Process of Filing a Whistleblower Case

There are many different ways to file a whistleblower case and there are several statutes that provide potential rewards to the whistleblower who does so. Each has its own procedures and, if only to preserve the right to obtain a reward, consulting with an attorney prior to filing is a sensible precaution.

In several jurisdictions, a whistleblower attorney is actually required to file a False Claims Act case. This is because the real party at interest is the United States Government and the government has previously insisted that such a matter can not be handled by a plaintiff acting alone.

False Claims Filing Process

The process of filing a False Claims Act whistleblower case is complex and subject to its own procedures. It is almost always advisable to file an initial disclosure with the government prior to filing the case in court. This is a required step to maintain the status of the Plaintiff as an “original source” of the allegations.

Should there be a public disclosure of the allegations, that bar to filing a case can be overcome by the platiniff being an original source. After the initial disclosure, a complaint is filed under seal in court. That complaint can include only Federal Claims or it can include violations of the Federal False Claims Act and State False Claims Acts.

The False Claims Act provides for nationwide jurisdiction so it may be possible to find jurisdiction and an appropriate court to file the case in more than one place. Once the case is filed and until it is unsealed by the Court, it is a matter to be kept with the utmost discretion. Violating the Seal of Federal Court can lead to forfeiting a reward among other prohibitions.

Other Avenues for Filing a Case

There are several other potential laws under which a whistleblower may seek an award depending on the type of violation involved. It is possible to file with both the SEC (Securities and Exchange Commission) and the CFTC (Commodity Futures Trading Commission) whistleblower programs. These programs were created by the Dodd-Frank Act.

Unlike the False Claims Act which requires the government be the party that is effectively harmed, these programs are designed to protect the interest of investors. They are not what are called qui tam actions, in that neither law includes the private right of action which lets an individual go forward with the case for the fraud itself. In the False Claims Act, the government reviews the claim and hopefully decides to take over the litigation, but if they do not the individual may.

With the SEC and CFTC programs, the whistleblower files the case and the agencies can pursue it or not. If not the whistleblower has no action outside of a possible case for any personal retaliation they themselves suffered.

IRS

Congress just passed procedures to improve the IRS whistleblower law, including new anti-retaliation provisions.  For an award to be mandatory, a filing under the IRS whistleblower Law must include $2 million in controversy.

A whistleblower may not submit a claim to the IRS anonymously as they can under the SEC program, rather a form must be signed under the pains and penalties of perjury and submitted to the IRS. There is also no independent right of action under the IRS program, outside of the new anti-retaliation provision allowing the whistleblower to sue if they suffer for reporting a violation.

However, since the False Claims Act expressly prohibits collections for tax fraud the IRS whistleblower law is the appropriate way to attempt to file for federal tax fraud.  The IRS treats such filings seriously, and investigates, and in the event of a collection will reward the whistleblower with a share of what is recovered.