BlogLine

Within and without: False Claims Act whistleblowers can, and do, come from anywhere

4/22/24

By: Justin J. Boron

False Claims Act (“FCA”) lawsuits typically start with a whistleblower. Where the whistleblower starts is another question. 

Historically, whistleblowers under the FCA–which provides private citizens the ability to assert qui tam claims for fraud committed against the federal government–come from within the organization they are suing. Think hospital biller who is aware of a billing practice that results in unsupported increases in Medicare reimbursement. This “insider” can blow the whistle and bring a private lawsuit against the hospital to recover the overpayment that the federal government made to the hospital. The hospital biller comes from “inside” the hospital and can become a “relator” who in many ways, stands in the shoes of the federal government. In exchange, the relator shares in the recovery with the federal government. 

Insiders make sense as relators. They know the organization. They are usually uniquely positioned to discover fraud. And they have information that would otherwise be unavailable to the public or federal government.  

Outsiders make less sense for obvious reasons. But increasingly, outsiders–who might have no relationship to the organization they have accused of fraud–are comprising the persons who initiate FCA suits. The result is a much bigger litigation space with a much higher risk profile. 

For example, data mining companies and statistical analysis companies have analyzed publicly available data in a sophisticated way to root out otherwise imperceptible fraud. 

Use of AI and sophisticated data tools has been effective, particularly for the federal government. But with private companies, it pushes the boundaries on a key limit to qui tam actions called the public disclosure bar. In other words, the whistleblower cannot simply base its suit on information that is otherwise available to the public. 

We have seen would-be whistleblowers run up against the public disclosure bar and fail. In Paycheck Protection Program suits, for example, plaintiffs have attempted to rely on the work of open-source, public interest organizations that compiled loans from the program. They have been met with difficult challenges. Riner v. Beaver Run HOA et al., 22-cv-02071 (D. Colo.). 

As the scope of possible whistleblowers expands, litigants will need to be wary of whether the would-be whistleblower really has the right to blow the whistle. 

For more information, please contact Justin Boron at jboron@fmglaw.com or your local FMG attorney.