Proposed bill seeks to broaden False Claims Act whistleblower protections

The False Claims Amendments Act of 2021 (S.2428) would clarify post-employment retaliation against any whistleblower, regardless of their employment status with the company accused of fraud, would be prohibited.

FCA lawsuits recovered more than $2.2 billion in taxpayer dollars from fraudsters in fiscal year 2020, according to the Department of Justice (DOJ). Of that total, $1.6 billion was recovered through qui tam lawsuits in federal court, where whistleblowers allege fraud by a company or organization receiving government funds. If successful, a qui tam lawsuit can earn a whistleblower 10 to 30 percent of the taxpayer money returned to the government as part of a settlement. The DOJ said it paid $309 million to qui tam whistleblowers in FY2020.

Although the FCA does provide anti-retaliation protection for whistleblowers who have left the company that employed them, the wording of the law limited protections to “current” and “former” employees. The definition would be expanded to “any” employee, which would allow whistleblowers who are contractors or gig workers to also receive the FCA’s anti-retaliation protection.

In a Compliance Week series on whistleblowers that began publishing this week, several whistleblowers said they suffered retaliation after blowing the whistle. In some cases, the whistleblowers were never employed full time by the companies whose fraud they exposed but instead fell into these other workforce categories.

The proposed bill’s anti-retaliation provision for qui tam whistleblowers punishes companies that seek to make it difficult for a whistleblower to seek employment in their field with another company after blowing the whistle. The wording change has the support of the Taxpayers Against Fraud, the National Whistleblower Center, the Project on Government Oversight, and the Government Accountability Project.

“For too long, whistleblowers have faced retaliation from former employers. The amendments put the world on notice that blackballing whistleblowers will no longer be tolerated,” the groups wrote July 23 in a joint letter supporting the legislation. “We applaud your long-standing commitment to protecting whistleblowers.”

The bill was proposed by Sen. Chuck Grassley (R-Iowa), who has long been a champion for whistleblowers in Congress. Co-sponsors include Sens. Patrick Leahy (D-Vt.), John Kennedy (R-La.), Dick Durbin (D-Ill.), and Roger Wicker (R-Miss.).

The bill also proposes a number of other changes to the FCA process. One would shift the burden of proof on what constitutes materiality regarding continued payment by the government. Some fraudsters have argued because the government continued to pay them despite evidence of fraud, this practice somehow justified their fraudulent conduct.

This argument was given some credence, the bill’s proponents say, “following confusion and misinterpretation of the Supreme Court decision in United Health Services v. United States ex rel. Escobar, which has made it all too easy for fraudsters to argue that their obvious fraud was not material simply because the government continued payment.”

In the bill, those accused of fraud would have to prove the government’s continued payments were material to their fraudulent activities.

The bill also allows the DOJ to file a request with the court for the defendant to reimburse the government for the costs of discovery the court rules are irrelevant, burdensome, or otherwise disproportional. A judge would have the final decision on all such requests.

The legislation, if passed, would apply to “all pending and future litigation” related to trillions of dollars spent on COVID-19 relief, the bill’s sponsors noted.