The top 30 False Claims Act settlements of 2012 totaled $9,094,474,000. Initiated by whistleblowers, the top three settlements involved $3 billion from GlaxoSmithKline for illegal marketing of prescription drugs, $1.5 billion from Abbott Laboratories for off-label marketing of Depakote and $1 billion from Bank of America for mortgage and bank fraud.
The Federal False Claims Act Strengthens Whistleblowers
For Texans, it is important to know the interrelationship between the Texas Whistleblower Act (TWA) and the False Claims Act: the federal False Claims Act expands on the Texas Whistleblower Act by allowing private citizens to bring claims.
Texas Whistleblower Act
The Texas Whistleblower Act protects public employees who report, in good faith, violations of their employer to an appropriate law enforcement authority. TWA guards the whistleblower from retaliatory acts such as harassment, demotion, pay reduction and termination. A whistleblower may bring an action under TWA for injunctive and compensatory relief including reinstatement, actual damages, court costs and lawyer’s fees. Pecuniary damages may be available but there is a limit on the amount of recovery.
Federal False Claims Act
First passed in 1863, the False Claims Act provides that anyone who knowingly submits a false or fraudulent claim to the United States may be liable for triple damages and a penalty from $5,000 to $11,000. The key provision in the False Claims Act is the qui tam provision inserted in the law. The qui tam provision allows a private person, called a relator, to initiate a lawsuit on behalf of the U.S. against a defendant who submitted false or fraudulent claims to the United States. The private person is essentially acting as a whistleblower.
The False Claims Act also guards the whistleblower from retaliation by their employer. If a person suffers adverse employment action from filing a claim under the False Claims Act, they may bring an action in federal court for reinstatement with the same seniority, double the amount of back pay, plus interest, and compensation for litigation costs and attorney’s fees.
The federal False Claims Act functions similarly to the TWA, but it allows a private person to initiate the suit. This significantly expands the pool of whistleblowers who may initiate a claim of wrongful conduct by a government agency or official.
Texas False Claims Act
The Texas False Claims Act is extremely similar to the federal version. The actions that activate the criminal and civil penalties mirror those of the federal act. The Texas act also possesses a whistleblower provision. However, the Texas False Claims Act is different in one aspect in that it provides a larger civil penalty for illegal acts that result in injury to an elderly individual, disabled person or child under 18 years old.
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