Whistleblowers– Weighing the Risks vs the Benefits

July 7, 2023

Whistleblowing has emerged as a powerful mechanism to expose systemic fraud, protect the public interest, and promote corporate accountability, all along while potentially enriching insiders with significant whistleblower rewards for taking the right steps in a timely manner. The world of whistleblowers is an exciting one, sometimes they are shrouded in secrecy while shedding light on corruption that wouldn’t be addressed if it weren’t for their courage.  

This will discuss the upsides and the risks, both the benefits whistleblowers enjoy and perils they may face especially if there’s litigation missteps. The universe of claims a whistleblower can bring is vast, but the information has to be grounded in an actionable statute, and some of the most notable cases have been filed under the False Claims Act, SEC whistleblower program, and the IRS whistleblower program.  There are legal, societal, and ethical considerations surrounding whistleblowing.  With a field of law this dense it’s critical to make the right decisions early to avoid landmines and  we emphasize the significance of partnering with the best whistleblower law firm to navigate the complexities of these cases effectively – so if you’re thinking about blowing the whistle do your homework and find a qui tam firm that has a track record in this space. 

Risks and Rewards of Whistleblowers

Whistleblower Benefits: Protecting the Brave 

Whistleblowers play a pivotal role in unearthing clandestine fraud and they are heavily incentivized through the statutes, but on the flip side they often face significant personal and professional risks. To encourage individuals to come forward the whistleblower laws provide several benefits and protections, with the biggest incentive is economic which could be up to 30% of what the federal government recovers as a whistleblower award or up to 50% of what certain state governments recover as a whistleblower reward like for using the California private insurance whistleblower statute. 

Additionally, these laws safeguard whistleblowers against retaliation, such as job termination or harassment. The fact that they contemplate mechanisms to combat retaliation are indicative that they know it’s a chance that the person who blew the whistle may encounter challenges.  With the use of an IRS whistleblower attorney or an SEC whistleblower attorney, there’s a chance that the individual can stay anonymous from start to finish which inherently offers its own protections.  When a False Claims act case is initially filed, its filed confidentially under seal allowing the government many years to investigate which will also give you time to plan your future and be a few steps ahead of the wrongdoer.  

The Best Whistleblower Law Firm: Amplifying Impact 

When considering blowing the whistle, partnering with the best whistleblower law firm is paramount. Experienced attorneys who are knowledgeable in whistleblower cases possess the legal expertise, knowledge of relevant statutes, and extensive networks to effectively navigate complex legal processes.  Law firms who have individuals with a track record of success should be considered first and foremost and generally those firms have former Department of Justice FBI Agents or United States Attorneys to seamlessly interface with the DOJ who tend to investigate these matters. 

Successful whistleblower law firms work hard to ensure that whistleblowers receive comprehensive guidance, protection, and representation, and enhancing their chances of success. Choosing the right law firm can significantly maximize the impact of a whistleblower’s actions and contribute to holding accountable those engaged in fraudulent activities.  First impressions matter and the government and regulatory agencies view a large amount of whistleblower cases and its critical to tee the case up in a crisp, digestible manner or else inadvertently your case may be glossed over. 

For those that think they don’t need a qui tam law firm, the law disagrees with you as the False Claims Act requires a False Claims Act lawyer to commence and maintain the action.  The SEC whistleblower statute, and the IRS whistleblower statute enable anonymity through the use of whistleblower counsel.  All the big whistleblower cases have involved law firms, the scores of cases that are dismissed, marginalized and cause more trouble than solutions are often cases in which an individual tried to represent himself in court and realized early he had a fool for a client.  

The decision to blow the whistle involves carefully weighing these risks against the potential rewards. Whistleblowers must consider their personal circumstances, the strength of their evidence, and whether their case is potentially viable and making sure it’s filed the right way invoking the correct statute.  

Whistleblowing requires careful planning and strategizing. Whistleblowers often need the guidance and support of a reliable whistleblower law firm to navigate the intricate legal landscape and protect their rights. Working with experienced attorneys can help whistleblowers mitigate risks, ensure their claims are appropriately documented, and increase the likelihood of a successful outcome.

Notable Whistleblower Cases 

False Claims Act:

Case: United States ex rel. Nevyas v. Allergan, Inc.

Citation: 584 F.3d 137 (3d Cir. 2009)

In this False Claims act a physician relator was a former employee of Allergan, and alleged an unlawful kickback scheme in violation of the Anti-Kickback Statute (AKS). The scheme  allegedly induced medical professionals to prescribe Botox, by offering kickbacks and incentives.  Kickbacks under the False Claims Act are inherently viewed as unlawful – so any entity providing any sort of kickback while receiving government insurance funds may be found liable under the FCA. The kickbacks were allegedly free or discounted Botox, cash payments, lavish gifts, and other incentives to encourage them to use and prescribe Botox. They were allegedly disguised as “research grants” or “educational funding,” which is a smokescreen for a kickback creating a deceptive appearance of legitimacy. 

The case was settled for $13 million which is the average intervened False Claims Act settlement and the whistleblower was eligible for up to $3,250,000 whistleblower award, but generally the settlement for an intervened case lands around 20% so it may have been approximately $2.5 million whistleblower reward.  When filing a case you can’t presuppose the outcome since more cases fail then succeed, and even the successes may not settle for as much as you initially think the case is worth.  Before filing a False Claims Act case you should balance the potential recovery, times the risk versus other considerations to decide whether you wish to proceed. 

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Securities and Exchange Commission (SEC) Whistleblower Program:

In December of 2022, the SEC paid more than a $20 Million whistleblower award to an anonymous individual who provided information that led to an SEC enforcement action.  Individuals can stay anonymous in the program with an SEC whistleblower attorney.  The whistleblower provided new information, met with Enforcement Division staff multiple times, and remained responsive and  cooperative. Payments to whistleblowers under the SEC program are from an investor protection fund which is financed through monetary sanctions paid by securities law violators.

No money is taken from harmed investors to pay whistleblower awards. Under the SEC program the whistleblower awards can range from 10 to 30 percent of the money collected when the monetary sanctions exceed $1 million. Here, when proceeding anonymously through whistleblower counsel, the risks are minimized and the upside is economically there, but there are very few cases that succeed with the SEC program.  If you’re aware of regulatory violations that implicate securities you should go over your options to file the matter anonymously particularly if you have detailed insider information and if there’s a lot of money in play. 

Internal Revenue Service (IRS) Whistleblower Program:

As a whistleblower, a former UBS executive received for than $100 million IRS whistleblower reward after blowing the lid on the UBS scheme for tax evasion.  This IRS whistleblower case received a lot of attention and had many twists and turns, in part due to the initial representation that may have complicated the matter for the whistleblower, underscoring the need to go to a firm that has a focus of its practice on whistleblower laws.

Whistleblowing is not without ethical considerations. It requires individuals to balance their obligations to society, personal values, and potential consequences. When imminent harm could occur, one must act promptly, but that doesn’t always happen.  If in an ethical quandary its best to seek advice from someone who has experience in the field and firms like the storied whistleblower law firm Brown, LLC offers free, confidential consultations to go over whistleblower options.  The ethics of whistleblowing is to expose fraud while protecting innocent parties. 

Without whistleblowers too much fraud and harm may go undetected.  It’s an oversimplification to say it’s about exposing what’s wrong versus what’s right, when many things may be gray and concealed and the moral compass compromised if entrenched in a culture of corruption.  That is why a wholesome consultation with a whistleblower law firm who can comprehensively discuss the risks versus rewards of blowing the whistle is in your best interest if you don’t know what to do, or if you have information that you do know you want to expose.