Takeaways:
- The Treasury Whistleblower Program now provides for guaranteed awards of 10% to 30% of the government recovery in covered actions
- The Treasury Whistleblower Program has been expanded to include not just tips concerning anti-money laundering violations but also those regarding various forms of sanctions evasion
- The new law goes hand-in-hand with the government’s aggressive crackdown on Russian sanctions evaders and those that assist them
During the holidays,
The United States government has four primary whistleblower statutes and reward programs:
- The Federal False Claims Act (“FCA”)
- The Securities and Exchange Commission (“SEC”) Whistleblower Program
- The Internal Revenue Service (“IRS”) Whistleblower Program
- The Commodity Futures Trading Commission (“CFTC”) Whistleblower Program
All of these whistleblower programs are quite democratic.
Takeaway: Recent qui tam settlement highlights the DOJ’s continued focus on fraud and abuse in the diagnostics industry and robust enforcement of the Anti-Kickback Statute.
Earlier this month, Snap Diagnostics LLC and two of its executives entered into a nearly $4 million settlement with the United States to settle two qui tam lawsuits.
Takeaways:
- Stock promoters have moved from boiler rooms and stock newsletters to social media services.
- The COVID-19 pandemic and the “meme stock” mania that accompanied it brought an influx of retail traders to public markets.
- Those retail investors have proven to be prime fodder for social media stock promoters.
In Insinga v. Commissioner of Internal Rev. Service, 9011-13W, 2021 WL 4983084 (U.S. Tax Ct. Oct. 27, 2021), the United States Tax Court recently tackled an issue of first impression: whether an IRS whistleblower’s claim may survive death such that the claim may be pursued by his or her estate in the U.S.
Takeaway: Misconduct in the multitrillion dollar derivatives market can lead to massive recoveries for the government and whistleblowers alike. Even when the CFTC is already on the case, a whistleblower who tips off the government during an ongoing investigation may remain eligible for an award if they provide original information that “substantially contributes” to a successful enforcement action.
Takeaway: The H.I.G. case will no doubt embolden the Department of Justice and whistleblowers going forward. Now DOJ and relators have a strong summary judgment opinion to ground liability in future cases and several sizeable recoveries against PE firms to use as comparators for settlement purposes. With a more rigorous regulatory environment under the Biden administration,
Takeaway: 2021 has been a record year for the SEC’s whistleblower program with awards for fiscal year 2021 topping $500 million and total awards now exceeding $1 billion. This reflects both a pro-whistleblower administration and a growing private-public partnership in exposing corporate malfeasance. As the SEC’s whistleblower program matures and knowledge of its existence spreads,
Takeaway: This recovery makes it very clear that the federal government and whistleblowers continue to aggressively pursue fraud allegations involving the Medicare Advantage Program. We can expect to see robust enforcement and sizable recoveries to continue.
On August 30, 2021, the United States Department of Justice announced a $90 million settlement with Sutter Health and certain of its affiliates (collectively Sutter Health) relating to allegations that Sutter Health had defrauded the federal government’s huge Medicare Advantage (Part C) Program.
Takeaways:
- The District of Massachusetts issued the very first summary judgment decision in a False Claims Act (FCA) lawsuit involving a private equity (PE) firm. The decision provides valuable insight into how the FCA may apply to PE firms.
- Equity and board control will remain relevant,
