Whistleblower Blog

Whistleblower Laws of Two More States–Hawaii and Virginia–Are Approved by Feds

States are figuring out how to pass whistleblower laws with effective “qui tam” provisions, so that they qualify to receive more money from Medicaid fraud settlements. The Office of Inspector General of the Department of Health and Human Services has announced that, unlike 7 of the 10 state whistleblower laws that OIG had previously reviewed, the whistleblower laws of Hawaii and Virginia pass muster under the Deficit Reduction Act of 2005.

We have previously discussed why states are passing or improving their own
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Whistleblower Law Sponsor Testifies About Iraq Contractor Fraud

Whistleblowers and whistleblower attorneys may consider Senator Charles Grassley of Iowa as the “patron saint” of protecting taxpayer money from fraud against the government. Sen. Grassley continues his great work as he testifies today before the Senate Judiciary Committee about Iraq contractor profiteering and fraud.

The Senator already claimed another recent victory by spearheading passage of the new IRS Whistleblower Rewards Program. Sen. Grassley saw how cost-effective the False Claims Act has been in recovering more than $20 billion for the government–largely because of the
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New State Qui Tam Whistleblower Law Is Approved by House Judiciary Committee in Georgia

This afternoon I had the privilege of joining the Inspector General of Georgia’s Department of Community Health, Doug Colburn, in serving as the two invited witnesses who were asked to explain how the new “State False Medicaid Claims Act” would work, in testimony before the full Judiciary Committee of the Georgia House of Representatives.

The new whistleblower law was approved unanimously by the Judiciary Committee, and is gaining steam toward passage.

Chairman Wendell Willard expressed his strong support for encouraging whistleblowers to report wrongdoing. The
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IRS Whistleblower Rewards Featured in Smart Money Magazine

The new IRS Whistleblower Rewards Program that we have been discussing is featured in the March 13 issue of Smart Money Magazine–and Smart Money cites our Whistleblower blog and quotes one of our authors.

The Smart Money reporter, Lisa Scherzer, contacted our firm, Finch McCranie, LLP, to discuss the IRS Whistleblower Rewards program and our experiences in representing clients in the IRS Whistleblower program. We commented that most potential whistleblowers who have contacted us are ethical, conscientious persons who are troubled
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New “Whistleblower Protection Enhancement Act” Passes U.S. House

We were excited to see that the U.S. House of Representatives today passed an important new whistleblower protection law, the Whistleblower Protection Enhancement Act.

We have discussed this new whistleblower bill previously, as an encouraging development for whistleblowers and whistleblower lawyers. The new whistleblower law would protect federal employees and, now, also federal contractors, who report evidence of fraud, waste, abuse, gross mismanagement, or “substantial and specific danger to public health or safety.”

Rep. Henry Waxman sponsored the new whistleblower protection bill, but Rep. Bruce Braley of Iowa also spoke eloquently today about why American taxpayers–and the American public’s security–demand that honest citizens must be able to bring to light evidence of fraud, waste, and abuse that affects government dollars (which are taxpayer dollars).

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New State False Medicaid Claims Act (with Qui Tam Whistleblower Provisions) Is Approved by Georgia Legislative Subcommittee

Whistleblowerlawyerblog Author Testifies In Support of Georgia Department of Community Health’s “State False Medicaid Claims Act”

This morning, a new state False Claims Act cleared a hurdle as it was approved by a Georgia legislative subcommittee.

Georgia’s new “State False Medicaid Claims Act,” which has qui tam whistleblower provisions similar to the federal False Claims Act, received unanimous support among members of the subcommittee of the House Judiciary Committee chaired by Rep. Edward Lindsey of Atlanta.

Testifying in support of the new
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News in Government Procurement Fraud and False Claims

We found a very interesting article from last week’s Legal Times, with an excerpt of interest to whistleblower lawyers as follows:

“Last fall, the Justice Department launched a National Procurement Fraud Task Force to focus “resources at all levels of government to increase criminal enforcement” in areas of procurement fraud. The stepped-up attention to this area throughout the government may signal that the $3.1 billion record in federal fraud recoveries in 2006 could soon be broken. More than 50 inspectors general from across all
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IRS Names New Head of IRS Criminal Investigative Division

The IRS agents we have been meeting with since January to pursue whistleblower claims under the new IRS Whistleblower Rewards Program have a new boss, the IRS announced today.

The Criminal Investigative Division of the IRS will be led by Eileen Mayer, who was most recently head of the IRS’s Office of Fraud/Bank Secrecy Act.

We are encouraged by IRS Commissioner Mark W. Everson’s comments that “she will play a key role in IRS efforts to halt tax fraud.” Agents of the Criminal Investigative Division work tax fraud cases, some of which are now originating under the new IRS Whistleblower Rewards program.

As a result of the IRS’s efforts, the Department of Justice has brought many successful prosecutions.
The IRS’s press release is reprinted below:
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New Medicaid False Claims Act Proposed in Georgia

We were encouraged to see that Georgia has just joined the states that are considering a State “False Claims Act” with whistleblower provisions.

As we have discussed before on the Whistleblower Lawyer Blog, Congress has created great financial incentives for states that pass their own versions of the federal False Claims Act, with qui tam provisions that encourage whistleblowers. States can increase by 10% their share of Medicare fraud recoveries by passing their own False Claims Acts, but the state laws must pass muster with OIG and be at least as effective as the federal False Claims Act. Otherwise, as approximately seven other states were disappointed to find, the state does not receive an increase in its share of Medicare fraud recoveries.

Rep. Ed Lindsey is the sponsor of Georgia’s proposed “State False Medicaid Claims Act.” The new law would apply to Medicaid fraud and false claims, but not other fraud and false claims that cost the state taxpayers money.

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Has Iraq Fraud Cost Taxpayers Even More Than Previously Believed?

Congressional Committee Explores Contractor Overcharges

Of great interest to whistleblower lawyers is how much suspected fraud and abuse has occurred in Iraq reconstruction contracts. Goverment auditors recently announced that they now believe that Iraq contractor fraud and abuse may be three times greater than the previous estimates–and may affect one out of every six dollars spent in the Iraq reconstruction effort.

The estimate has grown from $3.5 billion to more than $10 billion in “questioned and unsupported costs,” according to the Defense Contract Audit
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Health Care Fraud Strike Force Targets Medicare and Medicaid Fraud

With the nation’s health care costs growing, a DOJ and HHS initiative to combat health care fraud continues to show progress.

Building on past enforcement efforts, in May 2009 the government announced its Health Care Fraud Prevention and Enforcement Action Team (HEAT), as part of what is now a Cabinet-level battle against Medicare fraud. To date in FY 2009, the Department of Justice has recovered close to one billion dollars in health care fraud cases, and has obtained 300 convictions.

Last week, the government announced
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New False Claims Act Amendments Strengthen Enforcement of Health Care Fraud and Procurement Fraud Laws

Defrauding the government of taxpayer dollars has gotten tougher over the past five months.

Important changes to the nation’s primary anti-fraud statute, the False Claims Act, took effect on May 20, 2009, when the Fraud Enforcement and Recovery Act of 2009 became law.

Among the most significant changes, Congress clarified and corrected the False Claims Act by legislatively overruling certain court decisions that sought to limit the scope of the Act, including Allison Engine Co. v. United States ex rel. Sanders, 128 S. Ct. 2123 (2008); United States ex rel. Totten v. Bombardier Corp., 380 F.3d 488 (D.C. Cir. 2004), cert. denied, 544 U.S. 1032 (2005); and United States ex rel. DRC, Inc. v. Custer Battles, LLC, 376 F. Supp. 2d 617 (E.D. Va. 2005), rev’d, 562 F.3d 295 (4th Cir. 2009).

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Part 2: IRS Whistleblower Program Report by Treasury Inspector General for Tax Administration (TIGTA)

We wrote yesterday about the just-released report on the new IRS Whistleblower Program by the Treasury Inspector General for Tax Administration (TIGTA). The “rest of the story” should be told.

Some history is essential to evaluate how far the handling of whistleblower (or “informant”) claims has progressed since the newly created IRS Whistleblower Office was formed in early 2007, and what is still needed.

Although information provided by whistleblowers is extremely effective in exposing fraud, before 2006 Congress had not authorized an effective IRS whistleblower rewards program–and some in Congress affirmatively opposed one.

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IRS Whistleblower Program: Inspector General Urges Whistleblower Protection from Retaliation and Administrative Changes

Today the Treasury Inspector General for Tax Administration (“TIGTA”) released a Report on the IRS Whistleblower Program that urges Congress to protect IRS whistleblowers from retaliation by employers, and recommends various administrative changes to the Program.

The Report’s title, “Deficiencies Exist in the Control and Timely Resolution of Whistleblower Claims,” is misleading to this writer, who has followed the progress of the new Program since its inception. Before Congress created the new IRS Whistleblower program in December 2006, the Inspector General had observed
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IRS Whistleblower Office Issues Latest Annual Report to Congress

The IRS Whistleblower Office has released its Annual Report to Congress, for the fiscal year ended September 30, 2008. Some highlights are below:

First, the IRS Whistleblower Program has experienced explosive growth since Congress authorized these new IRS Whistleblower rewards in December 2006.

According to this Report, “the initial results suggest that whistleblowers with significant knowledge are coming forward as a result of the changes to the award program. We received claims that appear to meet the section 7623(b) criteria on 46
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Health Care Fraud Lawyers to Analyze Recent Amendments to False Claims Act

At the “Advanced Health Law” seminar on October 9, attorneys prosecuting and defending cases of alleged health care fraud will discuss the important new amendments to the False Claims Act. I am honored to be the panelist who will discuss these important new provisions from the perspective of representing whistleblowers (known as “relators”) who bring qui tam whistleblower cases under the False Claims Act.

These significant changes to the False Claims Act took effect on May 20, 2009, when the Fraud Enforcement and
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Federal Contractor Fraud Laws To Get Tougher? ACORN Controversy Casts Spotlight on Larger Contractors That Violate False Claims Act

Outrage over misuse of public funds is a healthy reaction to those who cheat taxpayers. It can also create interesting bedfellows, as newly-introduced legislation in the House demonstrates.

HR 3571, aimed at “de-funding ACORN,” would ban federal contracts and most federal funds to any organization that “has filed a fraudulent form with any Federal or State regulatory agency,” among other things. (Complete bill is below.)

As. Rep. Alan Grayson (D-FL) observed correctly, fraud by those who receive government funds involves much “bigger fish” than ACORN–and bigger dollar amounts of alleged fraud.

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Calls Continue for a “False Claims Act” for Wall Street Whistleblowers

Since the Madoff and Stanford scandals, we have written about the calls for the Securities and Exchange Commission (SEC) to establish a meaningful whistleblower rewards program. Currently, no adequate incentives exist for whistleblowers to speak up when they might have a chance to stop large scale fraud and prevent the next Madoff or Stanford debacle. How much better off would so many Americans be if someone had exposed Madoff before he defrauded so many investors?

Forbes has run interesting column by Bill Singer, calling for a statute that apples “False Claims Act” whistleblower remedies to Wall Street. Why not protect investors from the massive losses that so many incurred? The current system obviously failed to do so. Harry Markopolis has described eloquently how the SEC could do so much better, and new SEC whistleblower rewards should make a huge difference.

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New IRS Group to Address Offshore Accounts and Other International Tax Abuses by Wealthy Taxpayers

Offshore tax abuses and tax evasion have kept the IRS quite busy of late. The fast-approaching September 23 deadline for its “voluntary disclosure program,” and its agreement with UBS that will allow it to identify thousands of American taxpayers with offshore accounts, have added momentum to its efforts to combat offshore tax abuses by high net worth taxpayers.

Now, the IRS is creating a new group to “focus on examinations involving webs of entities and arrangements controlled by the high wealth taxpayer segment.” It will
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Protecting Whistleblowers from Criminal Prosecution: The Mystery of the UBS Whistleblower’s Prison Sentence

In one of two prominent whistleblower cases in the news this week, whistleblower John Kopchinski will be awarded more than $50 million for his role in exposing improper “off-label marketing” of the drug Bextra by Pfizer. Other whistleblowers also will be rewarded because of this settlement. That settlement of $2.3 billion is the largest in history ($1 billion to settle False Claims Act allegations, and $1.3 billion in criminal fine and forfeiture).

As large as the Pfizer settlement is, the other whistleblower’s actions seem likely to lead to recovery of dollars that could dwarf this $2.3 billion settlement. UBS whistleblower Bradley Birkenfeld has lifted the shroud of secrecy from thousands of American taxpayers’ offshore accounts at UBS. He has given the IRS a foothold into recovering potentially many billions in unpaid taxes owed.

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