States.  Qui Tam – which means he who sues in this matter for the king as well as for himself – rights have their origin in the common law of England, and were incorporated in the original False Claims Act.

Filing Under Seal – The False Claims Act as currently enacted requires a whistleblower who suspects fraud in violation of the False Claims Act to file their complaint under seal in a United States District Court.  A whistleblower is also required to provide a copy of the complaint as well as a statement of all material evidence in support of the complaint with the United States Attorney General and the local United States Attorney.  While the complaint is under seal, which means that neither the defendants nor the public know of its filing, the government will investigate the allegations.  The period during which a complaint remains under seal lasts months, if not years.

Whistleblower’s Rights Once a Case Is Unsealed – Many times, a case is settled during the government’s investigation.  If the case is not settled, then the government can either intervene and take over the prosecution of the complaint, or decline to intervene, in which case the whistleblower can then elect to continue with the complaint, if the whistleblower wants to do so.  Even when the government does intervene, a whistleblower is still entitled to participate in the case, and often times is able to provide invaluable assistant to the government throughout the litigation.

The Filing Requirements Are Complex – The False Claims Act’s pre-filing and filing requirements, along with its jurisdictional requirements for establishing whistleblower status under the Act, are complex.  The level of factual detail required to survive a motion to dismiss are becoming more difficult to satisfy.  As a result, an otherwise strong case can be dead on arrival if the initial filing requirements, and up-front analysis and work are not done with the proper care, skill and attention.  It is critical that a whistleblower work with counsel who understands the complexities of the False Claims Act.

The FCA Rewards Those Who Act First – The False Claims Act contains what is commonly referred to as the “first-to-file” bar.  This requirement is designed to reward those with knowledge of fraud to act quickly.  If you are aware of fraud, wait too long to bring the fraud to the government’s attention, and someone else files a lawsuit before you file your lawsuit, then your lawsuit – and ability to recovery a reward – will likely be prevented by the prior lawsuit’s filing.

Weigh the Risks to Becoming a Whistleblower – Before a qui tam False Claims Act lawsuit is filed, the whistleblower must consider the risks.  While filing a False Claims Act lawsuit can result in a significant financial payment to the whistleblower, filing a lawsuit is not without risks.  And once the lawsuit is filed, the whistleblower cannot stop the government from conducting its investigation.  The time to resolve a False Claims Act lawsuit can also be lengthy, often times take years to reach a final resolution.

The amount that a whistleblower will receive in a successful False Claims Act case depends on whether or not the government joins in the case.  The False Claims Act establishes a range of percentages that the whistleblower will be awarded based on the amount recovered by or on behalf of the government.

If the government joins in the case, then a successful whistleblower is entitled to between 15% and 25% of the amount that is recovered by the government.  In a typical case, the percentage is usually negotiated with the government; however, if the whistleblower and the government are unable to reach an agreement, then the percentage will be decided by the court.

If the government does not join in the case, and the whistleblower is able to achieve a successful result on behalf of the government, then the whistleblower is entitled to between 25% and 30% of the amount that is recovered on behalf of the government.

There are many factors that go into determining a successful whistleblower’s percentage of the total recovery.  Some of the factors considered by the government are:

• Did the whistleblower report the fraud promptly?
• Did the whistleblower participate in the fraud?
• Did the whistleblower exposed a nationwide practice of fraud?
• Did the whistleblower provided extensive, first-hand details of the fraud to the government?
• Did the government have knowledge of the fraud?
• Did the whistleblower provide substantial assistance during the investigation, and during the case?
• Was the whistleblower an excellent, credible witness?
• Did the whistleblower’s counsel provide substantial assistance to the government?
• Did the whistleblower and its counsel support and cooperate with the government during the entire proceeding?
• Did the case go to trial?
• Did the filing of the False Claims Act complaint have a substantial adverse impact on the whistleblower?

While it may seem that proceeding without the government’s help would be the preferable option given the higher percentage that a whistleblower would receive, this is not the case.  In those cases in which the government intervenes, the chances of a successful outcome to a False Claims Act case are much greater.  Working with an experienced False Claims Act attorney who has dealt with the Department of Justice and local US Attorney’s Offices during the investigation phase of a case can improve the chances that the government will join in a False Claims Act case.

The False Claims Act was originally passed in 1863 during President Lincoln’s presidency.  The purpose of the Act was to recover money stolen through fraud by government contractors.  During the Civil War, the Act was used to recover money from unscrupulous government contractors who sold the Union Army decrepit horses, faulty rifles and ammunition, and rancid food rations.

The False Claims Act remained essentially unchanged until 1943.  As a result of a number of lawsuits having been filed that did nothing more than copy the allegations in criminal indictments by individuals who had no independent knowledge of the fraud against the government, and had done nothing to bring the fraud to the government’s attention, Congress amended the Act by enacting a bar that prevented an individual from bring a lawsuit if the information was already known by the government.  Congress also reduced the amount of a whistleblower’s share of the money recovered by the government from 50% to between 10% and 25%.

The government knowledge bar imposed an almost insurmountable obstacle on an individual that wanted to bring a False Claims Act lawsuit.  The 1943 amendments spelled the death knell of the False Claims Act, and it went largely unused for the next forty years.

In 1986, Senator Charles Grassley and Representative Howard Berman were instrumental in revitalizing the False Claims Act.  The 1986 Amendments to the False Claims Act increased the damages available, revised the qui tam provisions to increase the incentives for whistleblowers to come forward, removed the government knowledge bar, eliminated the need to prove specific intent to defraud the government, and lowered the standard of proof required to prove a violation of the False Claims Act.  The 1986 amendments also increased the rights of private whistleblowers to participate in a lawsuit even when the government decides to take primary responsibility for the lawsuit, and guaranteed a successful whistleblower between 15% and 30% of the amount recovered by the government, as well as reasonable attorney’s fees and expenses that must be paid by the fraudulent actors.  The amendments also added protections against retaliation for whistleblowers.

In 2009, the Fraud Enforcement and Recovery Act made further improvements to the False Claims Act.  Among the important changes were expanding the scope of liability by eliminating the “presentment” requirement, expanding the definition of a claim, defining materiality, expanding conspiracy liability, amending the reverse false claims act provision, and increasing protections for whistleblowers from just employees to contractors and agents.

In 2010, the Act was again amended as part of the Affordable Care Act (“Obamacare”).  These amendments included changes to the Act’s public disclosure bar and, importantly, revised the original source requirements by allowing a whistleblower to overcome the public disclosure bar if the whistleblower has “knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions.”