Whistleblowers Take Tremendous Risks in Coming Forward – Incentives Should Increase

There are hundreds if not thousands of people working on Wall Street who have witness all sorts of fraud and financial crime, and they have been scared to come forward, for fear of retribution, for fear of ruining their careers.

But the truth of the matter is that becoming a whistleblower, and disclosing information that leads to a succdssful prosecution, can also be lucrative.

Look at the case of Bradley Birkenfeld, the IRS whistleblower behind one of the largest tax fraud cases in world history. Thanks to the lawyers working with him, he received an IRS whistleblower reward of $104 million. This case and many others like it follow a similar story – the whistleblower came to us for representation and a whistleblower informant award, and we won.

In close partnership with our U.S. and international anonymous whistleblowers, whistleblower lawyers can help save billions of U.S taxpayer dollars by uncovering massive wrongdoing, cheating, and injustice.

If you’re a U.S. citizen or foreign national who knows of violations resulting in successful prosecution, where the U.S. government obtains monetary sanctions, you should consider getting in touch for references.

Here are some of the most common questions about whistleblower awards.

What is a Whistleblower Informant Award?

Simply put, a whistleblower informant award is generally a percentage given to a whistleblower for their brave and ethical action of reporting a violation of a specific act. The award (or reward) amounts differ, depending on the type of violation you’re reporting. No matter what, if your information leads to successful prosecutions under key anti-fraud laws, it’s absolutely mandatory for the government to pay you a reward.

If you are a whistleblower, it’s important for you to follow the proper procedures in order to receive a award. Each qui tam whistleblower reward law has its own filing procedures and rules. These rules must be carefully followed in order to qualify for a reward. You need a whistleblower lawyer with experience who knows the intricacies of federal and state whistleblower reward laws. 

Law firms can help you every step of the way — to help you collect evidence, properly file legal documents, work with government officials, and litigate if called to do so.

What Types of Whistleblower Rewards Are There?

Those who report violations of certain acts are eligible to submit a claim to receive a whistleblower informant award. However, those filing claims should know that federal and state law have their own rules and regulations governing a request for a reward. These procedures are extremely technical and failure to file a timely claim following the specific procedures outlined in each law can result in an otherwise qualified whistleblower losing his or her claim to a reward.

Below are the most common whistleblower laws that provide a reward to qualified whistleblowers:

  • False Claims Act Whistleblower Rewards — the False Claims Act qui tam provision empowers whistleblowers who have firsthand knowledge of frauds/violations to report them to the appropriate government officials, and to incentivize the whistleblowers to work directly with government investigators, often in the capacity of a confidential informant. The False Claims Act qui tam law sets mandatory minimum payments to whistleblowers to help convince “insiders” to take the risk of losing their jobs or suffering other harms. The minimum reward is 15% of what the government collects from the fraudster. The maximum award is 30%. A whistleblower’s right to a reward is enforceable in court. The guaranteed minimum payments, which are often in the millions of dollars, are essential for convincing otherwise skeptical potential whistleblowers to step forward.
  • IRS Whistleblower Rewards (Tax Fraud & Underpayment) — The Internal Revenue Act has a strong tax whistleblower law that permits any IRS or tax fraud whistleblower to obtain between 15 and 30% of any collected proceeds received by the government as a result of the original information filed by the whistleblower. If the whistleblower disagrees with the outcome of the award claim, he or she can appeal to the Tax Court. The IRS has strict rules protecting whistleblowers’ confidentiality.
  • SEC Whistleblower Rewards (Securities Exchange Act) — The SEC whistleblower law requires that the SEC pays a qualified whistleblower who provides original information to the SEC regarding a violation of any of the securities laws enforced by the SEC.

    The SEC whistleblower reward cannot be lower than 10% of the sanctions obtained by the SEC, or higher than 30%. More than one whistleblower can qualify for a reward, but under no circumstances can the total amount of awards paid be higher than 30% of the sanctions obtained.
    Whistleblowers become eligible for an SEC whistleblower reward once the SEC issues sanctions of $1 million or more based on the whistleblower’s information. Whistleblowers are also entitled to “related action” awards, once the $1 million threshold is met, as well as a percentage of rewards obtained from other federal agencies, if these agencies rely on the disclosures made by the whistleblower to the SEC. Whistleblowers can file reward claims with the SEC anonymously. But to do so the law requires that you hire a whistleblower attorney.
  • Commodities and Exchange Act Whistleblower Reward— The Commodity Exchange Act’s whistleblower law requires that the CFTC pay an award to qualified whistleblowers. Like the SEC whistleblower law, it was passed as part of the Dodd-Frank Act. To qualify a whistleblower must provide original information to the CFTC regarding a violation of any of the commodity exchange laws enforced by the CFTC.

    The reward cannot be lower than 10% of the sanctions obtained by the CFTC, or higher than 30%. More than one whistleblower can qualify for a reward, but under no circumstances can the total amount of rewards paid by the CFTC be greater than 30%.

    To obtain a reward the total amount of sanctions the CFTC must issue in an enforcement action (or related enforcement actions) is $1 million. Thus, the program only pays awards in larger cases. However, once the $1 million threshold is met, whistleblowers can collect on all future related sanctions given by the CFTC. Whistleblowers can also receive CFTC whistleblower awards on other “related action” sanctions awarded by other law enforcement or regulatory agencies.
  • Foreign Corrupt Practices Act — Whistleblower claims under the FCPA are initially filed with either the Securities and Exchange Commission or the Commodity Futures Trading Commission. If you are a foreign national with original information for the SEC regarding a violation of any of the securities laws enforced by the SEC and/or a violation of the Foreign Corrupt Practices Act, you may be eligible for a financial reward.The FCPA has widespread transnational application. Billions in fines have been collected by the United State as sanctions for bribes paid outside the United States by publicly traded companies.U.S. citizens and non-U.S. citizens are eligible for rewards based on crimes that originate outside the United States. Since 2012 numerous whistleblowers represented by the qui tam attorneys at Kohn, Kohn and Colapinto have been paid over $350 million for cases that concern violations of law that occured in Europe or other international jurisdictions.

How are Medicare Whistleblower Rewards Paid?

Medicare and Medicaid whistleblower rewards fall under the False Claims Act. Whistleblowers reporting violations of the False Claims Act, where original information leads to successful prosecution and the government obtains monetary sanctions, are eligible for a whistleblower informant award of between 15 and 30 percent of what the government obtains. However, by law, the whistleblower must work with a whistleblower reward lawyer to file a lawsuit against the violator. Since the False Claims Act was amended the taxpayers have recovered tens of billions of dollars based on medical frauds, including sanctions awarded against drug companies, hospitals, nursing homes, medical providers and doctors.

The various types of Medicare or Medicaid frauds include:

  • Billing Services or Items That Aren’t Necessary
  • Billing for Items That Do Not Even Exist
  • Unbundling and Upcoding
  • Illegal Drug Marketing
  • Kickbacks
  • Drug Diversion
  • Collusion
  • Poor Treatment in Nursing Homes

Getting the government to pursue a Medicare or Medicaid case requires a substantial amount of evidence. Those who have worked as an employee under the entity they are reporting have the best chances of success, because of their intimate knowledge of a particular fraud scheme. If you know of fraud and can prove the fraud, the government must pay a huge reward, provided you strictly follow the rules governing qui tam cases.

EPA Whistleblower Rewards

The Environmental Protection Agency (EPA) does not directly provide rewards to whistleblowers who report violations. With enforcement from federal and state agencies, they can however issue fines for pollution and other types of environmental damages. In addition, if a whistleblower knows of crimes against the environment, including illegal fishing, illegal logging, and wildlife trafficking, they may be eligible for a substantial reward under the False Claims Act, the Commodity Exchange Act, and Foreign Corrupt Practices Act, all of which have whistleblower provisions that can be used to combat criminal activity.

All major wildlife trafficking laws, laws prohibiting illegal lumbering, and laws prohibiting illegal, unreported, and unregulated fishing have reward provisions. These laws include the Endangered Species Act, the Lacey Act and laws covering fishing administered by NOAA, the National Oceanic and Atmospheric Administration. Unlike the False Claims Act and similar reward laws, the Endangered Species Act, Lacey Act and laws protecting fish are discretionary. Awards under these environmental and wildlife protection laws are paid by the U.S. Fish and Wildlife Service and NOAA Fisheries.

Another law available to environmental whistleblowers is the Act to Prevent Pollution from Ships (APPS). The APPS incentivizes the reporting of pollution on the high seas. The law permits federal courts to pay whistleblowers up to 50% of any sanction obtained by the government for illegal ocean pollution on the high seas. The courts have awarded millions of dollars in awards to non-U.S. citizens working as seamen on ships. These ships are usually non-U.S. owned ships, “flagged” outside the United States. The APPS law has transnational application. 

Anyone who witnesses an environmental violation should immediately contact an experienced whistleblower attorney. The facts of the case must be carefully screened to determine if the violation is covered under an effective whistleblower reward law.

COVID-19 and OSHA Whistleblower Rewards

The Occupational Safety and Health Act (“OSHA”) does not provide any awards to whistleblowers. Thus, employees forced to work in unsafe conditions during the coronavirus pandemic are not entitled to any awards for reporting violations under OSHA.

However, violations of worker, patient, or public health and safety laws may be covered under powerful award laws such as the False Claims Act or the Dodd-Frank Act. The False Claims Act has been successfully used in numerous cases where the quality of medical care is at stake. Likewise, the SEC has already taken numerous enforcement actions against companies based on violations related to COVID-19. The False Claims Act and the Dodd-Frank Act have among the best award laws. These laws provide employees with an opportunity to obtain a whistleblower reward for reporting violations and also protect them with strong anti-retaliation provisions. They all set minimum payments to those who come forward with information at the risk of losing their jobs or suffering other damages.

Due to the weak nature of the OSHA protections and other labor laws, it is advisable to talk to a whistleblower reward lawyer. Unlike the OSHA provisions, qui tam whistleblower laws have a private right of action. Reward and qui tam laws can be very effective at providing compensation to whistleblowers and protecting workers that report underlying violations.

What are the fees for hiring or to hire a whistleblower reward lawyer?

Many whistleblower reward lawyers work for a “contingency” fee. In a contingency fee case the clients do not pay any attorney’s fees. If the whistleblower loses his or her case, they do not owe the attorney any money. If the whistleblower wins the case, the contingency payment for the attorney is generally between 30-40% of the award.