Years ago, few lawyers thought a False Claims Act Case was appropriate to be resolved by mediation. It was Attorney General Janet Reno who introduced mediation to this practice area in the late 1990’s. She was optimistic the mediation process could be adapted to this and other types of Federal government-initiated litigation.
Takeaways:
- The IRS is modernizing its somewhat anemic whistleblower program.
- IRS whistleblower awards are finally rebounding.
- The IRS is aggressively targeting high-net-worth taxpayers and large corporations.
- Meanwhile, state false claims acts allowing tax-related claims continue to grow in number and have already yielded hundreds of millions of dollars in recoveries.
Takeaways:
- The Office of the Attorney General for D.C. announced a $40 million settlement with Michael Saylor and MicroStrategy, Inc., marking the largest income tax recovery in D.C. history.
- The resolution arose from a qui tam lawsuit filed under the D.C. False Claims Act relating to allegations of a longstanding income tax evasion scheme.
Several recent developments may spark a renewed effort to incentivize United Kingdom (UK)-based whistleblowers who frequently provide tips to U.S.-based agencies, such as the Security and Exchange Commission (SEC). The confluence of legislative developments, remarks by the director of the UK’s Serious Fraud Office (SFO), and the British Parliament’s focus on a scandal that rocked the post office may pave the way for new legislation providing incentives for tips to government authorities in the UK.
Senate testimony focusing on the impact of the rising presence of private equity (PE) firms’ control of major healthcare providers touched on the “substantial overlap between the risks associated with private equity ownership of healthcare companies and the activities targeted by the False Claims Act (FCA), a federal law that establishes liability for individuals or companies that defraud governmental programs.” See O’Grady Statement.pdf (senate.gov).
As experienced whistleblower counsel, with more than a decade of representing emergency providers in false claims act (FCA) cases against large hospital systems and national hospital-based staffing groups, the recent investigation by the US Senate into the impact of private equity on emergency care is no surprise.
Takeaways:
- FY 2023 saw the most FCA settlements and judgments ever.
- $2.69B in total recoveries is an uptick from 2022’s down year but still below historical norms.
- New non-qui tam cases surged to the highest in history as the Department of Justice’s pandemic fraud crackdown gains steam.
On February 8, 2024, the US Supreme Court issued a unanimous opinion in Murray v. UBS Securities, LLC, No. 22-660 (U.S. 2024) restoring a $900K jury verdict in favor of a whistleblower under the Sarbanes-Oxley Act (SOX) related to publicly-traded businesses and their financial reporting.
On November 30, 2022, the United States Court of Appeals for the Third Circuit revived a quality control manager’s FCA retaliation claim in United States ex rel. Ascolese v. Shoemaker Constr. Co., — F.4th —, 2022 WL 17335121 (3d Cir. 2022).
The Third Circuit’s precedential opinion addressed for the first time how Congress’s 2009 and 2010 amendments affect the False Claims Act’s retaliation standard.
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.