Welcome to Original Source: The Sidley Austin False Claims Act Blog

The False Claims Act (FCA) has long been a key enforcement tool for the federal government in matters involving government contracts or other expenditures of government funds. FCA enforcement has traditionally focused primarily on two industries receiving a substantial amount of government funds: healthcare and defense and other government contractors. Recently, however, FCA enforcement has expanded to other industries, including financial services. Through the False Claims Act Blog, lawyers in Sidley’s White Collar, Healthcare, FDA, Government Contracting, Financial Services, Appellate, and other practices will provide timely updates on new and interesting developments relating to FCA enforcement and litigation.

USDA Withdraws Rule Exposing Contractors to FCA Liability for Failure to Report Violations of Labor Laws

Posted by Jonathan F. Cohn and Brian P. Morrissey

Earlier this month, the U.S. Department of Agriculture (USDA) withdrew a proposed rule that would have imposed liability under the False Claims Act on USDA contractors for failure to report violations or alleged violations of federal labor laws. 77 Fed. Reg. 5714 (Feb. 6, 2012); 77 Fed. Reg. 5750 (Feb. 6, 2012). It appears that the rule, if adopted, would have been the first federal regulation to assert FCA liability on this ground. The USDA withdrew the Rule in response to criticism from industry groups, although it remains uncertain whether the agency will reissue the same or a similar rule in the future.

The rule, issued in December 2011, would have required USDA contractors to certify that they were “in compliance with all applicable labor laws” and that, to the best of their knowledge, “all of [their] subcontractors of any tier, and suppliers” were similarly in compliance. See 76 Fed. Reg. 74722 (Dec. 5, 2011); 76 Fed. Reg. 74755. Separately, the Rule would have required contractors to report violations or alleged violations of labor laws to their contracting officer. (The text of the Rule was ambiguous on the question whether this reporting obligation pertained only to violations by contractors themselves, or whether it required contractors to report conduct by their subcontractors and suppliers.) The Rule further stated that contractors’ certifications, if false, could be penalized under the FCA. 76 Fed. Reg. 74722; 76 Fed. Reg. 74755. The Rule was ground-breaking in this respect—it appears to be the first federal regulation that would have called for FCA liability for federal contractors who fail to report violations or alleged violations of labor laws.

This novel application of the FCA underscores the broad reach of the Act, and highlights yet another sector of the economy that could face increased exposure to FCA suits in the future. Most federal courts agree that a claim for payment is cognizable under the Act if it falsely certifies the submitter’s compliance with a condition of Government payment imposed by statute, regulation, or contract provision. See, e.g., United States ex rel. Conner v. Salina Reg’l Health Ctr., Inc., 543 F.3d 1211, 1217 (10th Cir. 2008). In applying this standard, courts have wrestled with the question whether, and to what extent, a claim submitted by a contractor should be interpreted to certify that other parties in the supply chain have also complied with applicable federal rules. The question typically arises in pharmaceutical cases, where a health care provider submits a claim based on the use of a product manufactured and supplied by other entities, all of whom might have violated a federal law—such as the Food, Drug, and Cosmetics Act (“FDCA”), 21 U.S.C. § 301, et seq., and the Federal Anti-Kickback Statute (“AKS”), 42 U.S.C. § 1320a-7b(b)(2)—at some point in the course of producing or marketing the drug for which the provider seeks reimbursement. The answer typically depends on the facts—e.g., the precise certification language on the contractor’s claim form and/or the nature of the law that was violated—and has engendered a great deal of litigation. Expanding this theory of liability to violations of labor laws and to contractors in the agricultural industry could represent a new frontier in FCA exposure.

Multiple industry groups objected to the USDA’s rule, including the National Chicken Counsel, the National Turkey Federation, and the U.S. Poultry and Egg Association. See here.  Their objections were numerous, but high on the list was their concern that the Rule would expose contractors to FCA liability for failing to report labor law violations already known to relevant federal law enforcement agencies, and for failing to report any allegation of labor law violations, even a patently frivolous one. The industry groups also expressed concern that the costs of their compliance with this Rule could materially increase the costs of poultry and other agricultural products provided to schools, hospitals, and the military through federal procurement programs.

The USDA withdrew the rule in response to these concerns, but this action may not end the debate. The USDA issued this proposed rule on December 1, 2011 through a Direct Final Rule, 76 Fed. Reg. 74722, and a substantively identical Proposed Rule, 76 Fed. Reg. 74755. The agency stated that the Direct Final Rule would bypass standard notice-and-comment procedures and take immediate effect on February 29, 2012 if no adverse comments were received. If adverse comments were received, however, the agency would withdraw the Direct Final Rule and proceed with standard notice-and-comment procedures on the Proposed Rule.

The USDA withdrew the Direct Final Rule on February 6, 2012 in response to the adverse comments noted above. It also withdrew the Proposed Rule, without explanation. It thus remains uncertain whether USDA plans to re-issue the same or a similar rule at a later time. But the possibility that the agency may do so warrants continued monitoring, especially for those interested in this potential expansion of the FCA.

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Justice Department Celebrates the 25th Anniversary of Key Amendments to the False Claims Act

Posted by Patrick E. Kennell III and Ellyce R. Cooper

On January 31, 2012, the Department of Justice celebrated the 25th anniversary of the 1986 Amendments to the False Claims Act with speeches by Attorney General Eric Holder, Assistant Attorney General Tony West, and Members of Congress. The celebration also included a panel discussion entitled “$30 Billion, 25 Years: The False Claims Act in Review.” The DOJ used the occasion to celebrate its recent accomplishments and to describe its future enforcement efforts.

In press releases sent out to mark the occasion, the DOJ noted the following successes:

  • “Since [the 1986] changes were enacted, the Justice Department has recovered more than $30 billion under the act.”1
  • “Since January 2009, the department has recovered $8.8 billion under the False Claims Act – the largest three-year total in the Justice Department’s history, and 28 percent of all recoveries since the False Claims Act was amended in 1986.”2
  • $6.6 billion of the amounts recovered since January 2009 have been from healthcare fraud recoveries.3
  • “[F]or every dollar Congress has provided for healthcare enforcement over the past three years, the Departments of Justice and Health and Human Services have recovered nearly seven.”4
  • “In FY 2011 alone, the Department of Justice secured more than $3 billion in settlements and judgments in civil cases involving fraud against the government.”5
  • “Whistleblowers have filed nearly 8,000 actions – including a record high of 638 in the past year alone.”6

The DOJ also noted a series of key settlements including:

  • $2.3 billion – Pfizer Inc. (2010);
  • $1.7 billion – Columbia/HCA I & II (2000 and 2003);
  • $1.415 billion – Eli Lilly and Company (2009);
  • $950 million – Merck Sharp & Dohme (2011);
  • $923 million – Tenet Healthcare Corporation (2006);
  • $875 million – TAP Pharmaceuticals (2002);
  • $750 million – GlaxoSmithKline (2010);
  • $704 million – Serono, S.A. (2005).
  • $650 million – Merck (2008); and
  • $634 million – Purdue Pharma (2007).7

In his speech, Attorney General Eric Holder stated that the DOJ is committed to “aggressively utilizing” the FCA to combat fraud and that the past successes of the DOJ “represent[] a wide-ranging effort to eradicate the scourge of fraud from some of government’s most critical programs.”8 Attorney General Holder also noted that “in these challenging economic times” the DOJ’s mandate to “aggressively pursue those who would take advantage of their fellow citizens – has never been more clear or more urgent.”9 Finally, Attorney General Holder stated that “the strength of our resolve is equal to the breadth of our mandate.”10 Likewise, Assistant Attorney General for the Civil Division, Tony West indicated that “Attorney General Eric Holder, has made fighting fraud – particularly healthcare fraud – a top priority.”11

It is clear from the remarks at this celebration that the recent increase in civil and criminal FCA actions will continue for the foreseeable future.12 It also remains evident that the healthcare sector continues to be a focus of the DOJ’s enforcement efforts, although it also continues to pursue other industries. The increase of whistleblower FCA cases during this past year also evidences the increased awareness of the FCA by employees of companies that deal with government funding in some way. Corporations and individuals should continue to have extensive compliance programs in place to ensure that the DOJ does not target them as part of the DOJ’s “aggressive[] pursu[it]” of government fraud related actions using the DOJ’s broad mandate.


1 Press Release, United States Department of Justice, Justice Department Celebrates 25th Anniversary of False Claims Act Amendments of 1986 (Jan. 31, 2012), available at http://www.justice.gov/opa/pr/2012/January/12-ag-142.html.

2 Id.

3 Press Release, United States Department of Justice, Assistant Attorney General Tony West Speaks at the 25th Anniversary of the False Claims Act Amendments of 1986 (Jan. 31, 2012), available at http://www.justice.gov/iso/opa/civil/speeches/2012/civ-speech-120131.html.

4 Id.

5 Press Release, United States Department of Justice, Justice Department Celebrates 25th Anniversary of False Claims Act Amendments of 1986 .

6 Press Release, United States Department of Justice, Attorney General Eric Holder Speaks at the 25th Anniversary of the False Claims Act Amendments of 1986 (Jan. 31, 2012), available at http://www.justice.gov/iso/opa/ag/speeches/2012/ag-speech-120131.html.

7 Press Release, United States Department of Justice, Justice Department Celebrates 25th Anniversary of False Claims Act Amendments of 1986.

8 Press Release, United States Department of Justice, Attorney General Eric Holder Speaks at the 25th Anniversary of the False Claims Act Amendments of 1986.

9 Id.

10 Id.

11 Press Release, United States Department of Justice, Assistant Attorney General Tony West Speaks at the 25th Anniversary of the False Claims Act Amendments of 1986.

12 For a detailed accounting of DOJ Fraud Statistics, see Department of Justice, Fraud Statistics Overview (Dec. 7, 2011, 2:47 PM), http://www.justice.gov/civil/docs_forms/C-FRAUDS_FCA_Statistics.pdf.

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Supreme Court’s Ruling On The Affordable Care Act Could Undo Key FCA Amendments

Posted by Ellyce Cooper and Stephanie Hales

On March 26–28, 2012, the Supreme Court will hear oral argument on various challenges to the Affordable Care Act (ACA), the federal health reform legislation enacted in March 2010. Two laws comprise the ACA: the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act of 2010. While the vast bulk of the political debate surrounding the ACA involves the individual health insurance mandate and Medicaid expansion provisions, these are only two components of a law that the Eleventh Circuit Court of Appeals described in its underlying opinion as “contain[ing] hundreds of new laws about hundreds of different areas of health insurance and health care.” Florida v. DHHS, Nos. 11-11021 & 11-11067, Slip Op. at 22 (11th Cir. Aug. 12, 2011). In this light, one of the most significant issues before the Supreme Court is whether the remainder of the ACA’s provisions are severable from any provisions that may be deemed unconstitutional.

Of particular import to companies affected by the False Claims Act (FCA) and the Anti-Kickback Statute (AKS), among the ACA’s hundreds of provisions are amendments to the FCA and the AKS that expand the scope of liability and restrict the “public disclosure” defense under the FCA. For example, the ACA:

  • Amends the AKS to provide that any claim submitted to a federal healthcare program for items or services “resulting from” a violation of the AKS constitutes a “false or fraudulent claim” under the FCA. PPACA § 6402(f)(1) (adding a new subsection (g) to 42 U.S.C. § 1320a-7b).
  • Eliminates the need to prove specific intent and actual knowledge to establish an AKS violation. PPACA § 6402(f)(2) (adding a new subsection (h) to 42 U.S.C. § 1320a-7b).
  • Limits the public disclosure bar by (a) restricting the scope of materials that qualify as public disclosure, (b) making it easier for relators to qualify as an “original source,” and (c) eliminating public disclosure as a subject-matter-jurisdictional bar and instead giving the Government veto power over any motion to dismiss based on public disclosure. PPACA § 10104(j)(2) (amending 31 U.S.C. § 3730(e)).
  • Imposes an affirmative obligation on recipients of overpayments to report and return those overpayments or face liability for “reverse false claims.” PPACA § 6402(a) (adding 42 U.S.C. § 1320a-7k, including subsection (d) regarding overpayments).
  • Establishes new civil monetary penalties of up to $50,000 per violation for conduct that is also actionable under the FCA. PPACA §§ 6402(d)(2) and 6408(a) (adding new CMPs under 42 U.S.C. § 1320a-7a(a)).

In the Eleventh Circuit’s 2-1 decision, the appeals court ruled that the ACA’s individual mandate is unconstitutional. Crucially, however, the court found this provision severable from the rest of the law. In so ruling, the Eleventh Circuit stated that “the lion’s share of the [ACA] has nothing to do with private insurance, much less the mandate that individuals buy insurance.” See Slip Op. at 192. Accordingly, under the Eleventh Circuit’s analysis, the rest of the ACA’s provisions could remain intact even if the individual mandate component falls.

The law’s challengers, including 26 states, do not agree; they have told the Supreme Court that the entire law must be struck if the individual mandate is held unconstitutional. Likewise, the federal government does not completely agree with the Eleventh Circuit’s view of severability, either. In its Supreme Court brief responding to the severability question, filed January 27, 2012, the federal government makes two arguments—neither of which asserts that the individual mandate provision is severable from all of the ACA’s other provisions. First, the federal government argues that the Supreme Court should not address the merits of the severability issue in this case, because the petitioners lack standing to challenge the validity of most of the law’s provisions. Should the Justices reach the merits of this issue, however, the federal government further argues that, if the individual mandate falls, so must two particular insurance reform provisions: (1) guaranteed issue, which requires insurers to provide coverage to all comers and prohibits discrimination based on preexisting medical conditions; and (2) community rating, which prohibits plans from charging higher premiums based on applicants’ experiences or characteristics, except for limited variances based on the applicant’s age, where the applicant resides, whether the applicant uses tobacco, and whether the policy covers individuals or families. Under the federal government’s position, only these two provisions—not the entire law—should be struck if the individual mandate is found unconstitutional.

To ensure that the arguments in favor of “full” severability get a full hearing, the Supreme Court appointed an attorney, who does not represent either of the parties to the case, to argue the position that the rest the ACA provisions (including guaranteed issue and community rating) can survive even if the individual mandate does not. (Another appointed attorney will address yet another question: whether the entire case is premature for judicial consideration under the Anti-Injunction Act (26 U.S.C. § 7421(a)).)

If the Supreme Court ultimately agrees with the Eleventh Circuit that the individual mandate is unconstitutional, but holds that the provision is not severable, the entire law would be struck down as unconstitutional. Such a ruling would “undo” the multitude of corollary provisions, which have received less public attention. While it also is possible that the Supreme Court will not reach the severability question in its decision later this year on the fate of the ACA, entities subject to the FCA—and, indeed, anyone affected by the ACA’s “hundreds of provisions”—should appreciate just how much is at stake in the pending decision beyond the provisions at focus in current media coverage.

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D.C. Circuit Splits with Sixth Circuit on Scope of FCA’s First-to-File Bar

Posted by Robert J. Conlan and Brian P. Morrissey

In a recent decision, the U.S. Court of Appeals for the District of Columbia ruled that a first-filed qui tam complaint need not satisfy the heightened pleading requirements for fraud set forth in Federal Rule of Civil Procedure 9(b) in order to bar subsequent qui tam complaints based on the same material allegations. In so holding, the court rejected the contrary argument put forth by the relator and the United States as amicus curiae, and it created a circuit split with the Sixth Circuit.

In United States ex rel. Batiste v. SLM Corp., reported at 659 F.3d 1204 (D.C. Cir. 2011), slip opinion here, the relator, Sheldon Batiste, alleged that SLM Corp. (commonly known as “Sallie Mae”) defrauded the Federal Government in its administration of student loans by unlawfully putting federally-subsidized student loans into forbearance (thereby causing the Government to pay additional interest and special allowances on such loans), and by filing false certifications with the Government in order to maintain its status as an eligible lender.

More than two years before Batiste filed his complaint, however, another relator had filed a qui tam suit against SLM and one if its wholly-owned subsidiaries. Complt., United States ex rel. Zahara v. SLM Corp., No. 2:05-cv-8020 (C.D. Cal. Nov. 9, 2005). That complaint was ultimately dismissed with prejudice after the relator failed to obtain counsel by a set deadline, Entry Dismissing Action, United States ex rel. Zahara v. SLM Corp., No. 1:06-cv-088 (S.D. Ind. Mar. 12, 2009). The district court in Batiste’s case concluded that this prior qui tam suit was based on the “same material elements of fraud” as Batiste’s complaint. Batiste, 659 F.3d at 1208. Accordingly, the district court dismissed Batiste’s complaint for lack of subject matter jurisdiction under the FCA’s first-to-file bar. Id.; see also 31 U.S.C. § 3730(b)(5) (providing that “no person other than the Government may intervene or bring a related action based on the facts underlying [a] pending action”).

Batiste, supported by the United States as amicus curiae, appealed, arguing that the prior complaint in Zahara did not allege fraud with the particularity necessary to meet Federal Rule of Civil Procedure 9(b)’s heightened pleading standard for fraud claims and, thus, should not have triggered the FCA’s first-to-file bar. The D.C. Circuit rejected that contention, holding that “first filed complaints need not meet the heightened standard of Rule 9(b) to bar later complaints; they must provide only sufficient notice for the government to initiate an investigation into the allegedly fraudulent practices, should it choose to do so.” Batiste, 659 F.3d at 1210.

In reaching this conclusion, the D.C. Circuit expressly declined to follow the Sixth Circuit’s decision in Walburn v. Lockheed Martin Corp., 431 F.3d 966 (6th Cir. 2005). Batiste, 659 F.3d at 1210-11. In Walburn, the Sixth Circuit reasoned that a complaint that fails to satisfy Rule 9(b) should not be given preemptive effect under the FCA’s first-to-file bar because such a complaint, by virtue of its failure to meet the 9(b) standard, is insufficiently precise to provide the Government “adequate notice . . . of the fraud it alleges.” Id. at 973.

Other federal courts are likely to grapple with this same question. As the number of qui tam complaints filed in the federal courts rises and qui tam relators focus special attention on certain industries (including the student loan industry), overlap between complaints is all but inevitable. These courts will be forced to choose between the competing approaches taken by the Sixth and D.C. Circuits, and may ultimately help inform Supreme Court resolution of the current circuit split.

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Relator’s Counsel Sanctioned For Mishandling Privileged Documents and Barred from Acting as Counsel Against Company In Future

Posted by Amy Markopoulos and Kristin Koehler

A recent ruling in the District of Arizona serves as a reminder to defense counsel that they should be sensitive to the possibility that relators are relying on stolen privileged documents to support their claims. Should a company suspect that a relator’s case is founded on privileged documents, the company should act quickly to move for return of the privileged documents. The consequences for relator or his counsel for failing to appropriately handle privileged documents can be serious.

In Frazier v. IASIS Healthcare Corporation, No. 2:05-cv-00766 (D. Ariz. 2012), IASIS Healthcare and Relator’s counsel had engaged in a 4-year battle regarding the return of certain privileged documents that Relator had stolen when he left IASIS in 2004. The relator, Jerre Frazier, had sent these privileged documents to his lawyers, who kept most of the documents in a sealed box. Despite bearing the title “Legal Memo,” relator’s counsel did not seek the court’s opinion as to whether these documents were privileged, and “appeared to play dumb” and feigned ignorance about the documents’ location when IASIS asked for their return. As a result, IASIS moved for the return of the documents and for sanctions against Relator’s counsel.

Relator’s counsel will pay IASIS $1.4 million, representing the amount of legal fees incurred by litigating this specific issue. Counsel is also barred from representing the Relator or any other plaintiff adverse to IASIS.

Serious issues can arise for counsel when relators steal documents – defense counsel needs to be prepared to file a motion should this occur, and relator’s counsel must be careful to appropriately handle privileged documents if relator turns them over.

IASIS and Frazier settled the case in November, six years after Frazier had initially brought his complaint. The government had declined to intervene in this matter.

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Recent DOJ Amicus Brief Demonstrates Government’s Aggressive Approach to Expanding FCA Liability

Posted by HL Rogers and Kristin Koehler

The Department of Justice recently filed an Amicus brief on behalf of the United States and in support of a Relator in an action originally brought in the District of Massachusetts and now on appeal to the First Circuit, United States ex rel. Rost v. Pfizer, Inc. Brief for United State of America as Amicus Curiae Supporting Plaintiff-Appellant, United States ex rel. Rost v. Pfizer, Inc., No. 10-2215 (1st Cir. January 17, 2012) (“United States Amicus Brief”). The Amicus brief is notable in demonstrating how far the First Circuit recently has moved from its previous interpretation of the False Claims Act and how far it has distanced itself from several other circuits. Additionally, the Amicus brief is notable in showing how aggressive the Department of Justice has been in expanding the reach of the False Claims Act.

The District Court ruled on Defendant’s summary judgment motion on September 14, 2010. At the time of the decision, the District Court Judge was accurate in stating that “the implied false certification theory of liability under the FCA is an evolving area of the law” – particularly in the First Circuit. United States ex rel. Rost v. Pfizer, Inc., 736 F.Supp.2d 367, 375 (D.Mass. 2010). Since that time, both United States ex rel. Hutcheson v. Blackstone Medical, Inc., 647 F.3d 377 (1st Cir. 2011) in June 2011 and New York v. Amgen, Inc., 652 F.3d 103 (1st Cir. 2011) in July 2011 were decided by the First Circuit.

Therefore, in Rost, the District Court Judge could reject two of the government’s arguments that attempted to greatly expand the FCA: (1) “[W]hen you bill Medicaid you are impliedly certifying that no kickbacks have been paid in any of the underlying transactions;” and (2) “the payment of a kickback renders subsequent claims factually false under the FCA, without regard to who submits the claim or whether there is a certification that no such kickback was accepted.” Rost, 736 F.Supp.2d at 377 (quotation marks omitted). But with the issuance of Blackstone and Amgen, the First Circuit now has embraced the government’s position and expanded the FCA in exactly the manner the government pushed in Rost and outside the bounds set by the FCA’s statutory language.

The government now argues on appeal in Rost, with the recent support of Blackstone and Amgen, that a defendant is liable under the FCA even when “the third party [submitting the claim] has no knowledge of the underlying kickbacks or makes no express certifications regarding compliance with the [Anti-Kickback Statute, 42 U.S.C. § 1320-7b].” United States Amicus Brief at 13; see Blackstone, 647 F.3d at 386-87; Amgen, 652 F.3d at 110. This argument, and the opinions in Blackstone and Amgen, read out one of the most important limitations of the FCA’s plain language—that in order to violate the FCA, a party must make a claim that is factually incorrect or certify compliance with a statute or regulation with which it failed to comply. In other words, for liability under the FCA, a party must file a claim that is false. Under the Government’s theory, a party is liable if it submitted a claim for which any underlying conduct, no matter how remote, included some form of illegality—whether or not the claim itself is false. Not only is this approach expansive, but as the Government itself admits, it is also one that has been rejected by the Second and Ninth Circuits and restrained by the Tenth and D.C. Circuits. United States Amicus Brief at 17. Stay tuned.

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New Report Reinforces The Role Effective Internal Reporting Policies Play In Preventing Whistleblower Suits

A recent survey of employee attitudes toward whistleblowing reinforces the importance of an effective compliance program in mitigating FCA suits. The Ethics Resource Center recently published its bi-annual National Business Ethics Survey (NBES), a longitudinal study of employee attitudes that seeks to provide a “barometer of workplace ethics.” The survey, a copy of which can be downloaded here, finds that employees perceive “historically low levels of current misconduct in the American workplace.” Specifically,

* The percentage of employees who witnessed misconduct at work fell to a new low of 45 percent. That compares to 49 percent in 2009 and is well down from the record high of 55 percent in 2007.

* Those who reported the bad behavior they saw reached a record high of 65 percent, up from 63 percent two years earlier and 12 percentage points higher than the record low of 53 percent in 2005.

However, the NBES notes that this positive trend is accompanied by “ominous warning signs of a potentially significant ethics decline ahead”:

* Employees who reported misconduct and who reported experiencing some form of retaliation rose to 22 percent, up from 15 percent in 2009 and 12 percent in 2007.

* The percentage of employees who perceived pressure to compromise standards in order to do their jobs climbed five points to 13 percent, just shy of the all-time high of 14 percent in 2000.

* The share of companies perceived as having a weak ethics culture climbed to near record levels at 42 percent, up from 35 percent in 2009.

The NBES also examined the impact of the new Dodd-Frank whistleblower provisions on employee attitudes regarding reporting of employer misconduct. According to the survey, employees say they are far more motivated by the nature of the misconduct and its potential harm than by financial reward. Only three percent of employees who actually reported misconduct said they went outside the company as their first resort. About half (49 percent) said that they would consider reporting to federal authorities under certain circumstances, even if it might cost them their job. An additional five percent said they would report to the federal government, but “only if there was a chance for a substantial financial reward.”

As the study notes, despite the addition of new incentives under Dodd-Frank for whistleblowers to report wrongdoing to the federal government, employees say that they prefer to first report their concerns internally to their employers. The study recognizes that while “[a]s whistleblower protections become more widely known these behaviors may change,” for now, “financial rewards from government agencies do not seem to be enough of a motivator to cause employees to circumvent their employers.” However, the self-reported nature of the survey merits some caution in interpreting these results.

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