How Does the Federal Government Calculate Whistleblower Rewards?

Several federal whistleblower statutes include provisions for whistleblower rewards. Each year, federal agencies pay hundreds of millions of dollars to federal whistleblowers who come forward with information about and report fraud, waste, abuse, and other forms of misconduct. Federal agencies calculate these rewards on a case-by-case basis, taking into account both the relevant whistleblower reward laws and the particular facts and circumstances of each individual case.

As a result, not only is there no “standard” whistleblower reward amount, but there is also no calculation you can make to determine how much you will receive if your whistleblower complaint results in the recovery of taxpayer funds. While an experienced federal whistleblower attorney may be able to provide a range of potential rewards based on the facts and circumstances of your case, it simply isn’t possible to provide a more concrete assessment until your case progresses.

5 Key Aspects of Whistleblower Reward Calculations

But, while our attorneys cannot provide a specific estimate of the amount you may receive as a federal whistleblower, we can explain how the federal government calculates whistleblower rewards. With this in mind, here are five key aspects of whistleblower reward calculations:

1. The Statutory Percentages

Each federal statute that includes provisions for whistleblower compensation provides for rewards to be calculated based on a percentage of the government’s monetary sanctions collected. In most cases, whistleblowers will be eligible to receive anywhere from 10% to 30% of the amount that the government recovers based on the information they provide.

The U.S. Commodity Futures Trading Commission (CFTC), U.S. Securities and Exchange Commission (SEC), and Financial Crimes Enforcement Network (FinCEN) all administer statutory whistleblower reward programs that entitle whistleblowers to between 10% and 30% of the amount recovered. Importantly, these agencies also place lower limits on whistleblower reward eligibility—with eligibility beginning with recoveries of $1 million.

Many federal whistleblower cases fall under the False Claims Act. The False Claims Act allows whistleblowers to file qui tam complaints on behalf of the federal government. Once a whistleblower files a qui tam complaint, the U.S. Department of Justice (DOJ) has a duty to investigate (provided that the complaint meets all statutory requirements); and, upon completing its investigation, the DOJ will decide whether to intervene.

If the DOJ intervenes, it will pursue the whistleblower’s qui tam complaint in federal court and their whistleblower reward program will apply. In these cases, the whistleblower (who is also referred to as a qui tam relator) is generally entitled to 15% to 25% of the government’s recovery if the case is successful, though this can be reduced to 10% in some cases. If the DOJ declines to intervene, the whistleblower has the option to pursue the case independent of the DOJ; and, if the case is successful, the whistleblower will be entitled to 25% to 30% of the amount recovered on the government’s behalf.

2. The Federal Agency Involved

The federal agency involved in a federal whistleblower case plays a key role in determining the amount of the reward issued (if the case is successful and the government’s recovery exceeds the applicable threshold, if any). This is because different agencies have different policies regarding whistleblower compensation.

For example, the SEC is known to be among the more generous federal agencies when it comes to issuing whistleblower awards, and it is responsible for issuing many of the largest whistleblower rewards in U.S. history. This includes the largest-ever whistleblower reward, which was a $279 million reward issued to an anonymous whistleblower in 2023.

In contrast, the IRS has historically issued relatively few rewards under its whistleblower program. Not only does the IRS have a higher threshold for reward eligibility than other agencies at $2 million, but it also takes a discretionary approach to issuing awards based on whether it determines that a whistleblower’s information “substantially contributed to an administrative or judicial action.”

With all of that said, federal whistleblowers and their counsel can also play a significant role in determining whether a reward is issued. At Oberheiden P.C., we take a proactive approach to helping our clients secure whistleblower rewards when warranted. When we represent whistleblowers, we work closely with the relevant agency throughout the process, demonstrating the value of our clients’ information and involvement in the case at every step along the way.

3. The Amount the Federal Government Recovers (if Any)

Since federal whistleblower rewards are based on a percentage of the amount recovered and any minimum thresholds that apply, the amount that the government recovers is also a major factor in determining a whistleblower’s reward. Except in False Claims Act cases in which the DOJ declines to intervene, the amount that the government decides to seek (and the amount it decides to accept in a settlement, if any) is ultimately beyond the whistleblower’s control. But, here too, whistleblowers’ attorneys can play an active role and advocate for their clients’ best interests—and this is one of the many steps our attorneys take when representing clients in federal whistleblower cases.

4. The Facts and Circumstances of the Case

When a whistleblower reward is warranted, the federal agency involved in the case will determine the percentage of the whistleblower’s reward based on a laundry list of factors. This is another stage during which effective legal representation can be essential. While each federal agency considers its own list of factors, common examples include:

• How quickly the whistleblower came forward after learning the information he or she provided to the government;
• Whether the federal government was previously aware of the issue that was the subject of the whistleblower’s complaint;
• The amount and materiality of the information initially provided;
• Whether the whistleblower provided any additional information upon request; and,
• The level to which the whistleblower provided assistance during the government’s investigation.

These are all “positive” factors that can lead to an award above the minimum statutory percentage. In some cases, federal agencies will consider “negative” factors that may mitigate or outweigh these positive factors as well. For example, the IRS considers negative factors such as:

• Delays that “adversely affect[] the IRS’s ability to pursue an action or issue;”
• The whistleblower’s direct involvement in the violation at issue;
• Failing to follow instructions provided by the IRS during its investigation;
• Providing false or misleading information to the IRS; and,
• Impairing the IRS’s ability to pursue enforcement (i.e., by disclosing the investigation).

Not all factors are relevant in all cases, and relevant factors will weigh more heavily in some cases than others. Ultimately, when issuing whistleblower rewards, federal agencies take a facts-and-circumstances approach—and it is up to whistleblowers (and their counsel) to ensure that agencies give due consideration to all relevant facts and circumstances when calculating their rewards.

5. Negotiating with the Federal Government

This brings us to our final point: When whistleblowers engage experienced legal counsel to represent them, their attorneys can negotiate with the federal government regarding their reward calculations. For example, if an agency is inclined to issue an award on the lower end of the range of applicable percentages, the whistleblower’s counsel can step in and highlight relevant positive factors while justifying or downplaying any negative factors.

This doesn’t have to be—and generally shouldn’t be—a contentious process. Rather, at the reward stage, the whistleblower’s lawyer and the federal prosecutors handling the case will have already been working together for some time, and they will often work collaboratively to arrive at an appropriate whistleblower reward.

Put our highly experienced team on your side

Dr. Nick Oberheiden

Founder

Attorney-at-Law

Lynette S. Byrd

Former DOJ Trial Attorney

Partner

Brian J. Kuester

Former U.S. Attorney

Hon. Kevin McCarthy

55th Speaker, U.S. House of Representatives (ret.)

Government Consultant

Mike Pompeo

Of Counsel

Former U.S. Secretary of State

John W. Sellers

Former Senior DOJ Trial Attorney

Linda Julin McNamara

Federal Appeals Attorney

Nicholas B. Johnson

Former Prosecutor

Roger Bach

Former Special Agent (DOJ)

Chris J. Quick

Former Special Agent (FBI & IRS-CI)

Michael S. Koslow

Former Supervisory Special Agent (DOD-OIG)

Ray Yuen

Former Supervisory Special Agent (FBI)

5 Tips for Maximizing Whistleblower Rewards

With these considerations in mind, if you are thinking about blowing the whistle with the federal government, what can you do to maximize your reward (if the government’s case is successful)? Here are five tips from the federal whistleblower lawyers at Oberheiden P.C.:

• Take Action Promptly – If you are thinking about blowing the whistle, coming forward promptly will help maximize your chances of securing a whistleblower reward at the higher end of the relevant range of percentages.
• Be as Forthcoming as Possible – Being as forthcoming as possible will also give the investigating agency more reason to issue a larger reward in your case.
• Be Prepared to Play an Active Role in the Government’s Investigation – All federal agencies that have whistleblower compensation programs consider the extent of the whistleblower’s cooperation and involvement when calculating rewards.
• Avoid Careless Mistakes – Avoiding careless mistakes, like inadvertently providing inaccurate information, can help avoid the application of any “negative” factors.
• Work with an Experienced Federal Whistleblower Lawyer – From protecting your confidentiality to maximizing your chances of securing a favorable whistleblower award, there are many ways an experienced federal whistleblower lawyer can help you.

Speak with an Experienced Federal Whistleblower Attorney at Oberheiden P.C.

If you have questions about serving as a federal whistleblower, we strongly encourage you to get in touch. We provide free initial consultations, and we do not charge any legal fees or costs out-of-pocket. To speak with an experienced federal whistleblower attorney at Oberheiden P.C. in confidence as soon as possible, please call 888-680-1745 or tell us how we can get in touch online today.