Whistleblower laws promote the integrity of American industries by protecting and rewarding individuals who reveal corruption. Some of the world’s most powerful corporations have committed fraud time and again at the expense of the American public. Without the help of people committed to standing up for what’s right, much of that fraud would likely go undiscovered.
Whistleblowers have been instrumental in exposing the financial crimes of corporations like Enron.
Whistleblowers have been instrumental in exposing the financial crimes of corporations like Enron, Pfizer, Bank of America, and Boeing. They have also helped save lives in environmental fraud cases like the Flint water pollution scandal, and have revealed defense contractor fraud that may have endangered our troops in Iraq and Afghanistan.
Whistleblowers can earn financial rewards for reporting fraud in many industries, including healthcare, defense, pharmaceutical sales, manufacturing, education, construction, and finance. Most of these laws apply to individuals that report corporate fraud committed against the government and taxpayers.
About the False Claims Act (FCA)
The oldest American whistleblower law is called the False Claims Act. The False Claims Act (FCA) was passed by President Abraham Lincoln in 1863, when contractors sold fake gunpowder, sick horses, and other defective military necessities to the Union Army during the American Civil War.
The FCA made it so that any contractor that knowingly submitted false claims to the government had to pay financial penalties. In addition, citizens who provided the government with accurate information about a contractor’s fraud were eligible for a portion of the government’s recovery.
The FCA has undergone changes since the Civil War, most notably in 1986 when President Reagan approved important amendments to the law. The amendments strengthened whistleblowers’ protections against retaliation, and increased penalties for fraudulent parties and reward amounts for whistleblowers.
Today, whistleblowers whose reports of fraud lead to a successful government action such as a settlement or fine are eligible for 15%-25% of the amount the government recovers. The actual percentage awarded depends on various factors, including the value of the whistleblower’s information, the nature of the fraud, and the overall amount of the fine.
Thanks to the efforts of whistleblowers and their advocates in the government, there are now many more laws on the books that protect citizens with the bravery and integrity to speak out against corporate greed across industries.
Patient Harm in the Healthcare Sector
The healthcare sector is the largest source of fraud, waste, and abuse in America.
The government alone cannot spot every instance of fraud in public healthcare programs, which include Medicare, Medicaid, and TRICARE. It is often up to people with inside access to these programs, including doctors, nurses, billing specialists, and other healthcare professionals, to report fraud when they see it.
The healthcare sector is the largest source of fraud, waste, and abuse in America.
Whistleblowers with evidence of healthcare fraud can become eligible for rewards and legal protections by filing a lawsuit under the False Claims Act. These are known as qui tam lawsuits, wherein an individual sues a company on behalf of the government.
Healthcare fraud has been discovered in hospitals, nursing homes, mental health facilities, hospices, clinical labs, and pharmacies. It frequently victimizes patients by enabling substandard care and sometimes outright abuse.
Mental healthcare corporation Universal Health Services (UHS) has been under government scrutiny for years. According to recent allegations, the company forcibly committed non-suicidal counseling patients to psychiatric wards so that it could receive higher insurance reimbursements. Many of these patients report having been harassed and abused in UHS facilities.
Due to the size of public healthcare programs, there are many types of FCA billing violations that can occur in both non-profit and for-profit healthcare facilities. These include:
- Upcoding: Lying about the nature of a patient’s actual diagnosis or treatment in order to receive a higher insurance reimbursement.
- Kickbacks: Making or accepting payments or gifts in exchange for patient referrals or prescriptions.
- Substitution of Generic Drugs: Switching out name-brand prescriptions for generics, and then billing public healthcare programs for the cost of the name-brand treatment.
Shady Pharmaceutical Marketing Practices
The misconduct of pharmaceutical companies has been a nuisance to taxpayers, the government, and patients for decades. Big Pharma is comprised of some of the richest corporations worldwide; this industry is always concerned about protecting its power and profits—often at the expense of the American public.
FCA lawsuits have played an important role in stopping harmful pharmaceutical business practices like Purdue’s.
The most recent example of the dangers of Big Pharma’s greed is the nationwide opioid crisis. Companies like Purdue Pharma are being held accountable for aggressive, misleading marketing practices that may have triggered millions of addiction and deaths, and led to the destruction of entire communities around the country, particularly in Appalachia and the Southwest.
False Claims Act lawsuits have played an important role in putting a stop to harmful pharmaceutical business practices like Purdue’s. The largest whistleblower lawsuit in the pharmaceutical industry concluded in 2012, when GlaxoSmithKline (GSK) pled guilty to charges of illegal marketing and FDA fraud. GSK was forced to pay back $3 billion in criminal and civil fines as a result.
Whistleblowers who produced evidence of intentional illegal marketing schemes, violations of FDA safety guidelines, and bribery have helped save patient lives and recover billions of defrauded taxpayer dollars. Many pharmaceutical whistleblowers who filed lawsuits under the False Claims Act have earned substantial rewards.
Greed in the Financial Sector
After the economic meltdown of 2008, the United States government made it a priority to curb corporate greed. The Dodd-Frank Wall Street Reform and Consumer Protection Act, passed in 2010, contains one of the strongest and most effective whistleblower programs in the world.
The whistleblower provisions of Dodd-Frank are enforced by both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), though each of these agencies has a separate whistleblower program.
Dodd-Frank penalizes companies that commit financial crimes such as insider trading, financial reporting fraud, and lying to investors. Since the SEC’s whistleblower program started, 37 whistleblowers have been awarded $136 million for successfully helping the agency investigate such violations.
In 2014, the SEC awarded a whistleblower $30 million. In 2016, it awarded $22 million to a former Monsanto executive.
To be eligible for a financial reward, SEC and CFTC whistleblowers must provide original information (i.e. new information that the government could not have otherwise figured out itself) and lead the government to a recovery of at least $1 million from the fraudulent company. Whistleblowers that meet these criteria can earn between 10% and 30% of the recovered amount.
IRS fraud (tax evasion) is one form of financial fraud. Another is bribing foreign officials, which is prosecuted under the Foreign Corrupt Practices Act (FCPA).
The most famous FCPA case involved global manufacturing company Siemens, which systematically bribed foreign government officials in exchange for business deals. The company was forced to pay $1.6 billion in fines to the U.S. and German governments.
Deadly Defects in the Auto Industry
Many auto companies have been known to cut corners in order to drive up profits. In December 2015, lawmakers enacted the Motor Vehicle Safety Whistleblower Act (MVSWA) following shocking allegations against airbag manufacturer Takata, whose defective airbags have killed 16 people and injured 150 to date.
Whistleblowers helped the federal government obtain the evidence necessary to investigate Takata.
Whistleblowers helped the federal government develop the evidence necessary to investigate the airbag company. These individuals alleged that Takata was aware of its products’ defects for years, but sold the airbags to automakers anyway.
Auto industry whistleblowers that help the government recover $1 million more from a fraudulent manufacturer can collect 10% to 30% of that amount. Most importantly, the new law protects whistleblowers in the industry from retaliation.
Environmental Hazards in Vulnerable Communities
Everyone deserves to breathe fresh air, drink clean water, and live in a safe and healthy environment. Sadly, many companies and organizations have committed environmental fraud, putting their profits above the health and safety of communities throughout America.
The Flint water crisis is one of the most egregious examples of environmental fraud, as the willful negligence of local officials triggered the lead poisoning of children and adults throughout the community.
The good news is that oil conglomerates, energy corporations, car manufacturers, and public agencies can be held accountable for polluting the environment. A few of the laws that allow whistleblowers to speak out against environmental fraud include:
- The Clean Air Act
- The Safe Water Drinking Act
- The Energy Reorganization Act
- The Toxic Substances Control Act
Speak Up Safely
Without whistleblowers, it would be far more difficult for the government to stop fraud in its tracks. Though many corporations still try to get away with fraud, a 2016 study by the University of Iowa showed that whistleblower lawsuits ultimately change companies’ behavior for the better. When it comes to issues like public health, environmental safety, and economic prosperity, that kind of impact is a big deal.
Contact us today to see if you could be eligible to file a whistleblower claim.