Federal Whistleblower Claims
False Claims Act
The federal False Claims Act (FCA) is the government's primary civil remedy to redress false claims for federal money or property, such as Medicare benefits, federal subsidies and loans and payments under contracts for goods and services, including military contracts. Most false claims actions are filed under the Act's whistleblower, or qui tam, provisions, which allow private citizens to file suits alleging false claims on behalf of the government. If the United States prevails in the action, the whistleblower receives up to 30 percent of the recovery. Actions that are considered violations under the False Claims Act include:
- Knowingly presenting (or causing to be presented) to the federal government a false or fraudulent claim for payment;
- Knowingly using (or causing to be used) a false record or statement to get a claim paid by the federal government;
- Conspiring with others to get a false or fraudulent claim paid by the federal government;
- Knowingly using (or causing to be used) a false record or statement to conceal, avoid, or decrease an obligation to pay money or transmit property to the federal government.
In addition to providing a bounty to persons who successfully report a false claim, the FCA also incorporates a whistleblower provision that prohibits retaliation against any employee who files a FCA case or assists in an investigation of a false claim against the government.
In 2006, Congress amended the Internal Revenue Code to protect employees from retaliation for reporting tax fraud and to permit whistleblowers to obtain a reward for reporting such misconduct. Examples of tax fraud or evasion include:
- Deliberately underreporting or omitting income
- Claiming false deductions
- Hiding or transferring assets or income
- Overstating the amount of deductions
- Making false entries in records
- Failing to report income earned in a stock exchange
- Maintaining two sets of books
- Misusing trusts
- Abusing charitable deductions
- Shifting profits overseas
- Transferring ownership of intangible property rights to offshore companies
- Discounting receivables to an unrelated foreign business entity.
Under the IRS Whistleblower Reward Program, an individual who exposes tax fraud can receive an award ranging from 15 to 30 percent of the proceeds recovered by the IRS. To qualify for an award, the tax, penalties, interest, additions to tax, and additional amounts in dispute must exceed $2 million and, if the allegedly noncompliant person is an individual, the individual's gross income must exceed $200,000.
Sarbannes Oxley Act
The Sarbannes Oxley Act (SOX) is a federal law that contains significant protections for employees who report corporate wrongdoing. Specifically, the law protects employees against retaliation if an employee provides information, causes information to be provided, or assists in an investigation regarding fraudulent activity by a public company. Assisting in an investigation includes filing, testifying in, or participating in a proceeding filed or about to be filed against the public company relating to any alleged violation enumerated in SOX. SOX's whistleblower provision also protects employees who refuse to participate in any unlawful conduct that may lead to fraud, securities fraud, or fraud against the company's shareholders from discrimination.
In 2010, Congress took additional action to protect and encourage whistleblowers in publicly held companies and companies in the consumer financial services industry as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Among other things, Section 922 of the Dodd-Frank Act requires the Securities Exchange Commission (SEC) to pay awards, subject to certain limitations and conditions, to whistleblowers that voluntarily provide the SEC with information about violations of securities laws that lead to a successful enforcement action resulting in monetary sanctions exceeding $1 million. By statute, whistleblowers are entitled to receive anywhere between 10 to 30 percent of total monetary sanctions recovered. Section 922 also provides protection to whistleblowers by prohibiting retaliation by employers against individuals who provide information regarding potential securities violations to the SEC.
Banking and Financial Institutions
In addition to possible coverage under the Dodd-Frank and Sarbanes-Oxley Acts, employees in the banking industry are also covered under three older whistleblower laws that protect employees working for credit unions, financial institutions, FDIC-insured institutions, federal banking agencies, and the Federal Reserve. The three laws—the whistleblower provision of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), the whistleblower provision of the Federal Credit Union Act, and a third law that covers "financial institutions" involved in "monetary instrument transactions"—are essentially identical in nature and protect employees who blow the whistle on gross mismanagement, the gross waste of funds, an abuse of authority, possible violations of any law or regulation, or specific dangers to the public health or safety.
The Occupational Safety and Health Act (OSHA)
The Occupational Safety and Health Act is the primary federal law that governs occupational health and safety in the private sector and federal government in the United States. To help ensure that employees are, in fact, free to participate in safety and health activities, the Act prohibits any person from discharging or in any manner discriminating against any employee because the employee has exercised rights under the Act. These rights include complaining to OSHA and seeking an OSHA inspection, participating in an OSHA inspection, and participating or testifying in any proceeding related to an OSHA inspection. If an employee has been retaliated or discriminated against for exercising his or her rights, he or she must file a complaint with OSHA within 30 days of the alleged adverse action.
Warning: As with filing claims under the California Fair Employment Housing Act and Title VII, actions brought under some of these federal whistleblower laws may require exhaustion of administrative remedies before an action can be filed in court. The statutory time period for filing a complaint after the last adverse action has taken place, may be as short as 30 days or 180 days. If you believe you have been retaliated against for exercising your rights under one of these federal whistleblower laws, you should consult an attorney as soon as possible.