Federal and state laws contain robust protections to ensure that corporations are held accountable for wrongdoing. Companies that receive money from federal or state governments are prohibited from taking kickbacks or engaging in other types of fraudulent schemes that lead to unjust profits. Other laws create incentives for people to report fraud and security violations by publicly held corporations. These laws also protect employees who speak out about this wrongdoing, ensuring that whistleblowers are protected from retaliation for ensuring corporate compliance. If you have concerns that your company is keeping inaccurate accounting records (“cooking its books”), profiting from fraudulent schemes, or providing false information to the government or shareholders, contact the lawyers at Correia & Puth.
Federal and state laws contain protections to ensure corporations are held accountable for wrongdoing. If you have concerns that your company is keeping inaccurate accounting records, profiting from fraudulent schemes, or providing false information to the government or shareholders, contact us.
The False Claims Act – “Lincoln Law”
Whistleblowers often keep employers honest and make sure that government funds are used lawfully. The federal False Claims Act (“FCA”), 31 U.S.C. §§ 3729 and 3730, passed in 1863 and often referred to as the “Lincoln Law,” is a whistleblower law that allows private citizens to hold companies accountable for engaging in fraud against the government. The False Claims Act makes it illegal to submit to the government a false or fraudulent claim for payment. Making false statements as a means of obtaining payment from the government also violates the law. Many states also have false claims act statutes that contain similar provisions, allowing private citizens to ensure that state funds are lawfully used.
Private citizens can bring claims against companies that engage in such wrongdoing, in what is referred to as a qui tam, under a provision of the FCA that authorizes an individual to bring a lawsuit on behalf of the United States (or the wronged state) against the wrongdoer. These individuals – referred to as “relators” – who file suit reporting false claims are eligible to obtain a portion of the recovery that is recouped by the federal government, often between 10% and 30%, depending upon how much the relator’s information contributed to the government’s case prosecuting the wrongdoer. Between 1986 and 2020, qui tam whistleblower lawsuits have enabled the federal government to recover more than $64 billion in ill-gotten funds.
The following examples illustrate the types of fraud that can form the basis for a claim under the federal False Claims Act:
- Paying kickbacks or financial incentives to doctors, nurses, or other health care providers to get patient referrals;
- Fraudulent medical billing practices under Medicare or Medicaid, including double-billing, upcoding (billing a more expensive service than actually performed), and billing for unnecessary services or services that were not performed;
- Violating the Buy America Act, which requires that a certain percentage of goods used on a government contract be made in the United States;
- Bid rigging, a form of collusion where competing parties determine a winner, thereby resulting in a rigged price for a government contract;
- Violations of good manufacturing practices;
- Overbilling for services, such as the number of labor hours;
- Providing a defective good or service – one that does not comply with the requirements of a government contract;
- Falsely asserting compliance with government requirements that are material to the terms of a government contract, including regulatory and contractual requirements; and
- Misrepresenting cost or data to secure a government contract.
These laws apply to government contractors, recipients of government funds through Medicare and Medicaid, defense contractors, and other recipients of federal funds.
The False Claims Act includes robust protections for employees who face retaliation for speaking out against this sort of wrongdoing. See 31 U.S.C. § 3730(h). The law prohibits an employer from retaliating against you for taking action in furtherance of an FCA or qui tam claim or for taking efforts to stop one or more violations of the law. Retaliation can take the form of a termination, a demotion, a bad performance review, loss of pay, or other action that would discourage someone from speaking out against wrongdoing. If you speak out against this type of fraud, the law protects you, and it provides you a mechanism to right any retaliation that you face.
Sarbanes-Oxley and Dodd-Frank
In response to the Enron and Worldcom accounting scandals, Congress passed the Sarbanes-Oxley Act in 2002. Popularly known as “SOX,” the law requires publicly traded companies to make accurate disclosures of their financial health to shareholders and would-be investors and prohibits them from violating securities laws enforced by the Securities and Exchange Commission (SEC). SOX requires that corporate officers certify that their companies’ financial statements comply with SEC disclosure requirements and fairly present their operations and financial conditions, that management establish internal controls and reporting methods, and that companies comply with certain recordkeeping requirements, including that they not destroy or falsify records.
The law also provides robust protections for employees who speak out about this wrongdoing or participate in investigations related to these violations. See 18 U.S.C. § 1514A. The law prohibits retaliation against employees who speak out against or report securities fraud and corporate fraud. This includes issues concerning securities fraud, bank fraud, mail fraud, or wire fraud; violations of any SEC rule or regulation; or violations of any federal law relating to fraud against shareholders. SOX protects retaliation when such concerns are raised internally to supervisors and managers, as well as when raised to oversight and regulatory entities, like the SEC, another federal agency, or Congress.
If you believe that your employer retaliated against you in violation of SOX, you must first file an administrative charge with the U.S. Department of Labor Occupational Safety and Health Administration (OSHA) within 180 days of an employer’s retaliatory action. Under SOX, employees who prove they were subjected to retaliation are entitled to damages such as lost wages, reinstatement, and compensatory damages for emotional distress.
In response to the financial machinations that led to the 2008 recession, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010 to, among other things, protect consumers and regulate and increase transparency of the financial services industry in order to maintain the country’s financial stability. Dodd-Frank enables the SEC to reward whistleblowers who provide it with information regarding securities violations or with information about bribes paid to foreign officials in violation of the Foreign Corrupt Practices Act (FCPA). If the SEC recovers over $1 million as a result of a whistleblower’s tip, the law awards that whistleblower between 10% and 30% of the recovery. Dodd-Frank also provides robust whistleblower protections to those employees who report securities violations to the SEC. See 15 U.S.C. § 78u-6(h). While Dodd-Frank has fewer administrative hurdles to bringing a claim (for example, it does not require that an employee exhaust administrative remedies), it does require that a whistleblower externally report wrongdoing to the SEC – not within the employee’s company – before he or she can take advantage of the statute’s anti-retaliation provisions.
If you have information concerning the types of fraud covered by the Dodd-Frank Act, you can help the government recover ill-gotten gains by disclosing your concerns to the SEC.
Contact Correia & Puth for Protection From Retaliation in the Workplace
If you have information about fraud – either in government contracting or by publicly held corporations – contact the lawyers at Correia & Puth for advice and guidance about your options. If you believe your employer is retaliating against you or has subjected you to retaliation for reporting these types of concerns, contact Correia & Puth for assistance with your legal claim. We are proud to represent courageous employees who stand up for what is right by reporting fraud.
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