Monetary Incentives for Whistleblowing 

While there are monetary incentives for whistleblowing under the False Claims Act, and under the IRS, SEC, and  CFTC Whistleblower Programs,  most whistleblowers come forward for reasons other than financial incentives.

Most whistleblowers find their real incentive from dismay at seeing an organization commit fraud get away with it and even thrive, because of it. The financial incentives for whistleblowers can also motivate people as it is supposed to do, to come forward with whatever information they have. If you are interested in filing a whistleblower claim, contact a qualified whistleblower lawyer that can help.

Allegations of Greed Against Whistleblowers

Most fraudulent organizations go undetected or pursue business plans involving fraud for quite a long time and profit quite enormously from fraud before any action is actually taken against them. It is this fact that puts the lie to the idea that the whistleblower is greedy.

That is usually the defense against whistleblowers who collect awards. Those whistleblowers, who earn incentivizes under the law, are greedy. That is seen by some as wrongful. Somehow the idea that an individual acting on behalf of the Federal Government helping to uphold the law must be without any desire for money is seen now as the way that a whistleblower must act.

Yet no one stops to think about the greed of the contractor who deliberately falsifies specifications of an important product relied upon by military personnel in the field to make more money. How is that not greed? Monetary incentives for whistleblowing exist to reward the efforts of whistleblowers when they come forward.

How Do Whistleblower Incentives Work?

Monetary incentives for whistleblowing are based on the fundamental idea of a capitalist system. That is, if a person wants something, the person will have to pay for it. In the case of whistleblowing, what whistleblowers have is important information that, if presented properly and given to the government to use, can support the ability of the government to prosecute wrongdoing in almost every sector of our society.

Whistleblower incentives, therefore, are a powerful tool to obtain that information. They may not be the only tool. They may not be all that is required, but they are a powerful force for helping Americans fight fraud throughout the country.

State False Claims Acts

The other area in which monetary incentives for whistleblowing are making a strong impression is the area of State False Claims Acts. There are now at least 30 state and local governments in this country with their own False Claims Act, and while in many of these states, the False Claims Acts are limited to Medicaid or health care program related claims, many others are not. There are even certain types of fraud, which a state may be in a stronger position to pursue under than the Federal law would ordinarily allow.

For example, while it is possible to report securities fraud to the Securities and Exchange Commission and obtain a reward from the Securities and Exchange Commission if it pursues that action, the U.S. Government generally does not buy securities. States and state pension funds do buy securities and can pursue fraud as a result. Obviously, state construction contracts involving construction of highways, for example, may involve both federal and state funds, and sometimes they only involve state funds. Fraud in such projects would be subject to a State False Claims Act.

How Do the Incentives Vary?

Again, the monetary incentives for whistleblowing do vary under State False Claims Acts. There are states, including California, whose incentives go as high as 50% of any funds collected by the state under a State False Claims Act action.

To return to the Federal False Claims Act, it is worth noting that the original Federal False Claims Act enacted in 1863, included a 50% award to the whistleblower. The Congress during the Civil War was very serious about incentivizing whistleblowing when they originally enacted the law.

Current Threshold For Whistleblowing Awards

Today’s law as amended has a lower percentage award of between 15-30% of a collection. That award is usually negotiated between the whistleblower and the Department of Justice but can be litigated in court if there is a dispute as to how much the whistleblower should obtain. In no event does a whistleblower get a 50% award under the Federal False Claims Act. Still, the awards, can, of course, be substantial, and that is the point of providing an incentive to report fraud. If you want to know more about monetary incentives for whistleblowing, contact a knowledgeable whistleblowing lawyer that can help you file your claim, and make informed decisions.