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Home > Journals > Michigan Law Review > MLR > Volume 116 > Issue 3 (2017)

 

Abstract

When the government contracts with private parties, the risk of fraud runs high. Fraud against the government hurts everyone: taxpayer money is wasted on inferior or nonexistent products and services, and the public bears the burdens attendant to those inadequate goods. To combat fraud, Congress has developed several statutory frameworks to encourage whistleblowers to come forward and report wrongdoing in exchange for a monetary reward. The federal False Claims Act allows whistleblowers to file an action in federal court on behalf of the United States, and to share in any recovery. Under the Dodd- Frank Act, the SEC Office of the Whistleblower investigates tips provided by whistleblowers and, in the event of a successful prosecution, pays an award to the tipster. The False Claims Act and SEC program both protect whistleblowers from retaliatory action from their employer. But the SEC program goes a step further: SEC Rule 21F-17 also prevents an employer from taking any action to interfere with the reporting of fraud. In this way, the SEC program protects not only whistleblowers, but also whistleblowing itself. It’s time for the False Claims Act to catch up. Congress should look to SEC Rule 21F-17 as a model for how it could amend the False Claims to establish a cause of action against contractors who take steps to chill or restrict their employees from bringing forward claims of fraud. In doing so, it will vindicate the original intent and purpose of the False Claims Act and encourage whistleblowers to come forward and put an end to corporate wrongdoing. Protecting whistleblowing benefits the government, taxpayers, and whistleblowers—and ensures that the False Claims Act remains an effective instrument in the fight against fraud.

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