Stein, Mitchell Teams Up with AARP and Baron & Budd in Whistleblower Case

Protecting Whistleblowers Who Report Government Fraud, Waste and Abuse

    Stein, Mitchell & Muse attorneys are experts in assisting whistleblowers report fraud, waste, and abuse in government programs to responsible government officials.  A whistleblower is someone with knowledge of the commission of some wrongdoing who discloses information to federal or state regulators or law enforcement officials.  

    Unscrupulous companies and individuals take billions of dollars from government agencies and public programs every year by making false claims for payment, filing fraudulent tax returns, and defrauding investors with bogus investment and securities scams.  The sheer number and complexity of these schemes outpaces the ability of federal and state government officials to identify, bring to justice, and recover the billions taken from the government.  Although the United States government annually recovers billions in settlements and judgments under the False Claims Act alone, it is only a fraction of the undetected schemes involving virtually every type of government contracting.  In reality, the government relies upon the assistance of whistleblowers to aid in its detection of fraud.  

    Successful whistleblowers are entitled to significant financial rewards for aiding in the identification of fraudulent schemes and recovery of ill-gotten gains.  For example, six whistleblowers were awarded a total of more than $102 million in 2009 after their efforts led to Pfizer paying $2.3 billion to federal and state governments due to illegal promotion of certain drugs for unapproved uses.  

    Drawing upon years of experience in high-level government investigations such as Watergate, Iran Contra, and more recently, the congressional inquiry following Hurricane Katrina, SM&M attorneys have the knowledge and experience to work with whistleblowers who seek to report fraud, waste, and abuse in government contracting.  The fraudulent schemes can be complex and varied, such as billing for unnecessary procedures; over-billing, double-billing, or upcoding; falsifying data to secure government approvals for drugs or devices;  providing kickbacks to induce the use of drugs or devices; providing defective or worthless services;  marketing and promoting drugs and devices for unapproved or uncleared uses; failing to give Medicare and Medicaid the best price for drugs; and billing for unallowable costs in defense contracts.

    Whistleblower programs on federal and state levels reward individuals for providing information on undisclosed frauds.  The primary federal law is the False Claims Act, 31 U.S.C. § 3729 (“FCA”), also known as the Lincoln Act.  It is intended to encourage, protect and reward citizens who come forward with information to assist the government in identifying fraudulent claims and practices related to healthcare, defense, and other federal spending programs, and to prosecute those responsible.

    Under the FCA, a private person can sue another private party on behalf of the federal government in what is called a qui tam suit.  If the federal government collects a settlement or court judgment because of the information provided by the qui tam plaintiff (called the “relator”), the government is generally required to pay a portion of the recovery (up to 30 percent) to the relator.  The amounts involved can be very large because the FCA requires a defendant to pay the government treble damages plus between $5,500 and $11,000 per false claim.
 
    Filing a qui tam lawsuit as a whistleblower, and working with government officials in investigating the claim, requires seasoned attorneys who understand the statute, the law, and the procedure, as the FCA has specific jurisdictional and procedural requirements.  For example, unlike other lawsuits, a relator is required to make specific disclosures to government officials before filing a case.  The lawsuit is then filed under a court-ordered seal, which means that only the relator and the government – but not the defendant or the public – are aware of the lawsuit while the government investigates the claim.  

    In addition to the FCA, the Restoring American Financial Stability Act (passed in 2010) authorizes a reward of up to 30 percent of the “monetary sanctions imposed” by the Securities & Exchange Commission in violations of securities laws.  This commitment to reward whistleblowers who report securities fraud follows a renewed pledge by the Internal Revenue Service (under the Tax Relief and Health Care Act of 2006) to reward whistleblowers knowledgeable of tax fraud with up to 30 percent of the tax the IRS collects. 

    Contact Andrew M. Beato (abeato@steinmitchell.com) if you know of a fraudulent practice in a government program or contract, so that you can understand your rights and memorialize any claim for a reward to which you may be entitled.