The law incentivizes whistleblowers (who are termed “relators” under the federal False Claims Act) to bring fraudulent activity to the government’s attention. Under the False Claims Act, whistleblowers can receive substantial monetary awards for reporting fraud that cheats government programs.
When the first iteration of the False Claims Act in the 19th century, whistleblowers were entitled to half of the monetary forfeiture and damages collected by the government. During the FDR administration, the whistleblower’s incentive was slashed to one-tenth of the proceeds of a qui tam lawsuit or settlement. In 1986, Congress amended the law and incentivized whistleblowers with a sliding scale of compensation, ranging from 15 percent to 30 percent of the total recovery. The sliding scale was an attempt by Congress to encourage relators to blow the whistle, but also to make it in the relator’s interest to cooperate during the investigation and litigation.
Under the current False Claims Act, if the federal government “intervenes” (meaning the feds agree to prosecute the claim because they believe it has merit), a whistleblower is entitled to between 15 and 25 percent of the proceeds of the case. If the government opts not to intervene in a whistleblower lawsuit, the relator in a successful qui tam case is entitled to between 25 and 30 percent of the recovery.
But, like everything else in the law, exceptions abound. The government treats whistleblowers who participated in the reported fraud differently. For relators who actively participated in the fraud and were convicted of this conduct, the government may bar recovery completely. See 31 U.S.C. Sec. 3730(d)(2). For relators who were not convicted of the fraud they reported, but nevertheless helped to plan and carry out the fraud, the government may award these whistleblowers less than the statutory minimum of 15 percent. Whistleblowers who participated in the fraud, but did not help to plan or initiate it, may receive between 15 and 25 percent of the recovery.
In addition to the statutory ranges set by the False Claims Act, courts will evaluate a number of other factors when determining the relator’s financial compensation for blowing the whistle. These factors include:
- Whether the relator’s information was based off publicly available information
- Whether the whistleblower planned and initiated the activity that defrauded the government
- The extent of the whistleblower’s assistance during the investigation and litigation of the qui tam claim
- The significance of the whistleblower’s information
- The degree of cooperation by the relator
- Whether the relator reported the fraudulent activity promptly or slowly
- Whether the whistleblower provided inside information and records that would not have otherwise been available
- The degree of contribution by the whistleblower’s lawyers
- Whether the case actually helped end the scheme that was defrauding public money
- Whether the government would have been able to discover the fraudulent activity on its own
- Whether the relator’s information brought attention to a safety issue that endangered the public
- Whether the whistleblower endured hardship when reporting the claim
- Whether the relator’s lawyers helped the government prepare for trial
- The credibility of the whistleblower during trial or deposition
- Whether the whistleblower’s information revealed a local or nationwide fraudulent scheme
Some of these factors are discretionary, but courts are required to consider some of these factors when determining a whistleblower’s award. At Chaikin, Sherman, Cammarata & Siegel, P.C., our whistleblower attorneys have been helping clients for more than 40 years. Our legal team is passionate about helping whistleblowers bring qui tam claims in a manner that both maximizes their personal recovery and also saves the taxpaying public’s money. If you or someone you know has information about activity that is financially defrauding a government program, please contact our team of attorneys. Because strict time deadlines apply to bringing a whistleblower claim, we recommend getting in touch at you earliest convenience.
