As 2023 wraps up, it’s worth a look back at what has been a defining year for whistleblowers.

After the flood of pandemic-related stimulus money, 2023 saw a series of prosecutions related to misuse of those funds — brought to light by people who spoke up about the fraudulent use of public money. Whistleblowers also continued to alert the government to troubling allegations of fraud in the health care system, one of the government’s largest single expenses.

Whistleblowers received millions of dollars in awards for alerting the government to various types of fraud, which come out of money recouped from violators. The U.S. Department of Justice alone reported paying whistleblowers more than $488 million in False Claims Act awards.

And, seeing the difference whistleblowers can make, advocates spoke up about the need for the nation’s patchwork of whistleblower laws to extend to more applications or urge more activity to stop fraud in industries such as cybersecurity, cryptocurrency, and wildfire/environmental protection.

On a separate track, court decisions have set out new guidance in whistleblower law. The nation’s highest court, the U.S. Supreme Court, has taken up cases that will guide all future whistleblower actions.

One case related to when whistleblowers, represented by their own attorneys — such as the experienced whistleblower attorneys at Keller Grover — may pursue a False Claims Act case after the government opts out. The Supreme Court affirmed that the Justice Department has broad discretion to intervene in a False Claims Act case after previously declining to intervene — even to the point of moving that a case be dismissed. Since the decision came down in June 2023, the Justice Department has indicated it does not plan to use this authority broadly.

This is significant because these so-called “non-intervened” cases account for an increasing percentage of the government’s overall recovery in False Claims Act cases, according to a report this year. Although money recovered from False Claims Act cases pursued by the government decreased each of the past six years, the Justice Department reported its second-highest recovery level ever in its latest annual report — more than $2.2 billion. More than $1.9 billion of that resulted from “non-intervened” cases.

In another significant decision, the Supreme Court unanimously confirmed that liability under the False Claims Act is not dependent on what an objectively reasonable person could have known or believed to be false, as crafted by lawyers after the fact. Rather, it depends on a defendant’s subjective belief as to whether a claim was false at the time the claim was made.  

Meanwhile, in an ongoing case, the court will decide whether whistleblowers suing former employers for retaliation must prove retaliatory intent. We’ll continue tracking this in 2024.

In California, the state Supreme Court affirmed that employees who report labor law violations that were previously known still are protected by anti-retaliation provisions.

Obviously, it’s been an eventful year for whistleblower law, and because the landscape is dynamic, it can be hard to know where to start if you notice wrongdoing in your workplace. Keller Grover offers potential whistleblowers free and confidential consultations. With our proven track record of advocating for whistleblowers, we can help you understand all your options, protections, and best next steps. In more than 25 years litigating fraud and employment cases, Keller Grover has recovered billions for its clients.

In addition to contacting us for more information, you can also read more on our website about becoming a whistleblower:

•     I Saw Something Fishy at Work: How Can I Become a Whistleblower?
•     Frequently Asked Questions about Becoming a Whistleblower
•     Whistleblower 101: What Is The False Claims Act and How Can It Help Me If I Witness Fraud?
•     Whistleblower 101: How to Report Financial and Securities Fraud
•     Whistleblower cases can pit David versus Goliath — prepare yourself with the right strategy

Keller Grover attorney Kathleen R. Scanlan joined Deputy Assistant U.S. Attorney General for the Department of Justice’s Commercial Litigation Branch, Michael D. Granston, to discuss their views on whistleblower law and the critical role whistleblowers play in False Claims Act enforcement as panelists during a Nov. 2 webinar sponsored by the Federal Bar Association’s Qui Tam Section.

Ms. Scanlan primarily represents whistleblowers using the False Claims Act and state versions of the FCA to expose fraud on the government. These laws allow whistleblowers, also known as relators, to collect a percentage of fraud recoveries. Among other cases, she was counsel of record in United States ex rel Kathy Ormsby v. Sutter Health and Palo Alto Medical Foundation. In 2021, Sutter settled all claims for $90 million, one of the largest settlements ever involving a Medicare Advantage provider. Ms. Scanlan is also a member of The Anti-Fraud (TAF) Coalition, which works to empower whistleblowers, and was the founding chair of TAF’s Public Education Committee. She is currently developing new educational initiatives to further TAF’s mission to support whistleblowers and their lawyers.

During the webinar, Ms. Scanlan said that while large whistleblower settlements capture headlines, she also works on smaller cases where the average relator’s share barely keeps up with an average worker’s annual salary. On top of that, whistleblowers take great risks by speaking out against fraud against the government. There’s a personal cost to prevent taxpayers like themselves from getting ripped off.

“These cases go on for a long time…” she said. “A lot of (whistleblowers) get blackballed in their industries, and they’re not allowed to find places to work after they’ve filed these kinds of cases. …

“Smaller cases often involve key employees who are taking a big risk, to either disclose patient harm, or risks to our troops, or other material events that wouldn’t be known by the government except for this courageous individual who’s stepping forward to disclose what’s happening within their company.”

Deputy Assistant U.S. Attorney General Granston agreed with Ms. Scanlan’s view of the importance of whistleblowers, who are often the only people willing to share information that can stop or expose a fraud.

“There’s all sorts of creative ways to engage in fraud, and ferreting out the next fraud scheme is always the challenge, right? We may find a particular fraud and course of conduct we address it. But then defendants move on to something new,” he said. “And that’s why we need to use all the tools at our disposal … to try to stay ahead rather than behind the fraud curve.”

Employees who see wrongdoing at their companies aren’t the only ones who choose to become whistleblowers, Ms. Scanlan said.

“We are increasingly seeing companies who are competitors, who are willing to become whistleblowers against their competitors when they can see that their competitors are getting an advantage over them…” she said. “I think the people who run these companies have an honest incentive, they’re taxpayers, they’re getting ripped off as taxpayers and their businesses are being impacted as a result of fraud.”

Ms. Scanlan also spoke on recent developments in FCA law. She emphasized the public-private partnership between whistleblowers and the government at the heart of the law and the importance of ongoing communication between the whistleblower’s counsel and the U.S. Attorneys, whether the government has intervened or the whistleblower and their counsel are litigating a non-intervened case.

If you want advice about how to handle suspected fraud, contact Keller Grover for a free and confidential consultation. With our proven track record of advocating for whistleblowers, we can help you understand all your options, protections, and best next steps. In more than 25 years litigating fraud and employment cases, Keller Grover has recovered billions for its clients.

In June the Supreme Court issued an opinion that affirmed the government’s broad discretion to intervene after a whistleblower files a False Claims Act case, and move to dismiss the case against the whistleblower’s objections. Six months later, however, the Justice Department indicates it has no plans to broadly use this dismissal authority on non-intervened FCA cases.

Here’s more about the case at issue: In U.S. ex rel. Polansky v. Executive Health Resources, Inc., et al., whistleblower Jesse Polansky alleged that compliance solutions provider Executive Health Resources was helping its health care clients misclassify patient treatments in order to get higher Medicare reimbursements.

After the government initially declined to intervene, Polansky continued to litigate the qui tam action. The case spent years in discovery; then the government decided that the burdens of the suit outweighed its potential benefits and filed for dismissal, which a district court granted.

The Supreme Court opinion upheld lower court rulings that as long as the government first moves to intervene in a case, then offers notice and an opportunity for a hearing, dismissal may take place.

While the government chose to intervene and move to dismiss this case, it’s important to note the Justice Department doesn’t intend to expand its criteria for dismissals. That’s important for whistleblowers who have credible information about a fraud to understand. The government relies on whistleblowers, especially those who move ahead with cases after the DOJ declines to intervene. Notably, recoveries from non-intervened FCA cases topped $1.2 billion in fiscal 2022, more than half of total recoveries and more than cases where the government intervened. The decision in Polansky has not changed that.

“Polansky continues to afford the government substantial flexibility in deciding whether to move to dismiss. But I don’t expect that to change the government’s ultimate approach to the use of the dismissal authority,” said Michael D. Granston, Deputy Assistant U.S. Attorney General for the Commercial Litigation Branch. “The government’s decision to dismiss will remain subject to the justice manual requirements, that any decision to dismiss be exercised judiciously and transparently.”

Opportunistic defendants have, unfortunately, latched on to Justice Clarence Thomas’ dissent in Polansky questioning whether the False Claims Act is constitutional to undermine the government’s most effective fraud-fighting tool.

However, as The Anti-Fraud (TAF) Coalition wrote in a brief supporting qui tam relators in the first post-Polansky constitutional challenge to the False Claims Act (U.S. ex rel Brooks v. Exactech), all three branches of government have unanimously accepted qui tam actions for more than 200 years, firmly establishing the False Claims Act’s constitutionality.

“The FCA is modeled on a method of law enforcement that has been in existence since the founding of the country, and the Act itself is over 150 years old,” TAF’s attorneys wrote. “Throughout the Act’s history, Congress and the Executive Branch have worked together to enhance the Act’s effectiveness, and courts have repeatedly rejected challenges to the Act’s structure. In light of that experience, Defendant’s efforts to revive such challenges ring hollow.”

In November, the U.S. District Court for the District of Alabama resoundingly rejected Exactech’s argument that the FCA was unconstitutional. While there are other cases where these challenges are still pending, the decision in Exactech is consistent with every appellate court to have considered the constitutionality of the FCA’s qui tam provisions.

Keller Grover attorney Kathleen R. Scanlan has been watching these issues closely and will continue to monitor any further developments; she’s a member of TAF, which works to empower whistleblowers, and is chair of TAF’s Public Education Committee. Counsel that has a firm grasp on whistleblower law and is skilled at communicating with the DOJ about its view of non-intervened cases can make a world of difference for whistleblowers.

As Ms. Scanlan said during a recent webinar sponsored by the Federal Bar Association’s Qui Tam Section, whistleblower attorneys are unlikely to take on cases that lack merit due to the risk that relators and their attorneys take. She also noted the DOJ has continually expressed the need for whistleblowers to help the government reclaim funds lost to fraud.

“We aren’t going to continually run the risk that the DOJ will come in and move to dismiss us,” she said. “That’s a waste of my time and resources.”

If you want advice about how to handle suspected fraud, contact Keller Grover for a free and confidential consultation. With our proven track record of advocating for whistleblowers, we can help you understand all your options, protections, and best next steps. In more than 25 years litigating fraud and employment cases, Keller Grover has recovered billions for its clients.

The IRS Whistleblower Office paid $37.75 million in awards to 132 whistleblowers in fiscal 2022, according to its latest annual report. 

“The IRS uses increasingly sophisticated data analytics and other methods to detect non-compliance with tax laws, but we can’t find it all by ourselves,” office director John Hinman said in the report. “We need help from whistleblowers — people with firsthand knowledge of noncompliance who are willing to share what they know with us so we can investigate it when warranted.”

The office, which aims to support fair and effective enforcement of U.S. tax laws, collected $172.7 million in proceeds based on the whistleblower tips.

Its report, which was released mid-year but covers the fiscal year that ended Sept. 30, 2022, noted that the amount awarded increased from $36.1 million the prior fiscal year. The number of tips was similar. 

Lately, there’s been a focus on improving the IRS Whistleblower Program, particularly handling claims more effectively and rewarding whistleblowers more quickly, as well as improving communication with whistleblowers about their claims, Hinman said.

Like many whistleblower programs, the IRS program strives to protect whistleblower confidentiality, so it discloses information in aggregate to keep identities from becoming known. 

Also, whistleblowers who provide specific, timely and credible information about tax underpayments or violations of IRS laws may qualify for an award of 15 percent to 30 percent of the proceeds collected based on that information.

We recently wrote about the government’s need for whistleblower help to uncover “pervasive fraud” in crypto and other U.S. derivatives; the agency overseeing that market, the Commodity Futures Trading Commission, reported a record number of annual whistleblower tips. That program awarded $16 million to whistleblowers during the past fiscal year.

While U.S. whistleblower law can be a complex patchwork relating to various specific situations, the government —and the public — highly value whistleblower tips. Such tips help protect many from fraud and other harmful activity. If you see or suspect wrongdoing, the experienced whistleblower lawyers at Keller Grover can advise you about your case and prudent next steps. Contact Keller Grover for a free and confidential consultation.

Crypto/digital asset schemes drove a record number of whistleblower tips to the Commodity Futures Trading Commission during the past year.

The CFTC Whistleblower Program, established under the Dodd-Frank Act, awarded $16 million to seven whistleblowers for their help during the year that ended Sept. 30. More than $15 million went to two whistleblowers who provided significant information and help for separate, successful enforcement cases.

In its annual Whistleblower Program report, released last month, the CFTC — which oversees the U.S. derivatives market, including futures and option contracts — said it had received a record 1,530 tips this year.

“The majority of the tips received this year involved crypto — an area that continues to have pervasive fraud and other illegality,” Commissioner Christy Goldsmith Romero said in a statement about the report.

Already in the new report year, the CFTC has announced a more than $18 million award, bringing total whistleblower awards since the program’s 2010 inception to about $365 million. Sanctions in all the whistleblower-related enforcement actions have topped $3 billion.

“The CFTC could not fully protect customers and markets without whistleblowers,” Romero said. “Whistleblowers help identify fraud and other illegality, interpret key evidence, and save considerable Commission resources and time. The faster we can stop fraud, the more we can protect customers from harm.”

Like many whistleblower programs, the CFTC’s program offers both incentives and protections. Whistleblowers could receive between 10 percent and 30 percent of the monetary sanctions collected when they voluntarily provide meaningful information for a successful action. Also, the CFTC does not disclose information likely to reveal a whistleblower’s identity, except in limited circumstances.

While U.S. whistleblower law can be a complex patchwork relating to various specific situations, the government — and the public — highly value whistleblower tips. Such tips help protect many from fraud and other harmful activity. If you see or suspect wrongdoing at your workplace, the experienced whistleblower lawyers at Keller Grover can advise you about your case and prudent next steps. Contact Keller Grover for a free and confidential consultation.