A former project manager for Science Applications International Corp. (SAIC) will be awarded $1.88 million from the $11.75 million SAIC paid to settle a whistleblower lawsuit. The lawsuit, filed in February 2012 and settled in June 2013, alleged that SAIC over-charged the government millions of dollars under a first responder training program contract. The company falsely certified that it was using full-time employees who received fringe benefits to conduct training, but actually used part-time employees with few benefits.

The False Claims Act is sometimes referred to as “Lincoln’s Law” because it was enacted at the urging of President Lincoln to combat wide-spread fraud by Civil War defense contractors. Although originally enacted to combat defense contractor fraud, the False Claims Act has long been successfully employed to combat false claims against the United States in many other contexts, including healthcare fraud.

The Act prohibits the submission of false claims for government money or property and allows the United States to recover up to three times the actual damages and penalties for a violation.  Under the Act’s whistleblower provisions, a private party may file suit on behalf of the United States and share in any recovery. In addition, the United States may choose to intervene and take over the case, as the Department of Justice did in this case, United States ex rel. Priem v. SAIC.

The False Claims Act makes whistleblowers eligible to receive between 15 percent and 20 percent of the fine. While that is certainly one incentive, another is that the Act provides an avenue to be heard.

According to Tim McCormack, a partner at the law firm that represented the whistleblower, “A lot of times, people who know that their company … is engaging in fraud don’t know how to bring it to the government’s attention. A number of times a client or a whistleblower may call a hotline, but they never know what comes of it. The False Claims Act, because it allows a whistleblower to file a case and participate in the investigation, oftentimes gives a whistleblower an opportunity to make sure that they’re being heard.” [Moore, 2013]

Well-run anonymous reporting systems, such as ethics hotlines, provide employees and others opportunities to report suspected wrong-doing and to be heard. Such systems also enable organizations to investigate and address problems internally, at lower cost and with reduced risk to their reputations.

Ethical Advocate addressed this in a recent blog post, “Encourage Employee Hotline Use”, April 1, 2013.  Contact us to discuss how to implement or improve an anonymous hotline reporting system.

References:

Moore, Jack. “Whistleblower suit leads to $12M false claims settlement by SAIC”, Federal News Radio.com, June 17, 2013.