Academic journal article Michigan Law Review

Protecting Whistleblowing (and Not Just Whistleblowers)

Academic journal article Michigan Law Review

Protecting Whistleblowing (and Not Just Whistleblowers)

Article excerpt

Introduction

When the government contracts with private parties, the specter of fraud always looms. The massive amounts of money at stake in government contracts, combined with an often-overburdened infrastructure with limited oversight, make federal contracting a field particularly ripe for abuse. As government activity increases, so too does the use of third parties to provide procurement and contracting services. But with increased reliance on thirdparty contractors comes a heightened risk that those services are tainted by fraud. Fraud against the government hurts everyone. Taxpayer money is wasted on inferior or nonexistent products and services, and the public bears the burdens attendant to those inadequate goods. The costs of fraud include not only direct financial loss, but also potential endangerment of public health and national security: major fraud prosecutions have involved the sale of adulterated or misbranded drugs to Medicare and Medicaid patients, 1 or the provision of defective supplies to the military.2

To combat such wrongdoing, the government has developed an arsenal of legislative and administrative tools designed to detect fraud against the government and punish those who perpetrate it. Perhaps the most potent of these tools is the federal False Claims Act. The False Claims Act ("FCA") has been described as "the government's most effective civil tool to ferret out fraud and return billions to taxpayer-funded programs."3 Congress implemented the FCA during the Civil War in the face of widespread fraud against the government. Its unique qui tam provisions allow an individual whistleblower to initiate a claim against a wrongdoer on behalf of the government, and to share in a portion of any ultimate recovery. In this way, the FCA provides a compelling incentive for those with knowledge of fraud to come forward. Today, the FCA remains an active and effective enforcement mechanism: in 2015 alone, FCA litigation resulted in over $3.5 billion in recovery to the United States.4

Like other whistleblowing statutes and programs, the FCA contains antiretaliation provisions that aim to protect would-be whistleblowers by prohibiting employers from taking retaliatory action against an employee for engaging in whistleblowing activity. This makes sense-such provisions increase the likelihood that insiders will report wrongdoing, thus protecting the government and taxpayers at large from fraud and abuse. They also protect employees from suffering personal harm for serving the public interest in combating fraud.

By contrast, the SEC whistleblower program-which Congress developed in response to the 2008 financial crisis-includes antiretaliation protections similar to those in the FCA that protect whistleblowers from professional or personal backlash. But the SEC has also established a rule that prohibits employers from taking any action that interferes with whistleblowing activity. The SEC has used this rule to target a wide range of activity, including confidentiality agreements, employment agreements, and severance agreements, that might chill whistleblowers from pursuing legitimate claims. In other words, unlike the FCA, the SEC rules protect not only whistleblowers, but also whistleblowing itself.

It's time for the FCA to catch up. Congress should amend the FCA to enact similar prohibitions against antiwhistleblowing activity so that the Act continues to serve as a robust tool to deter and combat government fraud. By doing so, Congress could ensure that, like the SEC program, the FCA best serves its public interest aims by protecting whistleblowing, and not just whistleblowers.

Part I of this Note provides a history and overview of the FCA and the SEC Office of the Whistleblower. It also examines one of the SEC program's rules, Rule 21F-17, which targets antiwhistleblowing activity. Part II focuses on the antiretaliation provisions of the FCA. It shows that the FCA provisions are less robust than the SEC rules because of the FCA's narrower focus on protecting whistleblowers. …

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