Tag: whistleblower

DOJ Looks to Incentivize Whistleblowers with New Pilot Program


Robyn N. Burrows ●

On March 7, 2024, Deputy Attorney General Lisa Monaco announced that the Department of Justice (“DOJ”) is designing and launching a pilot program to pay monetary rewards to whistleblowers who report significant corporate or financial misconduct. The pilot program, which will roll out later this year, is intended to encourage individuals to report misconduct and for companies to further invest in their internal compliance and reporting systems.

Several agencies have already established similar programs that reward whistleblowers financially, including the U.S. Securities & Exchange Commission (“SEC”) and the Commodities Futures Trading Commission (“CFTC”). Those programs, however, are limited in scope to each agency, resulting in what Monaco referred to as a “patchwork quilt” that does not address the full range of corporate and financial misconduct. The new pilot program is intended to fill these gaps.

Key Aspects of Pilot Program

Over the next 90 days, DOJ will be engaging in a “policy sprint” to gather information, consult with stakeholders, and design the pilot program. DOJ’s Money Laundering and Asset Recovery Section (“MLARS”) will lead the development and administration of the program.

The program’s core concepts will include the following:

  • Award Thresholds: DOJ expects to establish a monetary threshold to focus its resources on the most significant cases. Both the SEC and CFTC whistleblower programs limit rewards to cases in which the agency orders sanctions of one million dollars or more. DOJ may end up adopting a similar threshold.
  • Victim Compensation: Whistleblowers will only receive payment after all victims have been compensated.
  • “First in the Door”: Eligibility is limited to whistleblowers who provide truthful information not already known to the government. The information cannot be in response to any government inquiry, pre-existing reporting obligation, or imminent threat of disclosure. As Monaco emphasized, “you have to tell us something we didn’t already know.”
  • No Criminal Involvement: Whistleblowers cannot be involved in the criminal activity itself.
  • No Existing Incentive Programs: The program applies only in cases where there is no existing disclosure incentive, including qui tam provisions of the False Claims Act or another federal whistleblower program.

Enforcement Priorities

Although DOJ seeks information about any violation of federal law, Monaco clarified that the government is primarily interested in:

  • Criminal abuses of the U.S. financial system;
  • Foreign corruption cases outside the SEC’s jurisdiction; and
  • Domestic corruption cases, especially involving illegal corporate payments to government officials.

What to Expect from the Pilot Program?

Increase in voluntary disclosures

  • The new whistleblower program builds on DOJ’s prior efforts to strengthen corporate enforcement by encouraging voluntary disclosures. With the new pilot program offering monetary rewards to those “first in the door,” companies assessing whether to self-report potential misconduct must consider whether a whistleblower might get to DOJ first (thereby preventing the company from reaping the benefits of a voluntary disclosure). This may encourage companies to self-report misconduct earlier and more often. As Monaco stated, “[O]ur message to whistleblowers is clear: the Department of Justice wants to hear from you. And to those considering a voluntary self-disclosure, our message is equally clear: knock on our door before we knock on yours.”

More referrals to DOJ—and potentially fewer internal whistleblower reports

  • With the prospect of potentially significant financial rewards, we can expect more employees to report wrongdoing directly to DOJ, rather than going through corporate whistleblower channels. Companies should therefore ensure employees are aware of and have easy access to whistleblower hotlines to encourage internal reporting.

Focus on non-public companies

  • One of the “gaps” DOJ seeks to fill with the whistleblower program is to target foreign corruption cases outside the jurisdiction of the SEC, which already has its own whistleblower program. Thus, DOJ is likely to focus on suspected violations by non-public corporations.

We expect more information on program details and implementation over the coming months and will follow up with further updates.

The Once and Future King: SCOTUS Maintains the Government May Intervene in Previously Declined FCA Matters to Seek Dismissal

Luke W. Meier and Carolyn R. Cody-Jones ●

Last Friday, June 16, 2023, the U.S. Supreme Court (“SCOTUS”) ruled that the federal government may seek to dismiss a qui tam False Claims Act (“FCA”) suit over the relator’s objection, even where it previously declined to intervene in the case and the relator invested in moving the case forward. The 8-1 decision by the high Court firmly established the broad authority for the government to intervene in such circumstances under a Rule 41(a) “reasonableness” standard, explaining that the key reason for this is that “the government’s interest in [an FCA] suit … is the predominant one” based on the “FCA’s government-centered purposes.” United States Ex Rel. Polansky v. Executive Health Resources, Inc., Slip. Op. No. 21–1052, at 12, 599 U.S. ____ (2023).

When an FCA suit is filed, the government has 60 days (which is typically extended) under the FCA statute to decide whether to decline or intervene in the case. See 31 U.S.C. § 3730. If declined, the relator may proceed with the litigation without the government’s support. The statute also allows the government to intervene “at a later date upon a showing of good cause.” § 3730(c)(3). As of 2022, publicly available statistics show that the government has elected to intervene only in about 40 percent of all qui tam FCA matters subject to judgment or settlement.

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How to Manage a Potential Whistleblower

Dominique L. Casimir, Jennifer A. Short, and Michael Joseph Montalbano ●

Jennifer A. Short headshot image

The federal False Claims Act (“FCA”) is one of the United States’ most effective tools to detect and prevent fraud against the Government. One reason the FCA is so effective is that it encourages the employees of an organization to come forward as claimants and receive a share of any financial recovery to the Government. Recognizing the central role of these whistleblowers in the FCA’s enforcement scheme, Congress included an anti-retaliation provision in the statute that protects them when they report suspected fraudulent conduct. Under the FCA’s anti-retaliation provision, employees, contractors, or agents can sue for damages on their own behalf if they are “discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done” in connection with a reported FCA violation. 31 U.S.C. § 3730(h)(1). Likewise, nearly every state also affords some degree of whistleblower protection, either statutorily or in the common law.

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Polansky and the Future of FCA Qui Tam Prosecution

Jennifer A. Short, Tjasse L. Fritz, and Bridget Mayer Briggs

Jennifer A. Short headshot image
Tjasse L. Fritz headshot image
Bridget Mayer Briggs headshot image

In its upcoming term, the U.S. Supreme Court is poised to address the issue of whether the United States can seek to dismiss a whistleblower’s False Claims Act (“FCA”) lawsuit after it has elected not to participate in the case. And, if it can seek dismissal, what standard should apply?

On June 21, 2022, the Court agreed to consider the matter of United States ex rel. Polansky v. Executive Health Resources, Inc. (Case No. 19-3810). In his cert petition, the whistleblower presses the theory that after the United States declines to intervene in an FCA qui tam case, it lacks any authority to dismiss the action. At a minimum, the petitioner argues that the Court should resolve a long-standing split among the Circuit Courts regarding the standard that applies to such a motion—a split that has splintered even further in response to an uptick in such motions since 2018.

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Another Banner Year for False Claims Act Recoveries Signals More of the Same for 2018

Justin A. Chiarodo and Sara N. Gerber

The Department of Justice (“DOJ”) reported $3.7 billion in False Claims Act (“FCA”) settlements and judgments for fiscal year 2017, the 8th straight year of 3-plus-billion-dollar recoveries and 700-plus new cases filed. Healthcare, mortgage, and procurement fraud once again dominated recoveries. This article analyzes DOJ’s FCA statistics, and includes our predictions for continued strong enforcement in 2018. Continue reading “Another Banner Year for False Claims Act Recoveries Signals More of the Same for 2018”