Friday, July 17, 2015

Whistleblowers Convicted of Participating in a Fraud, Cannot Recover Under Qui Tam Provisions

A few years ago, a DOE contractor was charged with timekeeping irregularities - it's employees were charging overtime for hours they did not work and these overtime hours were passed right along to the Government under a cost-reimbursable contract. You can read more details about this case here and here.

Sadly, the discovery of this fraud did not come from the many oversight agencies whose jobs were to prevent and detect such activities. The discovery of the fraud came from a whistleblower who himself, had engaged in the fraud. The question that has been rattling around the court system for awhile is whether that whistleblower, who participated in the fraud to an insignificant degree, can share in the Government's $18.5 million recovery under the Qui Tam provisions of the False Claims Act. The U.S. Court of Appeals just ruled that he could not share in the recovery:
"... the False Claims Act requires the dismissal of a qui tam relator convicted of the conduct giving rise to the fraud, even if the relator only played a minor role."
The relator argued that applying the prohibition to minor fraud participants undermines the FCA's (False Claims Act's) purpose of encouraging qui tam plaintiffs to help uncover fraud. The supposition here is that if there is no chance of reward, fewer whistleblowers will come forward. The Court did not buy this argument.

You can read the entire Court decision here.

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