Personal Injury & Workers Comp Lawyers

One of our first tasks is to build a powerful documentary and graphic narrative of the case based on all of the evidence we are able to gather for presentation to the IRS Whistleblower Office or the appropriate District Attorney. In a False Claims Act case, we then file a Complaint "under seal" (out of public view). In an IRS case, we file a Form 211 with the IRS Whistleblower Office.

Once we file the complaint or Form, we continue to gather evidence, monitor the progress of your case with the government and work with Department of Justice ("DOJ") or IRS to move the case along. Typically, the government's first course of action is to interview the whistleblower. They are particularly interested in evaluating the whistleblower's effectiveness in telling the story and responding to questions in an informal setting. We prepare you for this interview and stay with you every step of the way. After the interview, government attorneys and investigators normally request additional information and ask specific questions to deepen their understanding of key details.

A whistleblower case can take years to develop. Therefore, patience and discretion are essential. While the DOJ investigates your claim, the complaint and other documents filed with the government typically remain confidential. This means that you cannot speak about the case with anyone but your attorneys and the DOJ. Often, it takes the government two years or more to decide what to do with a case. We work with our clients to manage and expedite the process within the constraints of the system.

To get a feel for how to prepare your whistleblower claim for our review, Please Click Here.

Mechanics of Whistleblower Claims

A whistleblower (or qui tam relator) must start with evidence that someone, typically a corporation or wealthy individual government contractor, has intentionally or recklessly billed the government more than they should or has paid less tax than they owe. These violations occur in a variety of settings and industries including health care, child care, child protection, education, research, mortgage lending, defense contracting, and procurement. With knowledge of such a fraud, a relator can file a lawsuit in the government's name to recover the excess charges or the unpaid tax. If the government recovers through negotiation or trial the whistleblower typically receives between 10 and 30 percent of the government's recovery, depending on the particular situation.

The legal authority for whistleblower recoveries is typically in the Federal False Claims Act ("FCA") or Internal Revenue Code. Additionally, many State governments have whistleblower laws. Procedures vary somewhat between FCA and tax claims, but we'll focus here on the FCA. In an FCA case, the relator files a lawsuit under seal and provides a detailed disclosure document to the Department of Justice. Initially, the DOJ has 60 days to investigate and decide whether it is interested in joining the lawsuit as a party. Although a relator can pursue a case without the DOJ, the chances of success are significantly higher with the DOJ as a party.

It is important to keep in mind that a relator cannot recover if another relator has already filed a lawsuit based on the same set of facts. Likewise, facts that have already been publicly disclosed generally cannot be used to build a whistleblower claim.

What about retaliation? Even though the whistleblower's identity remains secret while the case remains under seal, once the DOJ begins investigating, an employer may be able to guess who blew the whistle. In this case, the whistleblower's employer or fellow employees may be tempted to retaliate. To counteract retaliation in FCA cases, the law contains provisions designed to protect whistleblowers and penalize retaliators.

A whistleblower who is discharged, demoted, suspended, threatened, harassed, or discriminated against by his or her employer for participating in an FCA claim is entitled to reinstatement plus two times the amount of back pay, interest on the back pay, and compensation for litigation costs and reasonable attorneys' fees.

Tips for Preparing & Protecting Your Whistleblower Claim

Confidentiality is essential. You should avoid communicating with anyone but an attorney about the facts in your case. Prior to meeting with an attorney, you should write down everything you know about the fraud. You may want to keep a voice recorder or pad ready to record things like

(a) the location of documents, computers, files and other evidence,
(b) names and contact information of anyone with knowledge of the fraud,
(c) laws, regulations, rules and procedures you think were violated, and
(d) any negatives about yourself or your involvement in the fraud.

It is not a good idea to attempt to record anyone but yourself unless your attorney advises you to do so. Taping a conversation with another person without their knowledge may violate state or federal law. The same is true of accessing physical files or computer data without authorization.

Participation in the fraud does not always rule out the whistleblower's eligibility to right the wrong and receive some of the recovery. However, a prospective relator should never plan such an event with the expectation of later suing. Whatever you do, be sure to tell your attorney everything you know about the story regardless of your own views on whether the information is good, bad or indifferent.

We are happy to discuss a potential claim with you on a confidential basis without charge or obligation. To contact us about either a false claim or an income tax fraud, click here. We will keep your contact and claim information strictly confidential.

Sample False Claim Cases

In the cases summarized below, government contractors or beneficiaries of government guarantees were accused of defrauding the government by intentionally or recklessly over-billing, by providing goods or services that did not meet the specifications of the applicable government contract, or manipulating the market through anti-competitive conduct such as bid rigging, price fixing or market allocation.

Pharmaceuticals

In February 2008, Merck & Company agreed to pay $650+ million to resolve allegations it failed to pay proper rebates to Medicaid and other government health care programs and paid kickbacks to health care providers in exchange for prescribing Merck's products.

Relator H. Dean Steinke, a former Merck district sales manager, alleged that Merck violated the Medicaid Rebate Statute in connection with Merck's marketing of drugs Zocor and Vioxx. Merck allegedly offered deep discounts for the two drugs if hospitals used large quantities of those drugs in place of competing brands.
Steinke also alleged that from 1997-2001, Merck had fifteen programs primarily consisting of payments to physicians disguised as fees paid for "training," "consultation" or "market research." In fact, the government alleged that these fees were illegal kickbacks intended to induce the purchase of Merck products.
In settlement of Merck's alleged violations, the federal government will receive more than $360 million, and forty-nine states and the District of Columbia over $290 million. In addition, Mr. Steinke will receive $44.7 million from the federal share of the settlement plus $23.5 million from the states.

Mortgages

Two California real estate investors arranged for 27 home purchasers to finance their homes with HUD-guaranteed mortgages. To qualify the mortgages for the HUD guarantee, the investors themselves made the down payments on the homes but falsely certified in the loan documents that they had not done so. Because HUD would not have insured the mortgages if the seller-investors had been truthful, in 2007, the court granted summary judgment to the government, awarding nearly $6 million in damages, civil penalties and costs.

Export-Import Financing

A U.S. manufacturer relied on loans from the U.S. Export-Import Bank to finance the sale of irrigation pumps to Nigeria. In applying for financing, the exporter falsely certified that it had not paid "irregular" commissions to its Nigerian sales agent. The defendant exporter argued that the government suffered no damage because the loans were repaid in full. The court disagreed, holding that even where fraudulently obtained loans are repaid in full, the original loan amount is a loss to the government under the False Claims Act.

Health Care

Over a period of six years, an Atlanta-area hospital falsely claimed - among other things - inpatient status for patients whose charts showed they were admitted and discharged on the same day. These false billings to Medicare, together with others, resulted in an out-of-court settlement of $26 million. The relator was a hospital case manager whose responsibilities included reviewing patient files for Medicare billing accuracy. For her role in bringing the fraud to light, she was awarded approximately $5 million, 19 percent of the total settlement.

Bid rigging

In May 2008, the DOJ intervened in two qui tam actions alleging a conspiracy to rig bids, fix prices and allocate the market for the transportation of household goods belonging to military personnel between Europe and the United States. The defendants include a Belgian company, four German companies, and an American company, The Pasha Group. California-based Pasha Group, its subsidiaries and two employees together paid $13 million to settle claims brought against them in the lawsuits alleging their participation in the bid-rigging scheme. Relators Kurt Bunk and Daniel Heuser are German citizens who worked with one of the German companies. Relator Ray Ammons owned an American freight forwarding company. As a result of the settlement, the relators will receive $2.6 million as their share of the $13 million Pasha payment.

Defective Goods/Defense Contracting

The relator was a quality-control engineer working for a Boeing subcontractor on a contract to remanufacture CH-47D helicopters for the U.S. Army. After fatal chopper crashes in 1988, 1991, and 1993, the relator discovered that Boeing had installed defective transmission parts. After trying in vain to draw attention to the problem inside the company, he was laid off, in 1994, and filed his qui tam complaint under seal in May 1995. Five years and 27,000 attorney hours later, in August 2000, he received $10.5 million as his share of a $50+ million government settlement.

Elder Care

In October 2008, the DOJ joined a qui tam action alleging that several companies including McKesson Medical-Surgical MediNet Inc. (MediNet) and CERES Strategies Medical Services Inc. (CSMS) entered an agreement through which McKesson durable medical equipment ("DME") & supplies were used by Beverly nursing facilities. McKesson allegedly promised Beverly facilities (now Golden Horizons) significant profits in exchange for Beverly's falsely telling Medicare that Beverly - not McKesson or MediNet - was supplying the DME equipment and supplies.

To facilitate the fraud, the DOJ alleges that MediNet set up a sham corporation called CSMS and that MediNet allowed CSMS - "thinly capitalized, with few employees, and almost no DME equipment" -- to bill Medicare and retain millions of dollars in Medicare payments for services and supplies that actually were supplied by MediNet and not by CSMS. In exchange for accepting this arrangement, Beverly allegedly agreed to buy McKesson's DME supplies. This suit is ongoing in the Northern District of Mississippi. The DOJ's intervention increases the likelihood that the private relators will be compensated for their efforts at exposing the alleged fraud.

Environmental Testing

In 2002, Intertek Testing Services Environmental Laboratories agreed to pay $8.7 million to settle claims that Intertek failed to conduct environmental laboratory tests prescribed by its contract with the government. Intertek's Richardson, Texas laboratory had contracted to test air, liquid and soil samples for hazardous substances for the Army Corps of Engineers, Department of the Air Force, Department of the Navy and the Environmental Protection Agency (EPA).

False Claims Act Settlement

In this quirky 1996 case, Allegheny Teledyne Incorporated ("ATI") paid $2.79 million to settle a qui tam suit alleging that ATI lied to the DOJ during settlement negotiations over a 1994 qui tam suit. The 1996 claim alleged ATI hid testing cost data used in the U.S. Air Force's APX-109 program involving "identification of friend or foe" equipment. ATI's failure to disclose the data meant that the government received less in the 1994 settlement than it should have. The relator in this case was a former ATI internal auditor.