The DOJ reported that the Civil Division recovered $2.8 billion in fiscal year (FY) 2015 as a result of 638 “whistleblower” lawsuits filed under the qui tam provisions of the False Claims Act (FCA). These provisions allow individuals to file lawsuits alleging false claims on behalf of the government. The amount recovered by False Claims Act whistleblowers, represents 80 percent of the total $3.5 billion the government recovered. The overall recoveries were significantly lower than the $5.69 billion recovered in 2014. However, the percentage of the amount recovered from whistleblowers increased greatly, from slightly over 50 percent in 2014 to 80 percent in 2015. The reality is that the vast majority of monetary recoveries from civil fraud cases are a result of false claims actions filed under the qui tam provisions. Since 2013, recoveries resulting from these cases have averaged around $3 billion per year.
Most false claims actions are filed under the False Claims Act whistleblower, or qui tam, provisions, which allow individuals to file lawsuits alleging false claims on behalf of the government. If the government prevails in the action, the whistleblower, also known as the relator, receives up to 30 percent of the recovery. Awareness of the FCA has been growing since the passage of the 1986 FCA amendments, which increased incentives for whistleblowers to file lawsuits on behalf of the government. The number of whistleblower lawsuits is also growing steadily. From 2000 to 2008, such cases averaged from 300-400 hundred per year, but have been increasing steadily since then. In 2009, the number of cases rose to 433 and continued to rise to about 750 in FY 2013. Since then, the number has been around 700 per year. To date, the DOJ has handled about 7,000 qui tam cases.
The key driver for so many individuals to become qui tam relators is that they share personally in the recoveries from successful lawsuits. In 2015, the government paid out $597 million to whistleblowers as compared to $435 million the previous year. From January 2009 to the end of FY 2015, the government recovered $19.4 billion in settlements and judgments related to qui tam suits and paid whistleblower awards of $3 billion during the same period.
Lessons to be Learned From the False Claims Act Whistleblower Lawsuits
- The ability to direct potential whistleblowers to internal compliance communication channels is critical. Evidence over the years has shown that weak internal reporting channels drive individuals externally into the hands of law firms that are happy to take up their cases directly with the DOJ.
- Ensure ongoing monitoring of the hotline operation and other compliance communication channels. This means ongoing review of: (a) hotline related policies; (b) Code of Conduct references to reporting issues; (c) education and training programs that speak to reporting potential problems; (d) verifying that policies are followed properly; and (e) reviewing and analyzing hotline logs and follow-up actions.
- Ensure ongoing auditing of the hotline and compliance communication channels by outside experts is in a separate contract or included specifically in the scope of work of the independent review and evaluation of the compliance program.