Types of Fraud

Fraud can cost the government millions of dollars a year at the expense of taxpayers. Deceptive practices and providing dishonest information can also reflect damages on civilians that have little power over large corporations. Although the term whistleblower includes a broad variety of cases, it is important to know the kind of fraud being alleged in your specific case and therefore which law applies to it. Some claims entitle a whistleblower to recovery of an award, which could be substantial.

Are you looking for support on how to bring a case of fraud to the attention of the government? Whistleblower is a broad term used to describe those employees, contractors, or other insiders who alert the government of widespread acts of fraud involving issues of public health, safety, or taxpayer dollars.

Qui Tam: Types of Fraud

As a potential whistleblower you have the opportunity to share concerns about ongoing fraud or illegal activity, and to protect your rights as an employee in doing so. Many potential whistleblowers might be curious about what meets the grounds for fraud.

Certain situations that a whistleblower becomes aware of could be reported to supervisors at the company, and eventually the government authorities or other officials with the intention of discontinuing behavior and holding the company accountable for actions of fraud.

While all fraud is wrong, how the whistleblower chooses to bring a case depends on the fraud allegations involved. Certain programs apply under different laws; each of which might have unique standards applied regarding what happens in the case.

Who Is Eligible to Become A Whistleblower?

Under the False Claims Act, any individual who has insider knowledge about potential fraud carried out by a business or an individual is able to potentially recover funds on the government’s behalf. This must involve a claim of defrauding the government.

Because of the personal and professional risks taken by whistleblowers in attempting to stop fraud against the government and expose these fraudulent behaviors, whistleblowers have specific protections under the laws. Fraud can be defined as activities that endanger the lives of patients, US service members and the misuse of taxpayer money.

The US government has aggressively pursued criminal, civil and administrative actions against those accused of fraud, and taking federal funds. The vast majority of recoveries in whistleblower cases are in the area of healthcare fraud, but significant recoveries in recent years have also occurred in other areas, including qui tam cases related to environment regulation, defense contracts, financial services, scientific research, oil and gas mining, prevailing wages, and education fraud. All of these circumstances might prompt an employee or former employee who has knowledge of actions of fraud, to come forward and report these concerns as a whistleblower. Taking this action enables the whistleblower to a partial recovery of any funds received by the government in the pursuit of this case regardless of whether or not the government decides to initiate a claim.

Healthcare Fraud

The most common area for fraud reported by whistleblowers is healthcare fraud. This particular sector has grown tremendously over the last several decades, which makes the complexities of addressing healthcare fraud a top priority for the government.

Large healthcare fraud cases often involve physician practices, pharmaceutical companies, hospitals, insurance companies, drug wholesalers, medical device companies and other businesses involved in the healthcare system. Some of these fraudulent schemes directly put the public’s health at risk. Some types of healthcare fraud include billing for services not provided, making false statements to regulators about compliance with various federal and state laws, or providing services that were medically necessary or in line with the standards expected.

Since healthcare fraud is often the subject of whistleblower claims, it also represents a substantial portion of cases that end in recovery in favor of the government.

Defense Contractor Fraud

Given the significant reach of defense contractor funds and with so much government funding going to outside contractors, whistleblower fraud reporting remains one of the most important issues in the defense industry today. Defense contractor fraud can include falsifying invoices, over-charging the government, rigging bids, failing to provide the best possible price to the government and false certifications of contractual obligation compliance. In other situations, defense contractors can be accused of fraud when using unsafe or inferior products in their government contracts, such as manufacturing supplies or equipment.

There are many different kinds of contractors that work on projects for the federal government. Many are dedicated to providing services that end up supporting the U.S. military. These items include computers, medical equipment, ammunition, medications, and more. If these items are overpriced or involve other allegations of fraud, those contractors could be held accountable for penalties and payments due back to the government.

IRS Fraud

Tax fraud whistleblowers play an important role in alerting the government to indications of tax evasion for businesses or individuals who might be refusing to pay what is owed on their taxes. The number of claims received under the government’s tax whistleblower program has jumped significantly from just over 8,000 claims in 2011 to more than 14,000 in 2014.

Securities Fraud

Securities and investor fraud has become more prominent in the wake of the most recent recession. The number of claims filed and award claims received by the SEC’s Office of the Whistleblower have continued to increase. Corporate disclosures, offering fraud and manipulation are three of the most common types of allegations reported by whistleblowers.

Pharmaceutical Fraud

FDA or pharmaceutical fraud is troubling because it represents dangers to public health. If a pharmaceutical company is found guilty of cutting corners and putting a user’s life at risk, this could end up causing patients to suffer severe or even fatal side effects.

Other kinds of fraud impacting pharmaceutical companies has to do with kickbacks paid to physicians in order to promote use of a particular medicine. Health insurance fraud and off-label marketing are other examples of pharmaceutical company fraud, all of which might be mentioned in a whistleblower’s claim.

Procurement Fraud

Procurement fraud can include everyone from food suppliers to construction experts, to contractors with allegations of false claims and manipulation. A procurement fraud claim relates to the mechanism through which the government acquires services, property or goods. Over-charging the government, bid manipulation, rigging bids, false invoices or use of inferior goods are some of the most common types of fraud raised under this kind of claim.

Sources:

https://www.irs.gov/compliance/how-do-you-file-a-whistleblower-award-claim-under-section-7623-a-or-b

https://news.clearancejobs.com/2019/05/14/defense-contracting-fraud-remains-an-ongoing-issue/

/www.sec.gov/whistleblower/submit-a-tip

https://www.sanders.senate.gov/newsroom/press-releases/fraudulent-defense-contractors-paid-1-trillion

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