U.S. Whistleblower Law

(Title 31 — Money and Finance, §§ 3729 — 3733)

In 1863, the False Claims Act was written to provide a civil penalty "of double the amount of damages suffered by the government, plus a $2,000 forfeiture for each false claim submitted." [9]. The law was "enacted to prosecute Civil War manufacturers who substituted sawdust for gunpowder in Union army supplies." [7]

Any person could submit a lawsuit on behalf of the government regarding a false claim against the government. These people are referred to as the qui tam. Qui tam comes from the Latin "qui tam pro domino rege quam pro sic ipso in hoc parte sequitur," meaning "who as well for the king as for himself sues in this matter." Black's Law Dictionary (1979) defines a qui tam action as "an action brought by an informer, under a statute which establishes a penalty for the commission or omission of a certain act, and provides that the same shall be recoverable in a civil action, part of the penalty to go to any person who will bring such action and the remainder to the state or some other institution." [9] In other words, the qui tam plaintiff is sues on behalf of his/her own right as well as that of the government.

Amendments in both 1943 and 1986 were enacted to "increase detection and prosecution of false claims submitted to the federal government." [8] The Reform Act of 1986 was "the brain-child of public-interest attorney John R. Phillips." [7] If the Attorney General elects to take over the case, whistleblowers are guaranteed 15 to 25 percent of funds recovered as well as legitimate compensation for legal fees, back pay, and other damages. If the Attorney General does not elect to take over the case, the whistleblowers are guaranteed 25 to 30 percent of the winnings.

In general, a claim is defined in § 3729 (1986) as, "any request or demand, whether under a contract or otherwise, for money or property which is made to a contractor, grantee, or other recipient if the United States Government provides any portion of the money or property which is requested or demanded, or if the Government will reimburse such contractor, grantee, or other recipient for any portion of the money or property which is requested or demanded."

The Act defines 7 acts that can be prosecuted as false claims. Individuals can be prosecuted under the False Claims Reform Act of 1986 only if they knowingly defraud the government with one of these false claims. By "knowingly", the Act states that a person, with respect to pertinent information about the false claim, "has actual knowledge of the information, acts in deliberate ignorance of the truth or falsity of the information, or acts in reckless disregard of the truth or falsity of the information." This means that violators can be prosecuted not on "clear and convincing evidence" which was required in the 1863 Act but only on a "preponderance of evidence." An employee does not need to prove that their employer submitte4d a false claim, just have a "good-faith belief that a violation had been committed."

False claims as defined by the 1986 Reform Act are as follows:

"§ 3729 False Claims

(a) Liability for Certain Acts — Any person who —

1. knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the Unites States a false or fraudulent claim for payment or approval;
2. knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government;
3. conspires to defraud the Government by getting a false or fraudulent claim allowed or paid;
4. has possession, custody, or control of the property or money used, or to be used, by the Government and, intending to defraud the Government or willfully to conceal the property, delivers, or causes to be delivered, less property than the amount for which the person receives a certificate or receipt;
5. authorized to make or deliver a document certifying receipt of property used, or to be used, by the Government and, intending to defraud the Government, makes or delivers the receipt without completely knowing that the information on the receipt is true;
6. knowingly buys, or receives as a pledge of an obligation or debt, public property from an officer or employee of the Government, or a member of the Armed Forces, who lawfully may not sell or pledge the property; or
7. knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government."

The penalties for violations can be very costly. Violators can pay up to $10,000 for each false claim as well as attorney’s fees and other costs. But, if the violator admits to submitting a false claim within 30 days of the Government discovering it, the fines are reduced to no less than twice that suffered by the Government. All other damages are waived.

Most importantly, the 1986 revision includes a whistleblower protection provision. (31 U.S.C. § 3730 (h)) "Any employee who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment by his or her employer because of lawful acts done by the employee on behalf of the employee or others in furtherance of an action under this section, including investigation for, initiation of, testimony for, or assistance in an action filed or to be filed under this section, shall be entitled to all relief necessary to make the employee whole." [4]

(Title 5 — Government Organization and Employees, § 1201)

In order to prevent retaliation against whistleblowers, the Civil Service Reform Act of 1978 established the Office of Special Counsel. Since whistleblowers "serve the public interest by assisting in the elimination of fraud, waste, abuse and unnecessary Government expenditures," the Whistleblower Protection Act of 1989 was written in order to strengthen this protection for whistleblowers by the Office of Special Counsel. Congress found that "protecting employees who disclose Government illegality, waste, abuse, and corruption is a major step toward a more effective civil service." The Act improves protection as follows:

1. mandates "that employees should not suffer adverse consequences as a result of prohibited personnel practices and
2. establishes that the primary role of the Office of the Special Counsel is to:

The Act provides deadlines to which the Office of Special Counsel must adhere in prosecuting whistleblower complaints. "To help prevent retaliation against whistleblowers while their cases are pending, the Counsel is specifically prohibited from disclosing the identity of whistleblowers, except when necessary to prevent imminent danger to the public or to prevent criminal activity." [8] To prevent delays after trial, whistleblowers who win their cases are compensated for attorney’s fees and other costs while appellate court reviews are pending. [10]

(Title 10 — Armed Forces, § 2409)

Much like the whistleblower protection clause in the 1986 False Claims Reform Act, the Department of Defense Authorization Act of 1987 was written specifically to prohibit retaliation against whistleblowers. But, this Act was written specifically for employees of defense contractors who disclose "substantial violations of the law."

Under this Act, "an employee of a contractor may not be discharged, demoted, or otherwise discriminated against as a reprisal for disclosing to a Member of congress or an authorized official of an agency or the Department of Justice information relating to a substantial violation of law related to a contract."

The maximum penalty for violation is complete compensation for damages to the employee. This can included rehiring, back pay, employment benefits, attorneys’ fees, or other fees that were lost or otherwise reasonably incurred by the whistleblower throughout the course of "bringing the complaint regarding the reprisal [to the] head of the agency." [11]