The Federal False Claims Act Protects Whistleblowers Who Try to Stop Fraud on the Government

January 6, 2023

The federal False Claims Act not only protects whistleblowers who file lawsuits alleging fraud against the government, but also protects whistleblowers who take other steps to try to stop False Claims Act violations.

The Federal False Claims Act, sometimes called the “FCA” for short, is, according to the Department of Justice, “the government’s primary civil tool” to combat fraud against the government.  The FCA does this with the help of whistleblowers (sometimes called “relators”) who expose companies defrauding the federal government.  Those whistleblowers can file “qui tam” lawsuits and may share in 15-30% of the government’s recovery if the lawsuit is successful.  The FCA has long prohibited employers from retaliating against whistleblowers for filing or planning to file such a lawsuit. A whistleblower who is retaliated against may be eligible for reinstatement, double back pay, interest, and special damages, including attorneys’ fees.

But the federal False Claims Act also protects whistleblowers who try to stop fraud in other ways—and sometimes even protects whistleblowers who try to stop fraud before it occurs. Whistleblowers who internally report violations of the FCA to their supervisors to try to stop those violations are also protected from retaliation, and potentially eligible for the same damages as those who file qui tam law suits.

For example, last year in a case at the Third Circuit Court of Appeals (the federal appeals court for New Jersey, Pennsylvania, and Delaware), United States ex rel. Ascolese v. Shoemaker Construction Company, a whistleblower worked on a public housing project that received a $30 million federal grant. The whistleblower identified potentially fraudulent non-compliance with certain contractual provisions, and he raised those concerns about fraud to his employer, the contractors on the project, and the Philadelphia Housing Authority. According to his retaliation lawsuit, the whistleblower’s employer fired him for reporting this alleged fraud. The Third Circuit held that his reporting potentially qualified for anti-retaliation protection under the federal False Claims Act because the law protects “lawful acts in furtherance of either an action under the FCA or other efforts to stop 1 or more violations of the Act.” In other words, a whistleblower who takes steps to stop fraud against the government may be protected by the FCA if they speak up, even if they do not file a “qui tam” lawsuit.

Other federal appeals courts have made similar rulings in False Claims Act cases. For example, the Court of Appeals for the District of Columbia stated in a 2019 case, Singletary v. Howard University, that the False Claims Act protects a “whistleblower’s efforts to stop violations of the statute before they happen or recur.” The DC Federal Court of Appeals thus recognized that whistleblowers who speak up early may be entitled to the same protections against retaliation as whistleblowers who file “qui tam” lawsuits after the fraudulent conduct has already started cheating the government.

Still other federal courts have recognized that “efforts to stop” a False Claims Act violation do not need to be formal “reports” to supervisors. Instead, as the Second Circuit (the Court of Appeals for New York, Connecticut, and Vermont) recognized in United States ex rel. Chorches v. American Medical Response, Inc., refusals to participate in fraudulent conduct may be enough to trigger the FCA’s anti-retaliation protections. Employees who are retaliated against for refusing to participate in what they reasonably believe to be conduct that violates the False Claims Act therefore may also be protected under the law.

While the FCA provides rewards and protections for whistleblowers, the law is complex. Determining whether an individual potentially qualifies for a reward or anti-retaliation protection requires careful analysis of each case’s unique facts and circumstances. Blowing the whistle is a major decision that can have ripple effects on someone’s life and career. If you are thinking about reporting fraud or blowing the whistle at your company, you can contact attorneys at Outten & Golden’s whistleblower practice.

(*Prior results do not guarantee a similar outcome.)