What are whistleblower rewards?
Whistleblowers (known as “relators” in qui tam lawsuits) are awarded a whistleblower reward based on a percentage of the money recovered by the government when those recoveries are due to a qui tam lawsuit or claims made under the SEC, CFTC or IRS whistleblower programs. The amount of money a whistleblower could receive varies based on the type of case and the specific whistleblower program. If the whistleblower meets all the program’s criteria, they could be entitled to between 10-30% of the amount collected by the action.
Phillips & Cohen has earned their clients more than $1.1 billion in whistleblower rewards as a result of our successful cases.
Do whistleblowers get paid?
There are several US whistleblower reward laws that offer whistleblowers significant monetary rewards for reporting fraud, financial misconduct, and other wrongdoings. The process for obtaining a whistleblower reward and the amount depend on whether the whistleblower cases are qui tam lawsuits or submissions made to the Securities and Exchange Commission (SEC) whistleblower program established by the Dodd Frank Act, a similar whistleblower program at the Commodity Futures Trading Commission (CFTC) or the IRS whistleblower program.
The False Claims Act, the SEC, the CFTC and the IRS have separate criteria for whistleblower rewards. In all cases, the whistleblower reward is a percentage of the amount recovered by the government and varies by the type of case and other factors, as explained below.
Whistleblower rewards under the False Claims Act
- The whistleblower (known as the “relator” in qui tam cases) may receive a reward of 15 percent to 25 percent of what the government recovers, if the government joins the qui tam case.
- If the government declines to join the qui tam lawsuit and the whistleblower proceeds against the defendant anyway, the relator is entitled to a reward of 25 percent to 30 percent of the recovery that the government receives.
- The actual whistleblower reward depends on many factors, including:
- How extensive and detailed the information provided by the whistleblower was about the fraud.
- Whether the fraud involved a significant safety issue.
- The quality and amount of assistance the whistleblower and the whistleblower’s lawyer provided in the case.
How are whistleblower rewards calculated?
In qui tam cases, the reward for the “relator,” or whistleblower, is calculated based on the amount the government recovers, rather than the amount the government lost. Under the False Claims Act, the government may collect “trebled damages” – meaning it may recover up to three times the amount of money it lost to the fraud. In cases that settle before trial, the settlement is typically less than three times the loss.
What Factors Affect a Whistleblower’s Eligibility for a Reward?
Several factors can influence a whistleblower’s eligibility for a reward under various whistleblower programs, including:
- Original Information: The whistleblower must provide original, non-public information about fraud or misconduct. Information already known to the government or obtained from publicly available sources may not qualify.
- Level of Involvement: Whistleblowers who actively participated in the wrongdoing may have limited eligibility for a reward, depending on the program’s rules and the extent of their involvement.
- Program Requirements: Each whistleblower program has specific eligibility criteria, including reporting deadlines, procedural requirements, and cooperation with investigators.
- Impact of the Information: The information provided must be substantial and contribute to a successful enforcement action, such as a financial recovery or regulatory penalties.
What Types of Fraud Can Be Reported Under Whistleblower Reward Laws?
Whistleblower reward laws cover a wide range of fraudulent activities. Some common examples include:
- Healthcare Fraud: Billing for services not rendered, providing unnecessary services, upcoding, and kickbacks.
- Securities Fraud: Insider trading, market manipulation, and accounting fraud.
- Tax Fraud: Evading taxes, underreporting income, and claiming false deductions.
- Government Contract Fraud: Overcharging, providing substandard goods or services, and bribery.
Whistleblower rewards under the SEC whistleblower reward program
- The whistleblower may receive a reward of 10 percent to 30 percent of what the government recovers, if the SEC recovers more than $1 million.
- The SEC may increase the whistleblower compensation based on many factors, such as:
- How important the information that the whistleblower provided was to the enforcement action.
- The assistance that the whistleblower and the whistleblower’s attorney provided in the investigation and any enforcement proceedings.
- The value of the case in deterring other securities law violations.
The SEC also says it may increase the award if the whistleblower first reported possible securities violations through a company’s internal compliance system.
However, whistleblowers should be aware that they might not be protected from job retaliation if they report internally before going to the SEC as a result of a recent Supreme Court decision. To protect themselves, individuals should consult with an attorney before reporting securities violations internally.
For more information, visit our SEC whistleblower reward program page.
Whistleblower rewards under the CFTC whistleblower reward program
- The whistleblower is entitled to a reward of 10 percent to 30 percent of what the government recovers, if the CFTC recovers more than $1 million.
- A whistleblower award from the CFTC also may be based on enforcement actions brought by certain other government entities, such as the Department of Justice and the Federal Energy Regulatory Commission, that are related to the CFTC whistleblower case.
To learn more, visit our CFTC whistleblower awards program page.
How are Whistleblower Identities Protected?
Whistleblower laws and programs offer various protections to individuals who report fraud or misconduct, including:
- Confidentiality: Many whistleblower programs are designed to protect the confidentiality of a whistleblower’s identity, though the extent of protection may vary depending on the program and the nature of the case.
- Anti-Retaliation Protections: Federal and state laws prohibit employers from retaliating against whistleblowers for reporting fraud, including wrongful termination, demotion, or harassment. However, the scope of these protections depends on the specific law under which the whistleblower reports.
- Anonymous Reporting: Certain whistleblower programs allow for anonymous reporting, often requiring a legal representative (such as an attorney) to act on behalf of the whistleblower to maintain their anonymity.
Whistleblower Rewards FAQ
What is the average settlement for a whistleblower?
There is no fixed “average” settlement, as whistleblower rewards vary significantly based on factors such as the type of fraud, the amount recovered by the government, and the specific whistleblower program. Awards can range from thousands to millions of dollars, depending on the case.
Who qualifies as a whistleblower?
Eligibility as a whistleblower depends on the specific program. In general, individuals with original, non-public information about fraud against the government or violations of securities, commodities, or tax laws may qualify. This can include employees, former employees, competitors, and members of the public, depending on the program’s requirements.
How much do whistleblowers get paid?
Whistleblower rewards are typically a percentage of the amount recovered by the government due to the whistleblower’s information. Depending on the program and the specifics of the case, this percentage can range from 10% to 30% of the recovered funds.
Maximize your whistleblower reward with Phillips & Cohen
Because the quality and amount of assistance provided by the whistleblower and their attorneys are factors in determining whistleblower rewards, individuals who are considering blowing the whistle should carefully consider their decisions about whom to hire as their lawyers. See “Tips for Choosing a Whistleblower Lawyer” for factors to consider.
Phillips & Cohen will provide a free, confidential review of your case without any obligation. Get in touch, using our contact page.