Corporations and Non-Employees Can Also Be Whistleblowers

There are two common misconceptions concerning who can be a whistleblower under the Federal and State False Claims Acts that we hope to explain and correct by posting this blog. Many people believe that only employees can act against their current or former employers under the False Claims Act and blow the whistle on corrupt business practices that defraud either or both the national or state governments of the United States.

Many people also believe that only individuals and not corporations with information or evidence of business or corporations or individuals that are submitting false claims to these governments or their political subdivisions and programs can be a whistleblower under the False Claims Act. Both of these beliefs and misconceptions about the False Claims Act are wrong.

Anyone, whether they are an employee, former employee or not ever an employee, can be a Relator/Whistleblower under the False Claims Acts of both the Federal and State governments who have adopted the Act. The key to do so successfully under the Act is to have the information that leads to evidence and some actual evidence of the “who, what and where” of the fraud being committed. If you have information and some evidence of cheating the government by anyone, whether it be a corporation, other type of business entity or even an individual or local government agency that is submitting false information or claims to the State or Federal Government in order to obtain or retain government funds, you can be a Relator. You must retain an attorney because you are not allowed to represent yourself under the False Claims Act. If you do, you could be considered to be practicing law without a license to do so, because when you file a claim under the False Claims Act, you are also representing the defrauded government entity, whether it be federal, state or local.

The key to success and both stopping the wrongdoing and getting a reward for your information is the quality of your evidence and information and having an attorney to represent you with the knowledge and experience to file under the False Claims Act properly and in a manner that puts your evidence before the right government officials and attorneys who will act upon and investigate your information and allegations.

The other misconception is that corporations cannot act as Relators themselves against other corrupt corporations who are filing fraudulent claims or information to obtain or retain government funds, creating an uneven non-competitive playing field for the corporation or other business entity who is being victimized by the cheating or fraud. Corporations need not be victims of this non-competitive behavior to be a Relator. They can be a Relator for the same reasons most whistleblowers blow the whistle – to do the right thing, be moral and act to clean up and industry and just as a good citizen. They also can act, as business tend to do, in their own best interest and stop other corporations, such as competitors, insurance companies, pharmaceutical manufacturers or distributors, and government contractors – whether they are civilian or military contractors – from creating unfair competition which reduce the profits of the complaining whistleblowing corporation.

In a case in California, Hunter Labs faced competition that was putting it out of business. A competitor, a division of Quest Diagnostics had been producing competitive medical testing kits that were being offered at a substantial discount form the charges that Hunter needed to sell and make a profit from its medial test kits. Hunter Labs, a Corporation, who was being put out of business by a competitor investigated how its competitor could possible produce an sell a medical kit at such a discount and why as a result there was no completion in that market place. What it discovered was that the competing kits has a very high false positive test result thereby causing the federal and State governments unnecessary medical cost follow up and also to cause the State and Federal governments to buy medical test kits that did not meet the governments or even industry standards for accuracy. Hunter was successful in its filing as a Relator under the False Claims Act. It stopped the unfair competition, became profitable again, got a substantial reward under the False Claims Act and put its competitor out of business.

This story of Hunter Labs, a business who became a whistleblower to stop corrupt and unfair competition is not unusual and more and more corporations are retaining firms like us to even the playing field and allow themselves to operate their businesses in both a profitable and legal manner.

We at Begelman & Orlow have the experience and knowledge that it takes to have a successful Qui Tam case, whether you are an employee, former employee, competitor, business or concern person or taxpayer.

We currently are handling and have handled kickback cases which have resulted in not only fraud against the federal and state programs involved, but also have created predatory pricing an a lack of fair competition by the payment of these inducements and kickbacks. We are prepared and willing to listen to your concerns and move your case to a just and profitable resolution.

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