When you or your company is faced with a government FCA matter, a whistleblower matter, or an SEC, CFTC, or IRS bounty hunter investigation, we work closely with you to deliver a tailored approach that fits you, your company, and your matter. We also assist you in positioning your company to mitigate your risk under any of the several whistleblower laws.
The FCA continues to be a primary means for the federal government to seek recoveries for alleged fraud committed in various industries. In addition, nearly two-thirds of the states have enacted FCA statutes, and many of the states have become active in pursuing these cases.
The federal FCA and many state FCAs carry the possibility of significant monetary penalties and severe collateral consequences such as criminal actions and debarment from government programs.
Changes to the federal FCA, however, have broadened its reach to many sectors of the economy and to entities and individuals regardless of whether they are direct contractors with the government or direct recipients of government funds. Changes have also been made to encourage more whistleblowers to come forward and file actions or refer matters to the authorities. In addition, governments have allocated increased resources to court potential whistleblowers and create specific industry-focused task forces devoted to increasing fraud recovery efforts.
All of this has resulted in a sharp rise in FCA recoveries in recent years. It is also resulting in the proliferation of types of FCA actions and liability theories that are touching new industries and raising novel issues.
We represent clients in intervened and non-intervened FCA lawsuits, parallel criminal proceedings, and in debarment, suspension, or exclusion proceedings. We negotiate with the DOJ and HHS-OIG regarding potential FCA actions and corporate integrity agreements (CIAs). We conduct internal investigations; draft compliance policies; evaluate alleged overpayments and reverse false claims; advise clients on potential issues and collateral risks; and conduct employee exit interviews to help identify and mitigate FCA risks.
SOX Whistleblower Statute
In the wake of Enron and other accounting investigations, Congress passed the Sarbanes-Oxley Act of 2002 (SOX), which included a whistleblower provision designed to protect employees of publicly traded companies who internally report information relating to violations of the federal securities law and other laws. SOX whistleblower complaints must be filed with the U.S. Department of Labor and are administered by the Occupational Health and Safety Administration (OSHA). Recent Department of Labor rulings regarding SOX whistleblower claims have been favorable to whistleblowers and often have differed from federal court interpretations, leaving the landscape somewhat uncertain.
Dodd-Frank Act SEC Bounty Statute
With the passage of the Dodd-Frank Act in 2010, Congress expanded the SOX whistleblower protections by creating significant incentives for whistleblowers to report securities law violations. The Dodd-Frank Act provides that whistleblowers providing certain information to the SEC can recover 10 to 30 percent of any recoveries obtained by the SEC when the SEC’s recovery exceeds $1 million. Dodd-Frank also strengthened the anti-retaliation provisions.
The SEC rules implementing Dodd-Frank’s whistleblower provisions do not require that the whistleblower report the violation internally. This regulatory scheme permits an employee, unbeknownst to the company, to report alleged securities law violations to the SEC. As a result, companies must be ready to react in the event that the SEC already has information from an employee, including interacting with the employee in a manner that will not be construed as retaliation.
Dodd-Frank CFTC Bounty Statute
The Dodd-Frank Act created a nearly identical whistleblower bounty statute that is administered by the CFTC. Whistleblowers providing certain information to the CFTC regarding violations of the Commodities Exchange Act likewise can recover 10 to 30 percent of any recoveries obtained by the CFTC when the CFTC’s recovery exceeds $1 million.
IRS Whistleblower Statute
Similar to Dodd-Frank, the Internal Revenue Code has also been amended to encourage whistleblowers to report issues regarding unreported taxes. Whistleblowers under the IRS bounty statute also can recover between 10 to 30 percent of the taxes recovered by the government.
Other Whistleblower Statutes
There are dozens of other federal whistleblower statutes touching on a wide range of industries and services. OHSA administers more than 20 such whistleblower provisions, including whistleblower statutes relating to workplace safety violations, violations of food and beverage laws, and other public safety concerns. In addition to the bounty statutes administered by the SEC, CFTC, and IRS, federal law contains other bounty statutes, including a provision in the Financial Institution Reform Recovery and Enforcement Act (FIRREA) of 1989 that provides a bounty for the reporting of certain alleged banking and fraud violations.