Whistleblowers can face many unforeseen challenges along the way. Since the moment they detect fraud until a monetary award reaches their hands, they usually come across numerous hurdles. Inexperienced tipsters, who begin their journey without advice from a seasoned whistleblower attorney, can unknowingly kill their chances of receiving any compensation at all.
From reporting to the wrong office to failing to record key information, they can make many common, and tragic, mistakes. Though this list can help prevent some of them, it can in no way substitute advice from an experienced legal professional. Whistleblower law is very complex, and only a seasoned attorney can help you safely navigate those often treacherous waters.
1. Reporting Fraud via Company Hotlines
Whistleblowers do not always assume that their employers are aware of fraud or non-compliance with regulations. Sometimes, they naïvely report misconduct through an internal fraud hotline, ignoring the fact that the HR people on the other end of the line respond directly to senior managers.
More often than not, those managers are people who may suffer dire consequences if the fraud is exposed. Moreover, they often benefit from wrongdoing financially, and it is against their best interests to fix the problems observed by the whistleblower.
At numerous companies, these hotlines are mainly used to ferret out whistleblowers and retaliate against them, rather than to end misconduct.
Not only can reporting through company hotlines lower your chances of receiving a whistleblower award, but it can also lead to you being fired or demoted.
At the same time, a report of this nature puts fraudsters on the alert, giving them time to destroy compromising evidence.
2. Reporting Directly Through a Government Hotline
For whistleblowers who wish to remain anonymous, using the government’s fraud hotlines may seem like an attractive alternative. However, the number of people who report misconduct using these hotlines makes it virtually impossible for the government to investigate each one thoroughly. Statistically, only a very small percentage of the thousands of complaints fraud hotlines receive every year lead to a government investigation.
Thus, though you may feel like you have reported fraud through the appropriate channels, wrongdoers will most likely continue to break the law without facing any consequences.
On the other hand, if you do not follow a certain procedure, you will not be eligible for an award. Basically, whether you are reporting tax fraud, securities fraud, or False Claims Act violations, there are protocols in place. As a rule, when you only report via a government hotline, you may not be eligible for an award.
There are some jurisdictions where whistleblower complaints are not the exception. California’s Northern District and Central District courts have handled a large portion of whistleblower lawsuits; they are both in the historical top 15 nationwide for the number of qui tam suits filed.
It is sadly not uncommon, even in our state, to encounter whistleblowers who have read about a large settlement in the paper and expect to receive a reward, only to find out they are ineligible because all they did was submit information through a government hotline.
The only guarantee to become eligible for a potential whistleblower award is to work with an attorney who has experience navigating the SEC whistleblower program, the False Claims Act’s whistleblower provisions, and the like.
3. Failing to Document Your Claims and Amass Evidence
No matter how certain you may be that your employer, your client, or your partner have engaged in misconduct, if you cannot provide sufficient evidence, you will not succeed as a whistleblower.
Names, exact dates, internal memos, diaries recording in-person conversations, emails; you will need all of these when the time comes to prove your claims. At our practice, we sometimes encounter whistleblowers who come to us after they have been fired, thus, when they no longer have access to this type of compromising documents. At this point, their case is likely to fail, because the company may have already destroyed the evidence, and there may be no way to prove misconduct.
As soon as you suspect wrongdoing, it is crucial to begin keeping a diary, to make copies of both physical and digital files, and to store them safely, rather than in a work computer. Whistleblowers must plan strategically, and this is often very difficult to do without professional legal advice.
Technology today is quite indiscreet. When you save documents or forward a large amount of digital files to an external email, your company’s IT department may receive an alert. These things must be done carefully.
When transferring files to an external server, it is best to do it slowly and over time. This is unlikely to trigger an alarm, and it requires for you to keep your job. So, you must be extremely careful before speaking out to a superior.
On the other hand, it is important to always try to generate a paper trail. If someone tells you something inappropriate, it can be helpful to ask a follow-up question in writing, so there can be a record of misconduct.
4. Telling People About It While Your Claim Is Pending
Whether you feel like sharing details about your whistleblower claim with a friend, a colleague, or anyone you trust, this can have disastrous consequences, and I advise against it.
Whistleblowers are eligible for awards if they submit original information. This means that if you share yours with anyone, and they file a claim, you may have to share your award with them. If they file a claim before you file yours, you may end up with empty hands, as all whistleblower programs only offer awards to the person who files first. If you file second, you must have new and original information, or information about fraud that is not documented in the competing whistleblower’s claim.
If whatever you have been discussing reaches the ears of senior managers, this may give them time to destroy the evidence before the government launches an investigation.
Specifically, when you file a False Claims Act lawsuit, the act of filing it makes it illegal for you to share the details of your complaint with anyone else. FCA suits are filed under seal, so they must be kept secret. The logic behind this is that the government does not wish to alert the company that it is under investigation.
By the time the DOJ implements a raid of headquarters, for example, they have already obtained all the evidence they possibly could while the fraud was ongoing. After law enforcement has made an appearance, management will, of course, refrain from breaking the law. Thus, secrecy is critical to the success of your qui tam case.
Courts may also punish whistleblowers who break the seal of an FCA case. For example, by reducing their whistleblower award. There are many legal precedents that bear testimony to this, including in some of our firm’s main jurisdictions, Los Angeles and Orange County.
The bottom line is that in order to investigate your claim in-depth, the government needs to investigate in secret. If you become an obstacle for that, you will be jeopardizing everything you and your whistleblower attorney have been working for all along.
5. Picking the Wrong Whistleblower Attorney
How do you pick an attorney? If they have no experience filing whistleblower cases, that can be a problem, but even if they do, you need someone with expertise in the industry where the misconduct has taken place.
Attorneys covet whistleblower cases because they can potentially lead to millions of dollars in awards, of which they will be entitled to a percentage. For this reason, attorneys whose expertise is in the field of personal injury, for example, may advertise that they also handle whistleblower cases. But the number of successful whistleblower cases filed every year in the U.S. is very limited, and you need someone with a proven track record. The government only investigates a small percentage of the cases filed, and the most decisive factor is usually the attorney’s experience.
A seasoned attorney knows right away whether a case has potential. If the government decides not to intervene, lesser attorneys may quit the case altogether. For someone with experience and resources, however, this can be a challenge and an opportunity to obtain a larger reward. In fact, when the government does not intervene in a qui tam case, if you succeed without them, your award can be as high as 30 percent of any recoveries.
Whistleblower attorneys who are dedicated to a specific niche, like military contracts or healthcare fraud, usually have the right connections in the field. They have access to the best expert witnesses and investigators. If they specialize in securities fraud, they will likely have forensic accountants who can trace the fraud through complex paths within the system. The fact that an attorney is aware of whistleblower laws does not necessarily provide them with this type of expertise and resources.
Finally, as experienced whistleblower attorneys, people like me and my team know the people on the other side of the counter. Some of us are former prosecutors. Government officials respect us. They do not read a case with the same interest when it is filed in a sloppy manner by an unknown lawyer than when a prestigious whistleblower attorney files a case that checks all the boxes for them. We know what they are looking for, and we work to package our claims accordingly.
Moreover, we know where it is best to file a claim. We know how each jurisdiction will approach a case, and what is best for it. In California, we are known and respected, but we also have the right connections in other states, and we will put them to work whenever a case requires it.
Your choice of attorney is, in short, the most important of all, and the earlier you consult with them, the higher your chances of success.
6. Obtaining Evidence in An Illegal Way
What can you do to obtain evidence. Is it OK to just take home a box of incriminating documents? The answer to this type of questions is not so clear-cut. This is one of the reasons it is crucial to consult with an attorney as soon as you suspect misconduct.
Company policies, NDAs; a lot of things can stand in the way when you are trying to gather evidence of wrongdoing, and you will need an attorney to do it right.
One of the things companies often do is invoke trade secret violations. Naturally, the government understands that you are allowed to try to obtain documents that prove fraud, but if the company finds a way to connect those documents with trade secrets, you may be violating the federal Trade Secrets Act. In that case, the company can even sue you... Thus, you need advice from an attorney with experience suing companies in your industry in order to stay safe.
7. Failing to File Claims in All The Appropriate Jurisdictions
This item refers not so much to a mistake that can kill your chances of an award, but rather, to missing out on untapped awards from different states.
This is very common in the case of healthcare fraud claims. Often, we sue massive healthcare providers operating in different states. When an inexperienced attorney only files a claim in one or two states, they may cause you to miss out on awards from other states. For example, if your employer has defrauded Medicaid, they may settle with multiple states for defrauding their local Medicaid programs. But you will only receive an award if you have filed in each one of those states. If you only filed in California, but they also defrauded Washington and Oregon, this can be a terrible mistake.
Likewise, when you detect fraud taking place at a Los Angeles-based hospital that belongs to a chain, the other hospitals in that network may also be engaging in the same misconduct. If you only file against a single California hospital, you may be reducing your chances of securing a massive reward.
The same can happen with fraud against private insurers. In some states, including California, you can also receive an award for blowing the whistle in this type of cases. So, if you find out that a hospital has defrauded Medicaid and Medicare, but also, for instance, Blue Cross, filing the appropriate claims may entitle you to larger awards. An inexperienced attorney may fail to notice this, which can cause you to miss out on millions of dollars.