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The Importance of Whistleblower Incentives

New TAF report reveals flaws in Chamber’s proposed whistleblower incentive caps

There is no doubt that fraud costs taxpayers money, but stopping this fraud can be difficult and costly. State and federal governments often rely on whistleblowers to come forward with helpful information. Qui tam provisions in the False Claims Act (FCA) allow those individuals with evidence of fraud against the government to sue on behalf of the government. These individuals, known as “relators” or “whistleblowers,” are eligible under the FCA to receive rewards of 15 to 30 percent of the amount that they help the government recover. Yet, those who blow the whistle on wrongdoing do so at great peril to their careers and reputations.

In October of last year, The U.S. Chamber of Commerce published a report proposing substantial reductions to relator awards under the False Claims Act. However, the public interest group Tax Payers Against Fraud (TAF) has countered with a revealing report that exposes major flaws in the Chamber’s proposed whistleblower caps.

Authored by economist Jack Meyer of Health Management Associates, the TAF report notes that the Chamber’s analysis disregards nine of the ten risk factors that whistleblowers and their lawyers must weigh before bringing a case.

Even Attorney General Eric Holder recently confirmed at a House Judiciary Committee hearing on June 7, 2012, that “The statute as it is presently constructed, works and works quite well.” In fact, Holder “would be reluctant to fool around with a formula that for the past 25 years has shown to be an effective tool in getting at fraud, and incentivizing people to stay involved in the process and working with the Government as partners.”

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