We’ve all seen the news coverage. From Medicare and securities fraud to government contractor fraud and workplace safety violations, businesses and individuals often cut corners or run scams. And some can’t resist testing new government programs and contracts for weak spots to exploit. To these scammers, the Affordable Care Act is an irresistible target-rich environment and we’ll hear their stories in the coming years. Here’s the good news: you can actually make money catching these bad actors.
Fraud and other illegal acts don’t occur in a vacuum. Ordinary people often know what’s going on behind the scenes or at least know about pieces of the puzzle. In the workplace, someone might see a curious bank deposit slip or overhear a conversation. Someone else might see purchases that make no sense. Still others might see health and safety practices that violate state or federal law. But how many are willing to go to the authorities with information about these practices?
In the past, even the most honest in our society have hesitated to turn in their supervisors or companies for fear of losing their jobs or suffering other retaliatory practices. And whistleblowers, fired for ratting out their employers, learn quickly that new jobs aren’t exactly lining up for them. Prospective employers tend to view them much as campers view skunks. Modern day whistleblower statutes solve most of these problems.
Whistleblower statutes were well entrenched by the 14th century in England where qui tam writs empowered ordinary people to turn in lawbreakers. The king was happy to pay bounties to entice the people to help maintain law and order. People who reported these crimes fell into two categories: those who were the victims of the crimes and used these laws to collect bounties while obtaining redress for their own harm and those who had no involvement in the crimes other than to collect money for turning in those who did.
In the United States, many of the early statutes of the Continental Congress contained qui tam provisions. In 1863, Congress enacted the False Claims Act after unscrupulous government contractors compounded the horrors of the Civil War by selling substandard provisions to Union troops. Robert Tomes in his account of the war, entitled, “Fortunes of War,” wrote, “[f]or sugar it often got sand; for coffee, rye; for leather, something no better than brown paper; for sound horses and mules, spavined beasts and dying donkeys; and for serviceable muskets and pistols the experimental failures of sanguine investors or the refuse of shops and foreign armories.” Government inspections were “thwarted by haste, negligence, collusion, or favoritism.”Id.
The False Claims Act primarily targets people who knowingly make or cause to be made false or fraudulent claims, those who knowingly have a hand in making or using false records or statements in support of a false or fraudulent claim, and those who conspire to do these things. It also punishes those who knowingly make false claims to evade obligations owed the government, including taxes. The current penalty ranges from $5,500 to $11,000 per false claim.
The False Claims Act’s qui tam provision empowers private individuals to become plaintiffs against those who defraud the government. Called “relators,” these people file sealed complaints against the wrongdoers on behalf of themselves and the government and submit the information to the Department of Justice. The department decides whether to take over the claim (intervene), settle it, or move to dismiss it. Relators stand to get a substantial portion of the proceeds or settlement –usually 15 to 25 percent – plus reasonable attorneys’ fees and costs. And, they’re specifically protected from employer retaliation. According to the Department of Justice, in 2012, their qui tam settlements and judgments totaled just shy of $5 billion, more than three times the non qui tam settlements and judgments obtained for fraud.
Today, whistleblower provisions cover fraud and other illegal activity in a host of areas from commodities and securities to food safety and taxes. In the next few articles, we’ll examine some of these statutes. On any given day, a whistleblower could walk through your door and tell you a tale of corruption, danger, and fraud. When that happens, remember these qui tam actions and grab that chance to raise that legal sword and shield. You could make a difference by stopping a modern-day rip-off artist.
- By Jeremy Browner
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