What Is Fraud?

The government relies on the evidence and experiences of whistleblowers to present issues of fraud against government funds. In exchange, whistleblowers under certain programs are entitled to recovery of settlement or judgment funds and also gain protection from discrimination. Discover what constitutes fraud for a whistleblower and the role that these individuals play in raising awareness about different kinds of illegal behavior affecting taxpayer dollars.

As a potential whistleblower, it is necessary to ask the question, what is fraud? Deciding when a company or individual has crossed the line and has been involved in illegal or fraudulent behavior is important for protecting your own rights and officially reporting this claim to relevant authorities.

Only certain types of activities meet the grounds for a fraud claim. It is a big step to alert the authorities or file a case based on fraud, so it’s critical for a current or previous employee to get legal advice about how to know the difference between unethical behavior and that which meets the definition of fraud.

It can be difficult to figure out whether or not misconduct in a workplace has met the legal grounds and threshold for fraud. It is possible for company policies or individual actions to be inappropriate or unethical without technically being classified as illegal.

Certain types of fraud will lead to qui tam lawsuits. Qui tam lawsuits are another way to reference whistleblower lawsuits. These are often brought by private citizens who have knowledge of behavior inside companies or by individuals that relate to large scale deliberate fraudulent schemes that misuse federal or state funding. When an individual or company potentially demand inappropriate or unearned reimbursement from the government, this means they are harming taxpayers and this can meet the grounds for federal fraud.

Programs such as Medicaid and Medicare are represented as a substantial portion of whistleblower fraud claims. The government aims to use taxpayer funding as responsibly as possible and fraudulent schemes can even endanger the health and well-being of patients.

Defining Fraud

As it relates to qui tam or whistleblower lawsuits, fraud is a significant and deliberate misuse of taxpayer funding or the direct theft of taxpayer funding. Entire organizations or individuals can be accused and guilty of committing fraud. Healthcare fraud is one of the most common types of allegations brought forward in qui tam lawsuits due to the extensive reach of programs such as Medicaid or Medicare fraud.

However, other examples of fraud can include that carried out by defense contractors who knowingly charge the government for faulty equipment provided under contracts. Publicly traded companies can also be accused of fraud if they deliberately mislead investors or engage in insider training, money laundering or other types of securities violations.

What Roles Do Whistleblowers Play in Recognizing and Reporting Fraud?

The government relies on the insight of whistleblowers to pursue many different types of fraud claims. This is because the government might not have otherwise been aware of the situation or have been entitled to have enough evidence to come forward with a legal claim. The government, therefore, encourages whistleblowers to take legal action in reporting instances of fraud to protect the use of taxpayer dollars.

Whistleblowers are those individuals who provide the government with detailed information and evidence about these fraudulent schemes. The core of this evidence must indicate an intent to defraud the government, which means that most whistleblowers are contractors or employees of a fraudulent company or previously worked there.

People who work with or for the company also have the most likely opportunity to collect evidence that could become crucial in a whistleblower lawsuit, including invoices, emails or patient records.

Identifying Fraud

Fraud pertains to the misrepresentation of services and goods in pursuit of unearned public reimbursements when it comes to whistleblower laws such as the False Claims Act. It can be difficult to define the line between fraud and malpractice.

A healthcare provider, for example, that negligently or deliberately harms patients should be reported, but certain instances of this behavior would certainly be classified as medical malpractice rather than fraud. Individuals and companies could be held accountable for committing both malpractice and fraud. However, in order for a whistleblower to proceed with a qui tam or False Claims Act lawsuit, the whistleblower must prove that a significant portion of federal or state funding has been misused to meet the grounds of fraud.

The amount of fraud involved in the case plays a role beyond just establishing evidence that fraud did indeed occur. It is also important for the whistleblower and the government as it pertains to pursuing a case. The amount of defrauded funds in question plays a critical role during the investigation phase of the case. After a qui tam whistleblower initiates a legal claim, the case officially goes under seal. During this time, even the accused parties are not aware of the presence of the case in most situations.

This is because the government is using the resources at their disposal to identify whether or not there is significant evidence that supports moving forward with the claim. Each whistleblower program has different rewards policies, but whistleblowers have typically been offered rewards when a successful recovery of defrauded government claims involves allegations of $1 million or more for taxpayers and the government.

The government typically investigates claims of systemic fraud, such as where hundreds or thousands of false claims have been submitted. A lawyer experienced in complex litigation should be familiar with how to pursue these types of cases and can help a whistleblower to prepare their claim.      

Evidence is a key component of the strength of a fraud claim. Any party in an organization who believes that a systemic fraud scheme is diverting funds away from the government should understand their rights and what is involved in stepping up as a whistleblower. Gathering this evidence and meeting with your own whistleblower lawyer can help prepare you for what is involved in a claim.

Sources:

https://www.justice.gov/jm/jm-9-42000-fraud-against-the-government

https://oig.ssa.gov/whistleblower-protection

https://www.whistleblowers.gov/