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Hard Times for Whistleblowers
Headlines describing $500-plus million settlements with the Department of Justice (DOJ) in False Claims Act (FCA) cases initiated by whistleblowers — often former employees of defense contractors, pharmaceutical companies, and others doing business with the government — have encouraged many disgruntled employees to try it themselves. But they can have a hard time making their own case if the government declines to intervene. Although the 1986 FCA amendments generally made the private action more available, the courts' interpretation of the FCA has not been easy on whistleblowers who stand in court without the United States at their side. As judges weed out unworthy cases, two trends run against the legislative goal of encouraging more whistleblowers, and invite instead a tactical corporate response that undercuts the legislative goal.
Rule 9(b): a Heavy Burden
In practice, the FCA sometimes sets up conflicting goals for potential whistleblowers. When they file their allegations under seal, their primary goal is to attract enough interest of the DOJ Civil Fraud Section to get them to conduct a pre-intervention investigation. This means the complaint must show a fraud that is not only sizable, but clear — quite a challenge when the allegedly defrauded federal program is a complex web of opaque regulations.
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