A reader writes:
Rewards to whistleblowers who report fraud against the government? That’s what I do; I’m an attorney specializing in representing whistleblowers under the federal False Claims Act. The FCA allows private citizens to bring a lawsuit on behalf of the federal government against those who commit fraud against government programs – Medicare fraud, defense program fraud, and many more. The Act makes defendants liable for triple the actual damages and – critically – provides that the whistleblowers who bring successful cases can be awarded 15-30% of the amount recovered.
According to the organization Taxpayers Against Fraud, since 1987, False Claims Act lawsuits have resulted in recovery of over $40 billion from fraudfeasors. The False Claims Act is a critical piece of combating waste, fraud and abuse in government contracting and grants, and has generally enjoyed bipartisan support in Congress. Many states have their own false claims acts, modeled after the federal act.
The federal government has more recently enacted other whistleblower reward programs (tax fraud and securities law, for example).
Unfortunately, the procedures for these programs, including provisions for the protection, involvement, and payment of whistleblowers, are not as strong, and they have not (yet) been as effective as the FCA. There are many reasons these newer laws depart from the proven model of the FCA, but much of it has to do with successful lobbying by large corporate defendants, who work to demonize whistleblowers they label as “opportunistic,” and the lawyers who represent them. Never mind that the FCA has strong provisions to bar claims brought by me-too whistleblowers who don’t bring anything new to the table, once the boogeyman of “Plaintiffs’ Lawyers” has been identified, some lawmakers are scared off.
I should add, government employees are generally barred from acting as whistleblowers and receiving rewards under the FCA with respect to fraud they discover in the course of performing their official duties. Why? Because we’re already paying them to discover and stop fraud.
The FCA does not, however, help the Snowdens of the world, because he is not reporting monetary losses. However, the FCA clearly teaches that financial incentives matter. As Taxpayers Against Fraud puts it:
Incentivized whistleblower laws work because whistleblowers bring hidden information to the government’s attention and their lawyers act as ‘force multipliers’ when cases are investigated and prosecuted. Because successful whistleblowers [under the FCA] are awarded 10 to 30 percent of the sum recovered, whistleblowers and their lawyers are incentivized to investigate frauds in a timely manner, to find as much fraud as possible, and to present evidence of fraud to the government in way in which it can be easily understood and prosecuted.