Whistleblower Blog

Special: Article Explaining the 2010 False Claims Act and State False Claims Acts

Three years ago, our whistleblower lawyer blog presented an in-depth article discussing the nation’s major whistleblower law, the False Claims Act, and the wave of new state False Claims Acts.

Since then in 2009-2010, Congress has amended the False Claims Act three times to remove obstacles created by courts, which had limited the law’s effectiveness. To reflect those important and needed changes in the law, I have updated this article to present at the 2010 Fraud and Compliance Forum sponsored by the American Health Lawyers Association and Health Care Compliance Association.

That detailed article is excerpted here to explain the False Claims Act, with its 2009-2010 amendments. For ease of reading, it is divided into six parts:

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Part 1: Introduction: What You Should Know About the False Claims Act And New State False Claims Acts After the 2009-2010 Amendments

This is Part 1 of an updated explanation of the major qui tam whistleblower statutes, the federal False Claims Act and the new state False Claims Acts. This Part 1 provides an introduction to the False Claims Act.

In 2010, more than ever, it is essential for lawyers to understand their clients’ potential liabilities under the federal False Claims Act (“FCA”). The health care industry increasingly has become the major focus of the federal government’s enforcement efforts, and usually pays at least two-thirds of the money recovered each year under this anti-fraud statute.

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Part 2: The False Claims Act and the Increasing Number of State False Claims Acts

This is Part 2 of an explanation the federal False Claims Act and the new state False Claims Acts with qui tam whistleblower provisions. This Part 2 discusses the sound policy reasons underlying the False Claims Act.

I. Why Have A “False Claims Act”?

Fraud is perhaps so pervasive and, therefore, costly to the Government due to a lack of deterrence. GAO concluded in its 1981 study that most fraud goes undetected due to the failure of Governmental agencies to effectively ensure accountability on the part of program recipients and Government contractors. The study states:

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Part 3: The False Claims Act: Background & History

This is Part 3 of an updated explanation of the major qui tam whistleblower statutes, the federal False Claims Act and the new state False Claims Acts. This Part 3 explains the history of the False Claims Act and why effective whistleblower laws are important.

II. Background of the Federal False Claims Act

Although the False Claims Act may be the best known qui tam statute, it is far from being the first. Qui tam actions date back to English law in the 13th and 14th Centuries. This tradition took root in the American colonies and, by 1789, states and the new federal government had authorized qui tam actions in various contexts.

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Part 4: How the False Claims Act Works After the 2009-2010 Amendments (with Comparisons to Some State False Claims Acts)

This Part 4 of a six part summary explains how the federal False Claims Act works, after Congress amended it three times in 2009-2010. It also discusses similar provisions of some state False Claims Acts.

This is an update from a previously published article by whistleblower lawyer blog author Michael A. Sullivan.

III. Overview of How the Modern False Claims Act Works (with Comparisons to Some State False Claims Acts)

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Part 5: The Trend of Recoveries Under the False Claims Act

This is Part 5 of 6 of a recently updated article about the qui tam whistleblower statutes, the federal False Claims Act and the new state False Claims Acts. This is an updated version of a previously published article by whistleblower lawyer blog author Michael A. Sulliva.

This Part 5 discusses the striking success of the False Claims Act since its 1986 Amendments, as it has recovered more than $27 billion in taxpayers’ money wrongfully obtained by fraud and false claims.

IV. The Trend of Recent Recoveries Under the False Claims Act

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Part 6: States’ Experiences With Their Own False Claims Acts

This Part 6 is the final installment of an article explaining why the major qui tam whistleblower statute, the federal False Claims Act, has led to a wave of new state False Claims Acts. It is an updated version of part of a previously published article by whistleblower lawyer blog author Michael A. Sullivan.

V. States’ Experiences With Their Own False Claims Acts

As noted, at least twenty-eight states now have a False Claims statute, and many other states are considering similar laws. The financial incentives of the Deficit Reduction Act of 2005 have not only prompted states that lacked False Claims statutes to enact them, but also have caused many states wishing to qualify for the additional funds to amend their existing False Claims statutes.

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Insider Trading Probe Reinforces Immediate Need for Strongest SEC Whistleblower Program

Yesterday’s Wall Street Journal reports a “sweeping” insider trading investigation, with civil and criminal charges soon to follow, involving “consultants, investment bankers, hedge-fund and mutual-fund traders, and analysts across the nation.”

While the details remain to be seen, the unending series of fraud cases that continue–despite Sarbanes-Oxley–proves why Wall Street must not be allowed to neuter the first potentially meaningful SEC whistleblower program, mandated by the Dodd-Frank financial reform law.

How is it that the hallowed “compliance programs” born from Sarbanes-Oxley have utterly failed to stop the breathtaking frauds of Madoff, Stanford, and other recent post-SOX scandals?

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With New SEC Whistleblower Program Proposed Rules Announced, Will the SEC Allow Potential Defendants to Gut Them?

We have been awaiting the SEC’s proposed rules for its new SEC Whistleblower Program, released yesterday. Even before the announcement, however, those who oppose this first potentially meaningful SEC Whistleblower Program have begun efforts to undermine it.

The SEC’s website already includes some firms’ suggestions to impose extreme restrictions on SEC whistleblowers–contrary to how other successful whistleblower programs operate.

Designing any new whistleblower program should begin with studying more than two decades of successes of the nation’s major whistleblower law, the False Claims Act. The False Claims Act has been so effective in uncovering and penalizing fraud against the government since 1986 that it has inspired Congress and the states to enact a wave of new whistleblower statutes–including the Dodd-Frank whistleblower mandate in section 922.

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Links to SEC Whistleblower and CFTC Whistleblower Lawyer Information

Our whistleblower lawyer blog has followed closely the development of the first potentially meaningful SEC Whistleblower and Commodities Whistleblower Programs. That link provides regular updates.

Based on our firm’s long experience in representing whistleblowers, we were asked by the Senate Banking Committee staff for input in how the new SEC and CFTC whistleblower provisions of the July 2010 Dodd-Frank Financial Reform Act should work. We urged that the Senate change the tepid House version, which provided no meaningful rewards to whistleblowers,
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COVID-19 Government Spending Must Be Protected by Whistleblowers–Through the False Claims Act and State False Claims Acts

COVID-19 has required unprecedented government spending through the CARES Act and other measures.  That spending creates countless opportunities for theft of funds desperately needed to fight the coronavirus.

The virus has made the nation’s major “whistleblower” law–the federal False Claims Act (“FCA”) and similar state False Claims Acts –even more essential. Both the federal and state FCA laws are civil statutes designed to combat fraud directed at taxpayer dollars.

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SEC Targets COVID-19 Fraud, and Its Success Will Depend on SEC Whistleblowers

As the anxious public yearns for vaccines, treatments, and protections from the virus, the SEC has warned of a “substantial potential for fraud relating to COVID-19. The SEC’s enforcement actions against 23 companies are just the start, as more fraud will undoubtedly be uncovered.

Whistleblowers are critical to the SEC’s efforts to stop COVID-19 fraud.  The SEC Office of the Whistleblower is authorized to pay monetary awards to whistleblowers whose information leads to an order of sanctions of $1 million or more.

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$465 Million Settlement in Our Client’s Qui Tam Whistleblower Case Over Pharmaceutical Manufacturer’s Underpaying Medicaid Rebates for New EpiPen Products

Through a $465 million settlement, Finch McCranie’s Michael A. Sullivan and James J. Breen of the Breen Law Firm successfully represented a whistleblower whose qui tam case under the False Claims Act helped return hundreds of millions to the United States and various states for Medicaid rebates underpaid on new EpiPen products introduced in 2009.

The Department of Justice announced the settlement on August 17, 2017, of two qui tam cases pending in the District of Massachusetts, United States, et al. ex rel. sanofi-aventis US LLC v. Mylan Inc., et al., and our case, United States, et al. ex rel. Ven-A-Care of the Florida Keys, Inc. Mylan Inc., et al..

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$145 Million Settlement: Largest in History by Department of Justice and Finch McCranie, LLP in Any Skilled Nursing Facility Healthcare Fraud Case

Today the Department of Justice announced the largest settlement in its history with a skilled nursing facility chain–a qui tam whistleblower case under the False Claims Act that our firm and our co-counsel Mark Simpson worked side-by-side with DOJ to prepare for trial.

We applaud the exceptional work of DOJ’s attorneys, as well the outstanding attorneys of the U.S. Attorney’s Office for the Eastern District of Tennessee.  Below is our press release on today’s settlement:

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“The False Claims Act at 30”–What the Future Holds for Qui Tam Whistleblower Cases

This past week our firm’s Larry D. Thompson,  the former Deputy Attorney General of the United States, joined me for a panel discussion that I moderated on “The False Claims Act at 30,” at the annual Taxpayers Against Fraud Annual Conference in Washington, D.C.

Joining us on the panel were the Department of Justice’s Renee Brooker, an Assistant Director in the Civil Division with 25 years of DOJ experience; James J. (Jim) Breen, an accomplished qui tam lawyer whose cases have recovered almost $4 billion for federal and state taxpayers; and Neil Getnick, Chairman of TAF and an accomplished FCA lawyer in his own right.

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SuperLawyers Recognizes for 11th Year Finch McCranie’s Michael A. Sullivan

We are proud to announce that Finch McCranie partner and head of its Whistleblower practice Michael A. Sullivan has been named to the “SuperLawyers” list for the eleventh consecutive year.
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Justice Department’s New Focus on Individuals’ Liability in “Yates Memo” Should Impact Qui Tam Whistleblower Cases under False Claims Act

Yesterday the Justice Department apparently responded to the frequent lament, “Why has almost no one gone to prison for the financial crisis?” DOJ signaled that it will now look to hold responsible both culpable individuals and their companies for corporate misdeeds–both criminally and civilly.

If DOJ means what it says, this policy change is profound. It should hit corporate officers whose business models are based on fraud and false claims. It should also snare high level executives who turn a blind eye to wrongdoing, and who typically get away with it.

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SEC Whistleblower Office’s Stand Against “Silencing” Employees Through “Confidentiality” Agreements

Sean McKessy of the SEC Whistleblower Program is right to continue his mission against muzzling whistleblowers through “confidentiality” agreements, for one simple reason:

Intimidating witnesses from reporting fraud is a form of obstruction of justice.

Although “confidentiality” agreements may appear innocent on their face, a company’s suggesting in any way that its employees refrain from reporting fraud or other violations of securities laws crosses the line. Too often, that is often the effect of these agreements–if not the intent as well.

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Qui Tam, IRS, CFTC, and SEC Whistleblower Claims Update: Today’s Whistleblower Law Symposium A Success

Since 2007, top officials from federal and state agencies and many of the country’s experts in whistleblower cases have gathered in Atlanta to discuss and debate anti-fraud efforts at the Whistleblower Law Symposium.

Today I was excited to chair our Whistleblower Law Symposium once again, as these experts explored the latest developments in qui tam cases under the False Claims Act, and SEC whistleblower, CFTC whistleblower and IRS whistleblower claims. The breadth of expertise of today’s speakers was unusual.

First, top enforcement officials from California, Georgia and Texas shared their approaches and priorities under their state False Claims Acts. We were honored to hear from Britt Grant, Solicitor General of Georgia, about Georgia Attorney General Sam Olens’ impressive new efforts to stop the theft of taxpayer funds.

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Today’s SEC Whistleblower Award to Former Officer of Company Shows Flexibility of SEC Whistleblower Rules

The SEC announced today its first SEC Whistleblower award to a former company officer. The award of a half-million dollars was for “original, high-quality information about a securities fraud,” which resulted in an SEC enforcement action with sanctions of more than $1 million.

Typically, corporate officers, directors and other corporate fiduciaries are not eligible for SEC Whistleblower awards when they learn of fraud through employee reports. The SEC built in flexibility in its rules, however, when the officer waits “more than 120 days after other
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