Like other areas of corporate fraud, money laundering is done in secret and is very hard to detect. The sponsors of the bill are proposing whistleblower protections that would cover the right to anonymously and confidentially file claims, obtain a reward and prohibit retaliation. These reforms are desperately needed.
Finally, Sen. Charles Grassley, R-Iowa, has announced that he will be introducing reforms to the qui tam provisions of the False Claims Act. The False Claims Act’s qui tam provisions are recognized as America’s most successful anti-fraud whistleblower law. Since the False Claims Act was amended in 1986, U.S. taxpayers have recovered over $62 billion from fraudsters. The law has been under attack for years from corporate interests that profit from sweetheart government contracts, including an unsuccessful attempt to find its qui tam provisions unconstitutional.
The False Claims Act is the most consequential anti-fraud law on the books for this pandemic. It covers fraud in the multi-trillion-dollar COVID-19 programs and federally funded medical treatments, including Medicare, Medicaid and private veteran health care programs. Most nursing homes are also covered under this law. Pursuant to its qui tam provisions, citizens can sue almost anyone fraudulently obtaining federal monies related to fighting the pandemic.
Thus, it is critical that Congress close loopholes in the False Claims Act. Three areas are being considered for reform. First, the reform legislation is expected to overturn judicial precedents that set a high bar on proving “materiality” in fraud cases. These precedents often let fraudsters profit from blatant violations of law or their contractual obligations.
Second, the U.S. Department of Justice has abused a technical procedure in the law that permits the government to have fraud cases dismissed, without any real due process for the whistleblower. Reforms will focus on this technical issue in the law and clarify that whistleblowers will have a right to a meaningful hearing before any case is dismissed. Finally, the anti-retaliation provisions need to be improved, especially to prevent whistleblowers from being blacklisted.
The reforms to the Dodd-Frank Act and the federal anti-money laundering bills already have bipartisan support and could be approved this term. Likewise, the issues that are undermining the False Claims Act are well documented, and given the trillions of dollars in COVID-19 spending, these reforms are urgently needed.
Prior to the publication of the Marist poll results, supporting whistleblower laws was viewed as good government reforms. Members of Congress would often support these laws, not because the voters demanded it, but because whistleblowers were recognized as essential partners in detecting fraud.
The Marist poll results change this equation. The overwhelming majority of Americans polled want to see their elected leaders enacting laws that improve whistleblower protections. The majority of likely voters polled see such laws as a priority for Congress. Voters from both political parties want to see immediate congressional action.
On top of this, 44% of likely voters polled will take into consideration how a politician votes on these issues. Whistleblower advocates will be well served by exposing members of Congress who block needed whistleblower reforms and praising those elected officials who stand with the whistleblowers. This is a game changer.