Since the Civil War, whistleblowers who have reported fraud against the U.S. government have received rewards under the False Claims Act. These whistleblower cases, also known as “qui tam” cases, have become much more effective since 1986, when Congress strengthened the False Claims Act. Congress increased the damages and penalties that can be recovered, increased the rewards available to whistleblowers, and added protections for whistleblowers against retaliation by their employers.
The False Claims Act now is a huge weapon that can create massive liability for the party who has been defrauding the government, and large recoveries for the government and the whistleblower. The Act provides for recovery of damages of three times the amount of the money improperly obtained from the government, plus penalties of $5,500 to $11,000 for each false or fraudulent claim submitted. Of the amount recovered by the government, the private citizen whistleblower (also known as the “Relator”) who brings the case is authorized to share in the government’s recovery and receive between fifteen (15%) and twenty-five (25%) percent of the amount the government recovers, plus reasonable expenses and attorney’s fees. That percentage can increase to thirty (30%) percent if the government does not intervene, and the whistleblower pursues the case and obtains a recovery.
Billions of dollars have been recovered under the False Claims Act, which the government describes as its primary tool for combating fraud. In 2003, for example, whistleblower cases recovered approximately $1.4 billion for the government, and whistleblowers received a percentage of that $1.4 billion. The False Claims Act will continue to be a powerful tool in recovering damages for Medicare or Medicaid fraud; other health care program fraud; fraud in the Hurricane Katrina disaster relief; fraud, waste and abuse in Iraq by government contractors; and fraud against state governments in Medicaid and other programs.
Whistleblowers with knowledge of fraud against the government may also be able to receive rewards through in the new IRS Whistleblower Rewards Program, because the fraud also may create tax liability for the defendant.