Mistrial illustrates complexities of qui tam whistle-blower laws

Under the qui tam provision of the Federal Civil False Claims Act, citizens can file lawsuits to allege fraud against a business that receives government funding. The person filing the lawsuit is often an employee of the business and is referred to as a whistle-blower. If a citizen’s claim is successful, he or she will generally receive a share of the settlement recovered by the government.

The Federal Civil False Claims Act, however, is very complicated and there is a great deal of risk involved for the whistle-blower. Whistle-blowers are often retaliated against by their employers, even though that is illegal itself. Additionally, whistle-blowers do not always receive a significant settlement. Because of these risks, potential whistle-blowers here in Wisconsin are very wise to seek legal counsel before filing a claim.

Earlier this month a whistle-blower case took an interesting turn when a judge declared a mistrial. The whistle-blower case itself actually ended 14 years ago, but after that case closed the Justice Department sued the plaintiffs and a particular whistle-blower in relation to how the settlement was dispersed.

This case began in 1996 when a watchdog group asked a then-government economist to join in its false claims act lawsuit. The lawsuit accused major oil companies of underpaying royalties to the government. The watchdog group said it would pay the economist one-third of their cut from any settlement.

The next year, the lawsuit was filed and the watchdog group ultimately prevailed, earning a $1.2 million award. Of that, it paid the economist $383,600.

Soon after, the Justice Department sued the watchdog group and the economist on the grounds that executive branch employees were banned from receiving salary supplements.

A judge ruled in favor of the Justice Department, stating that the economist’s cut of the settlement was an illegal salary supplement. However, several appeals followed, and earlier this month a judge declared a mistrial after the jurors could not reach a unanimous verdict.

While it remains unclear whether the government will try the case again, this case shows us how complex false claims cases can become. There are risks involved with pursuing such cases and whistle-blowers should always seek to become aware of their rights and responsibilities as soon as possible.

Source: Wisconsin Law Journal, “Mistrial declared in case of watchdog group,” Dec. 17, 2012

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