Regardless of the industry settings, the
most common scenarios leading to claims
appear to be situations in which internal corporate reports preceded external qui tam
claims. The National Whistleblowers Center,
in a study of qui tam cases between 2007 and
2010, found that nearly 90 percent of
employees “who would eventually file a qui
tam case initially reported their concerns
internally, either to supervisors or compliance
departments.” 19 In contrast, only 10 percent
reported their concerns first to the government.20 As the overwhelming majority of
employees did utilize their company’s internal reporting process to address issues, presumably the employees only took further
steps after being dissatisfied with the internal
response. While such data does not reflect
upon the validity of the claims, it does suggest that, by and large, companies do receive
notice of potential claims before they are pursued as qui tam complaints.
Best Practices for
The data suggesting that employees over-
whelmingly report internally first, before
becoming external whistleblowers, suggests
that best practices for internal compliance
programs really do matter. Although qui tam
claims may be asserted in any culture, com-
panies in highly regulated sectors with inter-
nal volatility and high employee turnover are
at the greatest risk. Risk can never be com-
pletely eliminated, but it may be reduced
with a strong compliance structure aimed at
encouraging internal reporting and leaving
no reasonable basis for employees to pursue
action externally. Best practices in this area
• Employee training to understand regula-
tions and job responsibilities
• A consistent focus on compliance includ-
ing helplines—a safe, protected way for
employees with questions and/or
concerns to “ask before acting”
• Ongoing communication from senior
leaders reinforcing a commitment to
compliance as the “tone from the top”
• Employee awareness of negative conse-
quences of non-compliance with rules
• Attention to audit results that show a
need for improvement in risk-related
• Awareness of industry-specific risks and
trends to ensure learning from similarly
• Careful attention to—and training
focused on—changes in laws affecting
• Alternative options for employees who
would feel uncomfortable with face-
to-face reporting to superiors about
• Well-defined procedures for reporting
internal findings to the appropriate body
if problems arise
• Empowering all employees, through
20 ARIZONA ATTORNEY MARCH 2014 www.azbar.org/AZAttorney
1. Michael J. Davidson, 10 U.S.C. § 2408: An Unused Weapon in the
Procurement Fraud Wars, 26 PUB. CONT. L.J. 181, 182 (1997).
2. Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice, Acting
Associate Attorney General Tony West Speaks at Pen and Pad
Briefing Announcing Record Civil FY 2012 Recoveries (Dec. 4,
4. Sean Elameto, Guarding the Guardians: Accountability in Qui Tam
Litigation Under the Civil False Claims Act, 41 PUB. CONT. L.J.
813, 814–15 (2012).
5. 31 U.S.C. § 3730(a)( 2).
7. See S. REP. NO. 99-345 at 2, reprinted in 1986 U.S.C.C.A.N.
8. See Press Release, supra note 2.
9. 31 U.S.C. § 3730(d)( 4) (emphasis added).
10. Pfingston v. Ronan Eng’g Co., 284 F.3d 999, 1006 (9th Cir. 2002).
11. 31 U.S.C. § 3730(h)( 1).
12. Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1103
(9th Cir. 2008).
14. See Press Release, supra note 2.
15. See Press Release, Office of Pub. Affairs, U.S. Dep’t of Justice,
Justice Department Recovers Nearly $5 Billion in False Claims Act
Cases in Fiscal Year 2012 (Dec. 4, 2012), www.justice.gov/opa/
16. GovernmentContracts Won.com,
arizona_counties.asp (last visited Jan. 23, 2014).
18. See Press Release, supra note 15.
19. See Nat’l Whistleblowers Center, Impact of Qui Tam Laws on
Internal Compliance: A Report to the Sec. Exch. Comm’n 4
(Dec. 17, 2010), available at
In Government’s Shoes
training and communication, to know
they will not face discrimination if they
“report up” regarding an internal
As discussed previously, the FCA provides a
clear path for reporting of false claims and
rewards for “relators” who step out of their
company roles to blow whistles. But the
flipside of that coin is that there are eco-
nomic incentives for prompt corporate self-
reporting and handling of potential FCA
claims. Given the data showing that nearly
90 percent of employees start by internally
reporting to their employers before report-
ing to the government, the likelihood
remains strong that companies have the
chance to take charge, correct problems
early and prevent potentially devastating
claims from proceeding. Or, in the circum-
stances where external reporting is
inevitable, companies often have the oppor-
tunity to be the first to do so—thereby
drawing the sting from any qui tam claim to
In the end, broad use of qui tam claims
across industry sectors may be far afield
from the concerns about faulty Union war
supplies that led to the creation of the FCA.
That said, the fundamentals underlying the
FCA’s inception remain intact. False claims
for recovery against the government are
harshly treated, and those who bring them
forward may be richly rewarded. And,
unquestionably, the stakes are high in this
multi-billion dollar area, making “Lincoln’s
Law,” at 150, alive and thriving. AZ AT