Supreme Court Decision is a Major Victory for Whistleblowers

This week, the highest court in the land sided with whistleblowers and ruled that breaches to the confidentiality (or seal) of a case brought under the False Claims Act (“FCA”) would not result in a dismissal of the case.  Cases brought under the FCA are initially filed under seal for 60 days.  During this time, the whistleblower is required to inform the injured government entity that it was defrauded by a certain company.  The government entity then has the option to intervene in the case, not intervene, or extend the time to analyze its decision.

Here, the big government contractors recruited the U.S. Chamber of Commerce in an effort to find a way where a government contractor who was guilty of defrauding the government may be able to evade having to pay the government back by using a technicality.  The case (State Farm Fire and Casualty Company v. U.S. ex rel. Rigsby) alleged that if the whistleblower violated the confidentiality/seal requirement that would cause such harm to the other party that the entire case would have to be dismissed.  This would also mean that the money that they bilked/stole from the government (and indirectly the taxpayers) would not be returned.  Thankfully, the U.S. Supreme Court took the fair approach and sided with the whistleblowers so as not to discourage many future whistleblowers from exposing corporate abuse of government funds to the government agencies and the media.  See these other blogs for more information of whistleblower action and how Stephen Danz & Associates has partnered with the Department of Justice for over 30 years in FCA cases within the fields of health care, aerospace and agriculture resulting in the recovery of millions of dollars to the government.

The following is a summary of how filing a Qui Tam Whistleblower case takes place.  The FCA Qui Tam rule allows private citizens to sue on behalf of the government.  Whistleblower, or Qui Tam, lawsuits may be brought by individuals, clients, competitors or vendors who then become “relators.”  These relators are then suing on behalf of the government and in return the government compensates the relators for speaking up against violating companies.  Out of the recovery, the Justice Department by law is allowed to give the whistleblower between 15% to 30% which can add up to millions of dollars.  What changes these percentages is whether the government intervened/joined the lawsuit which means the relator will not have to expend as much time and effort.  If the government selects not to intervene, the whistleblower and his or her attorney are entitled to a much higher amount of around 25-30% of the recovery.   If the government intervenes, then the whistleblower is entitled to 15-25% of the recovery.

Most often, the FCA is used within the health care industry to stem out fraud related to billing, staffing, and kickbacks. Examples of these are when a provider of health care services such as a doctor or hospital bills for services that were not provided or the bill was submitted at an improperly higher rate of reimbursement for the services.  In addition, health care companies are often fount to illegally bill the government for substandard services by fraudulently using higher diagnostic codes or by falsely certifying the medical necessity of medical procedures. Alternatively, these companies may realize that they have credit from their services that they have to repay to the government, but the companies do not reimburse the government within the 60 day time frame.  At that point, the nonpayment becomes a false claim. To combat retribution for filing FCA claims, the Health and Safety Code Section 1278.5 prohibits retaliation against patients, physicians, nurses and medical staff who whistleblow to the government or its agencies on patient care issues at a health care facility.  Even the IRS has been getting in on the action and recently reported that in Fiscal Year 2015 it paid out more than $103 million to whistleblowers resulting from settlements in successful lawsuits.

If you witness any potential false claims in California (i.e. requests for reimbursement to the government, not actually rendering work when reimbursement is received, or receiving and knowingly retaining an overpayment) by your company, or you are retaliated against for voicing your concern about potential wrongdoing, immediate action is crucial.  Contact the experienced employment law attorneys at Stephen Danz & Associates for a free consultation to discuss your circumstances and legal options.