Litigation: To the tune of $3 billion, whistleblower claims are on the rise

The 2010 Dodd-Frank Act is the likely impetus for the steep increase

At one time whistleblowers were relatively rare and isolated, and the law did not grant them much protection. But that’s not the case anymore. Fulbright & Jaworski's recent litigation trends survey of in-house counsel found that more than 25 percent of companies had faced whistleblower allegations in the past three years.

Whistleblowers employed by defense contractors, pharmaceutical manufacturers and other companies have increasingly taken allegations of violations of law to the government—with striking results. Companies on the receiving end of these allegations have paid billions of dollars in fines and penalties following whistleblowers’ cooperation with law enforcement authorities and civil lawsuits. What’s more, new laws have granted whistleblowers enhanced protections against retaliation and increased financial incentives to tell the government about suspected violations of law by their employers.  

The Internal Revenue Service’s whistleblower program received significantly fewer complaints - 332 whistleblower submissions in fiscal year 2012 - but paid out a record $125.4 million in awards. Though Bradley Birkenfeld, the whistleblower associated with the UBS foreign bank account investigation, received the bulk of the payouts ($104 million), the remaining $21.4 million nevertheless exceeded the $8 million paid to whistleblowers in the previous year. The IRS program also amended its provisions to raise the whistleblower award to 15% to 30% of the tax revenue recovered.

Whistleblowers have also collected substantial sums as a result of the government’s recoveries in False Claims Act cases. In March 2012, for example, whistleblowers received nearly 20 percent, or $4.6 million, of a $25 million settlement paid by Odyssey HealthCare.

Contributing Author

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Jonathan S. Sack

Jonathan S. Sack is a principal of Morvillo Abramowitz Grand Iason & Anello PC He formerly served as Chief of the Criminal Division, U.S. Attorney’s...

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Contributing Author

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Ester Murdukhayeva

Ester Murdukhayeva is an associate at Morvillo Abramowitz Grand Iason & Anello PC.

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