Whistleblower Programs: A Painless Way to Reduce Government Deficits
01/17/2013 // San Francisco, CA, USA // Whistleblower Law Firm // Jeffrey Keller // (press release)
President Obama addressed reporters on January 14 to discuss upcoming negotiations on the debt ceiling. While the United States managed to ring in 2013 without falling off the fiscal cliff and the conversation in Washington has now lurched on to the debt ceiling, the question remains the same as it ever was: how best to address the federal government’s budget deficit? If you missed the debate on the fiscal cliff at the end of last year, don’t worry. The talking points out of Washington on the latest debate are still the same. Do we cut spending on entitlement programs and defense, or do we raise taxes? If you’ve heard all the talking points before and want to see something different, consider the suggestions of Michael Sivy at Time.com who advocates a strategy that should have the support of everyone on both sides of the aisle in Washington: aggressively fighting fraud to reduce the government’s deficit.
Each year, the government pays out staggering sums that never should have left the treasury. For the 2011 fiscal year alone, the Department of Health and Human Services estimates that improper Medicare and Medicaid payments exceeded $64 billion. The culprit: fraud involving overcharges for drugs and medical procedures, bogus insurance claims, and other wrongful actions. Health care spending isn’t the only sector that sees billions lost to fraud each year, however. Improper payments related to defense contracts and financial programs, as well as securities fraud, drain billions more from the government — which is funded by each of us as taxpayers..
The good news is that the United States has an array of federal and state laws and programs designed to fight fraud and recover ill-gotten payments. Whistleblower statutes, for example, not only provide a legal framework for reversing fraud, they also incentivize and protect ordinary citizens who know of, and speak out about, wrongful behavior — even if they don’t initially realize that it rises to the level of fraud.
The gold standard of U.S. whistleblower laws is the federal False Claims Act — legislation that dates back to the Civil War but was substantially amended during the mid-1980s. It has proven an extraordinarily successful tool in helping the government recover improper payments to everyone from defense contractors to pharmaceutical and financial services companies who engaged in fraud in government contracts. The Act has led to the recovery of more than $30 billion for the government since 1986.
Under the False Claims Act, individuals with knowledge of fraudulent behavior are able to bring a lawsuit on behalf of the government — and receive a share of any resulting recovery. They also benefit from important protections against potential retaliation by employers — anything from demotion and harassment to outright dismissal — after reporting wrongful behavior.
Not surprisingly, state legislatures have enacted their own whistleblower laws modeled after the False Claims Act, and federal agencies have launched whistleblower initiatives designed to root out fraud — and recover taxpayer dollars — in a host of areas, including tax evasion and securities fraud. The Office of the Whistleblower (OWB) at the U.S. Securities and Exchange Commission, for example, received more than 3,000 tips during fiscal year 2012, its first full year of operation. In that period, the OWB recorded 143 whistleblower-facilitated enforcement actions in which sanctions exceeded $1 million.
“In recent years, it has become abundantly clear that whistleblower lawsuits, and whistleblower provisions and protections, turn the tables on fraud,” says Jeffrey F. Keller, a founding partner at Keller Grover, a nationally recognized labor and employment law firm, and a veteran whistleblower lawyer. “The False Claims Act and the statutes and initiatives based on its principles are helping the government to recover billions of dollars in ill-gotten gains.”
The billions that are recovered each year thanks to whistleblower laws don’t just put a dent in fraud. They encourage accountability for every dollar spent in economically challenging times. “By returning these enormous sums back to the government, statutes like the False Claims Act provide a way to reduce spending that isn’t painful to ordinary citizens and doesn’t raise anyone’s taxes,” says Keller, whose firm has offices in Los Angeles and San Francisco. “These are days when every bit of savings counts — and whistleblower programs deliver more than just a bit. They’re adding billions of dollars to the bottom line.”
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