when compliance comes up short whistleblowers may fill the gap

Assent Global

When Compliance Comes Up Short, Whistleblowers May Fill the Gap

By Dr. Jim Castagnera, Esq.

One of the most  important purposes of a robust compliance program is to avoid the lose-lose scenario of turning a conscientious, often highly competent, employee into a whistleblower.  When this happens, both your organization and that once-valued employee usually end up highly unhappy.

Whistleblowers, in theory, enjoy the protection of the federal Office of Special Counsel and the Whistleblower Protection Act of 1989, as amended in 1994. However, the Government Accountability Project (GAP), established in 1977 to help protect whistleblowers, admits that despite its efforts and the proliferation of federal and state laws in the ensuing 25 years, “[all] too often...federal workers who try to defend their whistleblowing rights before administrative judges find that these rights exist on paper only. Whistleblowers in the private sector face an even weaker patchwork of legal defenses.” In addition to

“inadequate legal protection,” GAP lists among the likely costs of whistleblowing:

Emotional and mental pain and suffering;

Loss of the support of friends and colleagues; and

Job loss.

The success rate of whistleblower actions is estimated at 33 percent at this writing. While on one hand, this rate is up from 10 percent 25-30 years ago, the statistic is derived from reported decisions. The success rate of unreported decisions such as those dismissed without a published opinion or withdrawn on threat of dismissal at the lowest level of the relevant judicial process is believed to be much lower.

In aiming at encouraging whistleblowing, the Government Accountability Project provides advice that every organization, as the potential target of a future whistleblower in its workforce, should know about:

Contact a support or advocacy group for an attorney referral. Other sources of attorneys include the American Bar Association and the Martindale-Hubbell Lawyers Locator.

Summarize the story in writing before contacting any attorney;

Seek to build an attorney's confidence in the initial interview while also asking the appropriate questions of the selected lawyer;

Confirm that attorney-client privilege applies to the initial interview as well as to any subsequent conferences and conversations with any involved attorney(s);

Research the attorney's track record in these specific kinds of cases;

Formulate and communicate to legal counsel clear goals and objectives;

Clarify financial burdens and options at the outset of retaining legal representation and embarking of whistleblowing and/or retaliation-claim activities;

Clarify respective time commitments between whistleblower/plaintiff and legal counsel; and

Clarify the whistleblower/plaintiff's and the attorney's respective roles in settlement negotiations and other actions that may occur in what may be a very dynamic situation both within and outside of the litigation.

Employers also need to know that certain specific sorts of whistleblowing enjoy the distinct advantage of a potentially massive payoff for the employee and her legal counsel.  A special kind of whistleblowing, where allegations of fraud against the federal government are

concerned, is a so-called qui tam action. “Qui tam” is short for a long Latin phrase dating from the enactment of anti-fraud laws, aimed at dishonest government contractors, during the Civil War. Under the terms of the relevant federal statutes, a private citizen—who can be, and often is, a government contractor's own employee—becomes a “relator” when he or she brings allegations of contract fraud to the U.S. Attorney's attention. If the government goes to court and is successful in collecting on the qui tam claim, the relator actually shares in the government's monetary recovery against the contractor.

How big can a qui tam payday be for this variety of whistleblower?  Here’s an excerpt from a law firm’s summary of the U.S. Department of Justice’s 2022 report on a record-breaking year of False Claims Act recoveries:

“The vast majority of the total qui tam recoveries—nearly $1.2 billion—was attributable to cases in which the government intervened.  This is illustrative of the potential for greater FCA exposure when the DOJ elects to intervene in a qui tam action, and underscores the importance of mounting a strong defense prior to the government’s intervention decision.  At the same time, the $479 million recovered in qui tam actions in which the government declined to intervene represents a substantial increase over the $193 million secured in 2020 and is the highest total since 2017 and the third-highest total ever. This suggests an increasing willingness by whistleblowers to continue litigating FCA actions even when the government declines to intervene and an increase in relators’ ability to secure significant recoveries even when the government does not take over the litigation.”

[https://www.winston.com/en/investigations-enforcement-and-compliance-alerts/the-announcement-of-dojs-near-record-breaking-2021-fca-recoveries-provides-valuable-guidance-on-what-to-expect-in-2022-and-beyond.html]  

In next week’s blog, I’ll provide a blow-by-blow dissection of the anatomy of one such 2022 qui tam action.  Stay tuned…