Update: Recent Whistleblower Examples
Whistleblowers help the federal government preserve and recover taxpayer funds while protecting investors, consumers, and the U.S. public at large from the consequences of corporate and governmental misconduct. While the federal government has substantial resources at its disposal, it cannot uncover all cases of fraud and misconduct on its own—and it relies on whistleblowers to come forward when they have information that could warrant civil or criminal enforcement.
Each year, whistleblowers report tens of billions of dollars in fraud, waste, and abuse to the U.S. Department of Justice (DOJ), Internal Revenue Service (IRS), U.S. Commodity Futures Trading Commission (CFTC), U.S. Securities and Exchange Commission (SEC), and other federal agencies. This includes whistleblowers in the private and public sectors. In this article, our whistleblower lawyers highlight some recent examples of whistleblower-initiated cases that led to successful enforcement actions and substantial recoveries for U.S. taxpayers:
Bon Secours St. Francis Health System Agrees to Pay $36.5 Million to Settle Whistleblower Lawsuit Under the False Claims Act
On June 15, 2023, the U.S. Attorney’s Office for the District of South Carolina announced that Bon Secours St. Francis Health System had agreed to pay $36.5 million to settle allegations that it paid unlawful kickbacks to orthopedic surgeons in violation of the False Claims Act, Stark Law, and Anti-Kickback Statute. The case arose out of a qui tam complaint filed by a whistleblower who will receive approximately $10.2 million as a result of coming forward.
According to the DOJ’s Press Release, the settlement “resolves allegations that St. Francis caused the submission of false claims to Medicare and to TRICARE as a result of an unlawful contractual payment structure between St. Francis and Piedmont Orthopedic Associates (“POA”), whereby POA’s compensation was tied to the volume or value of the practice’s referrals to St. Francis.” Payment of unlawful referral fees is a common issue that costs taxpayers by fraudulently inflating healthcare providers’ Medicare and Tricare reimbursements.
Healthcare Provider and Its Owner Agree to Settle Medicare and Tricare Fraud Charges Following Whistleblowers’ Qui Tam Lawsuits
On September 29, 2023, the U.S. Attorney’s Office for the Eastern District of Virginia announced a civil settlement in a case arising out of two whistleblowers’ qui tam lawsuits. The qui tam provisions of the False Claims Act allow whistleblowers to pursue claims on behalf of the federal government when the government declines to pursue litigation directly. Following the initiation of the whistleblowers’ qui tam lawsuits, the defendants—a behavioral services healthcare provider and its owner—agreed to settle allegations that they had billed Medicare and Tricare for services not actually provided on multiple occasions over a three-year period.
Under the terms of the settlement, the defendants will pay $918,000 immediately, and they will be required to pay an additional $2.05 million if the company is sold within five years. The defendants also agreed to enter into a three-year Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), which is intended to “promote compliance with the statutes, regulations, program requirements, and written directives of Medicaid and all other federal health care programs.”
Whistleblower Complaint Leads to First-of-Its-Kind Settlement Involving COVID-19 Fraud
On November 1, 2023, the U.S. Attorney’s Office for the Northern District of New York announced a first-of-its-kind settlement arising out of a whistleblower complaint filed under the False Claims Act. According to the DOJ’s Press Release, the defendant falsely certified that his business was eligible for a Restaurant Revitalization Fund (RRF) grant during the COVID-19 pandemic when he knew, or should have known, that his company operated too many locations to qualify.
Pursuant to the settlement, the defendant will pay $2 million to reimburse the federal government for its fraudulently obtained RRF grant, plus interest and penalties. The whistleblower will receive $200,000 to be paid out of this amount.
SEC and CFTC Announce Multiple Successful Enforcement Actions Resulting from Whistleblower Complaints
The SEC and CFTC regularly issue releases highlighting their enforcement efforts resulting from the contributions of whistleblowers. These agencies rely heavily on whistleblowers to help them identify violations of the Dodd-Frank Act, Sarbanes-Oxley Act, and other federal statutes and regulations, and they also go to great lengths to protect whistleblowers’ identities.
As a result, while the SEC and CFTC regularly announce the payment of whistleblower awards, the details disclosed in these announcements are minimal. With this in mind, here are some examples of their most recent announcements:
- On July 12, 2023,the SEC announced the payment of a $9 million award to a whistleblower who came forward “[a]fter repeatedly internally reporting the concerns” that ultimately prompted the whistleblower’s complaint. In addition to prompting the SEC to open an investigation, the whistleblower also provided “substantial and ongoing cooperation,” including “critical information and continuing assistance that helped the agency recover millions of dollars for harmed investors.”
- On August 4, 2023, the SEC announced that seven whistleblowers would share a $104 million award, each of whom “provided information that either prompted the opening of or significantly contributed to an SEC investigation.” As noted in the SEC’s release, whistleblowers can receive from 10% to 30% of the amount the government recovers as a result of the information they provide, which means that the whistleblowers in this case provided information that led to a recovery in excess of $300 million.
- On August 25, 2023, the SEC announced the payment of more than $18 million to a whistleblower “whose information and assistance led to a successful SEC enforcement action.” As the SEC’s release continues, “[a]fter initially reporting misconduct internally, the whistleblower submitted information to the Commission that prompted the opening of an investigation. The whistleblower thereafter provided additional helpful information and substantial cooperation that saved the Commission time and resources during the investigation.”
- On September 19, 2023, the CFTC announced that it was awarding more than $15 million to two whistleblowers who “provided significant information and assistance that led the CFTC to bring separate successful enforcement actions.” According to the CFTC, one of the whistleblowers “interpreted key evidence and helped the Division of Enforcement (DOE) staff identify new and productive lines of inquiry,” while the other provided key information that “led DOE staff to expand its analysis of the harm customers suffered as a result of the violations.”
- On October 12, 2023, the CFTC announced that it was awarding more than $18 million to a single whistleblower who provided “critical” information that led to successful enforcement actions by the CFTC and another agency. According to the CFTC’s release, the whistleblower “provided assistance to the Division of Enforcement’s (DOE) staff that was significant in amount and quality,” including giving “valuable information during multiple contacts with DOE staff.”
IRS Whistleblower Office Annual Report Highlights Whistleblowers’ Critical Role in Closing the Tax Gap
The Internal Revenue Service (IRS) is another federal agency that generally does not disclose the details of individual whistleblower-initiated enforcement actions. However, the IRS Whistleblower Office issues an annual report to Congress, and its reports are available online.
The IRS Whistleblower Office’s most recent annual report contains some notable statistics. Overall, the IRS collected more than $172 million from delinquent taxpayers as a result of 132 whistleblower-initiated enforcement actions. These enforcement actions led to whistleblower awards totaling $37.8 million. Overall, since the Whistleblower Office’s establishment in 2007, the IRS has collected approximately $6.6 billion thanks to whistleblowers, and paid whistleblower awards totaling $1.1 billion.
In its annual report, the IRS Whistleblower Office also highlights the 10 most common allegations submitted by whistleblowers. In the most recent edition, these were:
- Unreported and underreported income
- Failure to file a tax or information return
- Underreported wages and employment tax liability
- General allegations of tax fraud and other related crimes
- Overstated and false deductions
- False dependent exemptions
- Misclassification of employees and subcontractors
- Rental income-related issues
- Capital gains-related issues
- International and offshore disclosure and tax payment violations
Whistleblowers Continue to Play a Key Role in Exposing COVID-19 Fraud
While programs like the Restaurant Revitalization Fund (RRF), Paycheck Protection Program (PPP), and Employee Retention Credit (ERC) served as much-needed lifelines for many businesses during the COVID-19 pandemic, they also proved to be prime targets for fraud. Government estimates put the total cost of pandemic-related fraud in excess of $2 trillion, and multiple federal agencies are now in the process of seeking to recoup as much taxpayer money as possible.
In doing so, they are relying heavily on whistleblowers. On Whistleblower.gov, the federal government is tracking whistleblowers’ contributions to the ongoing fight against pandemic-related fraud. To date, the federal government has received approximately 7,000 complaints from whistleblowers, with more than 2,500 complaints filed in relation to alleged fraud under state COVID-19 relief programs.
Request a Free and Confidential Consultation with a Federal Whistleblower Lawyer
Our federal whistleblower lawyers represent individuals nationwide who need to report fraud, waste, abuse, and other statutory violations to the government. If you believe that you may be able to serve as a whistleblower, we encourage you to call 888-680-1745 or contact us online to arrange a free and confidential consultation at Oberheiden P.C.
Dr. Nick Oberheiden, founder of Oberheiden P.C., focuses his litigation practice on white-collar criminal defense, government investigations, SEC & FCPA enforcement, and commercial litigation.