In many cases, a whistleblower is still able to qualify for a reward even if they have already been helping the government. However, there are several reasons why you might no longer qualify. We would be happy to discuss your specific situation if you contact us.
It is not uncommon for a person to provide information to an employee or agency of the government before they are aware of the potential for a reward. In one notable case that has been publicized, the relator spent nearly two years helping a government agency build their case against the company before he learned of the False Claims Act and sought out a whistleblower attorney. He ultimately received an award of almost $50 million for his efforts to expose the drug company’s fraud.
In 2014, two individuals who informed the government about a fraud in a letter and then testified at trial did not receive a reward because they waited too long.
The case of U.S. ex rel. Babalola v. Sharma, 746 F.3d 157 (5th Cir. 2014) was a reminder to whistleblowers and their attorney that time is of the essence. The relators sent a letter to the government and testified at the trial, but did not file a qui tam lawsuit until the criminal case against the defendants was on appeal. On appeal to the Fifth Circuit, the Court held that the relators were not entitled to share in the recovery from the criminal trial.
This particular case is complicated by the fact that the U.S. pursued criminal charges against the defendants rather than a civil lawsuit. The ultimate resolution of Babalola turned on the definition of “alternate remedy” in the statute, an issue which would not have been present if the United States had filed a civil case. Still, it reflects well the general proposition that it is better to file your qui tam lawsuit early.
Were you the first to alert the government?
There are other potential problems which could arise when it takes longer to file your lawsuit. The first-to-file rule could bar your claim if another whistleblower has already filed and provided the government with the same information that you have in your complaint. Public disclosure of the allegations by another source could also make your recovery difficult.
The CFTC, for example, pays out for information “not already known to the Commission from any other source ….” §165.2(k)(2). In order to secure your status, a Form TCR with the information must be submitted. Although there are some mechanisms for achieving an earlier submission date, such as an internal report within the company less than 120 days before the submission of Form TCR, you do not want to risk losing your reward by filing your submission late. The earlier you follow the appropriate procedure, the better off you will be.
Although there is different language in the regulations governing the Securities & Exchange Commission, Commodity Futures Trading Commission and Internal Revenue Service Programs, the programs work similarly in this respect.
Did you report to the SEC or CFTC before the passage of the Dodd-Frank Act?
The SEC and CFTC also have date restrictions that may limit your ability to claim a reward. Your information must have been received after the passage of the Dodd-Frank Act. There are currently legal challenges to the validity of this restriction. Please contact us if you have been helping one of the securities agencies and we may be able to help you apply for a reward or appeal your denial.