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Blowing the Whistle on Coronavirus Relief Fraud

| Mar 31, 2020 | Retaliation & Whistleblowing |

When disasters strike – including the current coronavirus outbreak – price gouging, scams, and other fraud unfortunately follow. If the government is the entity being defrauded, however, whistleblowers have the power to expose the wrongdoing and protect the public, but they, too, need protection from unlawful retaliation.

Government Assistance for Those Affected by the Pandemic

Local, state, and federal agencies frequently make economic grants, programs, and allocations available to help protect vulnerable populations and restore order during or after a disaster. During the unprecedented public health and economic crisis caused by the COVID-19 coronavirus, the government has approved providing trillions of dollars in direct or indirect relief payments. This spending includes subsidies to businesses or qualified individuals in need, payments to local governments to support public health programs, investment in pharmaceutical development and medical research, and countless other avenues of spending.

Unfortunately, some malicious actors will take advantage of government funding and fraudulently siphon off profits to themselves or their businesses. One strong weapon against this abuse of government resources is the federal False Claims Act, which incentivizes and protects individuals who blow the whistle on fraud and allows the government to recover some of the misappropriated funds.

What Is the False Claims Act?

The False Claims Act (FCA) originated during the Civil War and imposes liability on persons and companies who defraud governmental programs. Known colloquially as the “Lincoln Law,” it was implemented to quell the wave of dishonest contractors selling the Union Army unfit horses and mules, faulty rifles and ammunition, and rancid rations and military provisions. It wasn’t until 1986 when Congress significantly strengthened the Act’s protections and application.

The Department of Justice (DOJ) investigates and pursues claims under the FCA. These claims often involve large-scale federal contracts in diverse industries ranging from health care, medical devices, insurance, and pharmaceutical-related claims to allegations involving military contracts and weapons production. The DOJ has recovered more than $62 billion under the False Claims Act since 1986 – $3 billion in 2019 alone.

Protection From Retaliation Under the FCA

Potential whistleblowers may be reluctant to report their concerns for fear of retaliation or adverse treatment. The FCA has an anti-retaliation provision to help alleviate that fear by establishing a cause of action for an employee who suffers retaliation for filing a qui tam action or otherwise attempting to enforce the False Claims Act. If successful, the employee could be reinstated and recover compensation such as double back pay, special damages, and attorney’s fees and costs.

Other federal laws, like the Whistleblower Protection Act of 1989, protect government employees (along with certain contractors) from retaliatory action in response to reporting information about fraud and other dishonest or illegal activities related to government organizations. Whistleblower provisions in other federal, state, and local laws against fraud (including Dodd-Frank, Sarbanes-Oxley Act (SOX), the Occupational Safety and Health Act (OSHA), the Fair Labor Standards Act (FLSA), and New York’s whistleblower law, N.Y.L.L. §§ 740, 741) may also protect individuals who report fraud or other wrongdoing related to the COVID-19 coronavirus crisis.

Speak to a Whistleblower Retaliation Lawyer to Avoid Any Whistleblower Pitfalls

Whistleblower protection statutes are complex and complicated and have numerous exclusions, exceptions, and requirements. It is essential to understand the reporting process and protection the FCA may extend to employee’s situation. Potential whistleblowers should consult with experienced legal counsel to fully understand what protections may (or may not) be available to them before taking any action to report wrongdoing or initiate a claim.

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