Government rewards are available to internal and external auditors for reporting fraud against the government
This article addresses how auditors can get a whistleblower reward for reporting fraud against the government, including Medicare fraud or military fraud. It also addresses special issues or concerns when an auditor becomes a whistleblower.
Fraud occurs more often than you think!
As an auditor you take pride in your job and your company. But what happens when you discover that your company or the company you are auditing is cheating the government? The reality is that fraud against the government happens all too frequently. It is estimated that ten percent (10%) of all government contract billings are fraudulent. As an auditor, you are in a position to discover fraud. This article outlines your option as an auditor of reporting fraud to the government and receiving a reward in the process.
The DOJ Whistleblower Reward Program
Under the False Claims Act (FCA), the Department of Justice (DOJ) pays rewards of up to 30% of the money it recovers back from a company submitting false claims. This includes reporting fraud under any of the 20 different federal programs, including as Medicare or military fraud.
To be eligible for a reward, you must hire an attorney and file a whistleblower complaint against the company. The case is initially filed under seal in order to give the government time to investigate the allegations without tipping off the defendant. The government has a choice of taking over the case itself or allowing the whistleblower’s attorney to proceed itself to recover back the improper payments. The government pays the whistleblower a portion of the amount recovered, consisting of 15% to 25% in cases DOJ take the lead and 25% to 30% if the whistleblower’s attorney controls the case. In other words, if the case settles for $100 million, the whistleblower would get $15 million at 15%.
Corporate officers and executives are eligible for whistleblower rewards
The False Claims Act (FCA) does not restrict who can receive a reward. That means that an auditor that either works for the company or is hired by an outside audit company can be a whistleblower. In short, internal and external auditors are eligible for sizable rewards for reporting fraud. For instance, in one case I represented an outside auditor who hired me to file for a reward for reporting that the company she was auditing was cheating Medicare. The government collected $65 million and paid her $12.35 million as a reward.
Issues for auditors
That does not mean that there are no risks. The next sections address a few special issues for auditors to consider. First, are you personally liable? Second, does your employment contract legally prohibit you from reporting fraud? Third, what information can you disclose? Fourth, how to get assistance from an experienced attorney in making the decision to report fraud?
Needless to say, if you planned or initiated the fraud, you could face criminal charges as well as be personally responsible for paying the funds back. However, if you are merely auditing a company you are not liable simply because you are an auditor or aware of the fraud. To be liable yourself, you must have been personal involvement in the fraud. (As explained in more detail below, you should speak to an attorney experienced with False Claims Act reward cases and have them assess your personal risks.)
Validity of confidentiality agreements in contracts?
Many auditors have confidentiality agreements that prohibit them from disclosing information to third parties. However, there is generally a public policy exception that still allows auditors or employees to report fraud to their attorney and to the government. In fact, both the Securities and Exchange Commission and Congress recently passed laws prohibiting companies from curtailing employees or others with knowledge from reporting fraud to the government. The SEC has been actively sanctioning companies that include certain language in employment agreements that prohibit reporting fraud. Therefore, even if you signed an employment agreement with language that suggests that you cannot report fraud, chances are it may be invalid. (You should disclose this to your attorney and get their advice.)
Auditors should not disclose privileged information to the government. However, not all information is actually considered privileged in terms of what can be disclosed to the government. For instance, HIPAA (The Health Insurance Portability and Accountability Act of 1996) generally prohibits disclosing personal information about medical patients to third parties. However, HIPAA has an express exception that allows employees to share such private information with their attorney and to the government when reporting fraud. That means you can show patient files to your attorney or the government as part of the process of thinking about reporting Medicare fraud to the government. But it does not mean you can share it with the media or others.
Although it may be rare for an auditor to have copies of documents protected by the attorney client privilege, if you do, that is something that you should not disclose to anyone. In other words, if you have a legal memo from corporate counsel providing legal advice on an issue, you should not give it to your attorney or the government. You should talk to your attorney before turning over copies of attorney client communications to anyone.
Report fraud to your attorney and the government
Because of the unique role and risks to auditors for reporting fraud and filing for a reward, you should carefully select your False Claims Act whistleblower reward attorney. The good news is that you can contact an attorney in confidence prior to deciding whether to report fraud. Even before you sign a representation agreement with an attorney, by law and legal ethic duties, your communications with an attorney while in the process of selecting an attorney are protected by the attorney client privilege. That means that your attorney must keep your information confidential and cannot disclose it to anyone without your express approval, even if you decide not to hire that law firm.
How to ask The Hesch Firm to become your attorney
Mr. Hesch would be pleased to review in complete confidence your allegations of fraud against the government. You can read his extensive experience as an attorney working for the Civil Fraud Section of the U.S. Department of Justice in the whistleblower reward office on this website. Not only did Mr. Hesch work for more than 15 years in the DOJ office that pays whistleblower rewards, but for the past 10 years he has represented clients, including auditors, report their company for committing fraud.
Find out if Mr. Hesch (and the team of attorneys that works with him) is the right False Claims Act whistleblower firm for you.
See the link at the bottom of this web-page below “Do I have a case” to have Mr. Hesch review your potential whistleblower reward case and help you decide whether to report fraud and file for a whistleblower reward as an auditor.
(Disclaimer: This article is for information only and should not be viewed as legal advice. Each case is unique and you should speak to an experienced False Claims Act attorney about your situation.)
Government rewards to auditors for reporting fraud against the government. Find out if you are eligible.