According to the Department of Justice (DOJ) report of Fiscal Year 2011 results, for the second year in a row, the DOJ has recovered over $3B in judgments and settlements from cases involving the False Claims Act. Many of the cases related to these settlements were advanced by whistleblowers. An historic $2.8 billion comes from cases brought forward by whistleblowers; this represents a high of 84 percent of all cases opened last year.
Whistleblower provisions have been available related to the False Claims Act since 1986, earning whistleblowers up to 30% of the award. While 84 percent of all cases are now brought to suit via a whistleblower, such cases represented only 8 percent of all cases just after the provisions were made available 25 years ago.
The False Claims Act cases closed in 2011 were lucrative for whistleblowers, with $540 million in total plaintiff awards and settlements. The largest individual case was related to a GSK quality manager who won $96 million for exposing manufacturing defects at a Puerto Rico plant.
Dodd-Frank recently implemented similar whistleblower provisions for those bringing cases related to securities law violations. While this law has yet to produce an award, based on the False Claims Act history, it may take some time for cases and awards to come to fruition. If Dodd-Frank takes the same case path, it will certainly be a significant factor in future judgments. It’s possible that Dodd-Frank whistleblowers will bring cases even faster based on seeing the lucrative False Claims Act results in 2011.
Organizations have strong incentive to ensure that they aren’t on the wrong side of such judgments. Finding out about problems early through solid ethics and compliance programs, open door policies, improvement programs, and anonymous hotlines can help address such problems before they involve multimillion dollar settlements.