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Matched Legal Cases: ['§ 3729', '§ 3729', '§ 3729', '§ 3730', '§ 3730', '§ 3730', '§ 3730', '§ 3729', '§ 3730', '§ 3730', '§ 3730', '§ 3730', '§ 3730', '§ 3730', '§ 3730', '§ 3729', '§ 3730', '§ 3730', '§ 3730', '§ 78', '§ 78', '§ 78', '§ 78', '§ 78', '§ 78']

Qui Tam Cases: What are They and How do You Handle Them: The Employment Law Group® law firm
| Our Team | Representative Cases | Contact Us Qui Tam Cases:
What are They and How do You Handle Them
R. Scott Oswald The Employment Law Group ®
Presentation Sponsored by Maryland Association for Justice
Part of the National Association of Trial Lawyer Executives National Webinar Series
© 2011 The Employment Law Group, P.C. - All rights reserved.
Overview of Qui Tam Claims Under the False Claims Act ("FCA")
Notable Qui Tam Settlements
Elements of a Qui Tam Claim
FERA 2009 Amendments
PPACA 2010 Amendments
Defenses and Limitations to Qui Tam Claims
FCA Retaliation
Dodd-Frank SEC Whistleblower Rewards
Enacted during the Reconstruction era to punish war profiteering, the federal False Claims Act ("FCA"), 31 U.S.C. §§ 3729 – 3733, has been the Government's primary tool for recovering losses resulting from contractor fraud. More than $20 billion recovered by the U.S. Government since 1986 resulted from actions initiated by qui tam relators, i.e., individuals who bring suit under the FCA on behalf of the United States
Text of 31 U.S.C.A. § 3729(a)(1)
"any person who:"
• (A) knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval;
• (B) knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim;
• (C) conspires to commit a violation of subparagraph (A), (B), (D), (E), (F), or (G);
• (D) has possession, custody, or control of property or money used, or to be used, by the Government and knowingly delivers, or causes to be delivered, less than all of that money or property;
• (E) is authorized to make or deliver a document certifying receipt of property used, or to be used, by the Government and, intending to defraud the Government, makes or delivers the receipt without completely knowing that the information on the receipt is true;
• (F) knowingly buys, or receives as a pledge of an obligation or debt, public property from an officer or employee of the Government, or a member of the Armed Forces, who lawfully may not sell or pledge property; or
• (G) knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government,
is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, as adjusted by the Federal Civil Penalties Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note; Public Law 104-4101), plus 3 times the amount of damages which the Government sustains because of the act of that person.
Tenet Healthcare: $900 million settlement where relator's share was in excess of $150 million. • In June 2006, settled allegations that it committed fraud by billing Medicare for services and supplies not provided patients, paying kickbacks, upcoding diagnoses, and otherwise padding Medicare bills. Pfizer: $2.3 billion settlement where relators' share was $51.5 million. • In September 2009, settled allegations of off-label marketing of Bextra, Lipitor, Viagra, Zyrtec, and Lyrica. Notable Qui Tam Settlements
Northrop Grumman: $325 million settlement where relator's share was $48.75 million
• In April 2009, settled allegations of supplying defective parts for spy satellites to the National Reconnaissance Office. Nelnet, et al.: $57.75 million settlement where relator's share was $16.65 million
• In Fall of 2010, Nelnet and a group of companies settled allegations of overbilling the Department of Education for student loan subsidies. Elements of a Qui Tam Claim Elements of a Qui Tam Claim
The elements of an FCA claim include:
• (1) that the defendant made a false statement or engaged in a fraudulent course of conduct; • (2) that the defendant carried out such statement or conduct with the requisite scienter (or intent); • (3) the statement or conduct was material; and • (4) the statement or conduct caused the Government to pay out money or to forfeit money due. See United States ex rel. Sanders v. N. Am. Bus Industries, Inc., 546 F.3d 288, 297 (4th Cir. 2008). Categories of False Claims
Product/Services Not Provided
Material Misstatement on Bid or Request for Payment, including Inflating Amount of Claim
Delivering Deficient/Defective Products
False Receipt of Property
Buying from Unauthorized Sellers
Using False Record/Statement to Avoid Payment 1. Products/Services Not Provided 31 U.S.C. 3729(a)(1)(A) Example: Presenting fraudulent claims to the National Flood Insurance Program for payment after Hurricane Katrina with the knowledge that the claims were false. U.S. ex rel. Branch Consultants, L.L.C. v. Allstate Ins. Co., 668 F. Supp. 2d 780 (E.D. La. 2009). 2. Material Misstatement/Inflation
31 U.S.C. 3729(a)(1)(B) Example: Creating documents that overstated the flood damage to submit to the National Flood Insurance Program. Id. 3. Conspiracy 31 U.S.C. 3729(a)(1)(C) Example: University employees acting in agreement to file false certifications with the U.S. Government, resulting in federal grant to the university. United States v. President & Fellows of Harvard Coll., 323 F. Supp. 2d 151 (D. Mass. 2004).
4. Delivering Deficient/Defective Products
31 U.S.C.3729(a)(1)(D)
Example: Contractor delivering substandard food to NASA concessions, amounting to less property than the amount for which the contractor received a receipt. U.S. ex rel. Vargas v. Lackmann Food Serv., Inc., 510 F. Supp. 2d 957 (M.D. Fla. 2007).
5. False Receipt of Property
31 U.S.C. 3729(a)(1)(E)
Example: Shipyard fraudulently certifying receipt of unseaworthy vessels on behalf of the U.S. Navy, stating in the receipt that the vessels were seaworthy (no published opinion). 6. Purchase Unauthorized Goods
31 U.S.C. 3729(a)(1)(F) Example: County water agency presents for signature a contract based on false information to the Army to avoid certain costs to the county. Hagood v. Sonoma County Water Agency, 81 F.3d 1465 (9th Cir. 1996).
7. False Record to Avoid Payment
Example: Commercial travel agency knowingly using nonprofit postal rates for mailings not eligible for that rate. United States v. Raymond & Whitcomb Co., 53 F. Supp. 2d 436 (S.D.N.Y. 1999).
Also known as "reverse claims" under FERA.
Illegal off-label marketing that results in the submission of impermissible Medicare reimbursement claims are actionable under the FCA. Example: A statement urging a physician to prescribe a drug for an unapproved, off-label use amounts to a false statement , where:
A drug sales representative fails to mention there is no support for the drug's efficacy for the use he is promoting, or
The FDA has specifically concluded that a drug is not safe or effective for the prescribed use use.
See United States ex reI. Franklin v. Parke-Davis et aI., 2003 WL 22048255, at *2 (D. Mass. Aug. 22, 2003).
Medicare/Medicaid often bar coverage for a particular off-label use or place other conditions on coverage.
Healthcare providers seeking federal reimbursement for a procedure or drug that is ineligible for payment is a false claim.
To the extent that a healthcare provider seeks reimbursement for a procedure or drug that is ineligible for payment under a federal healthcare program, either because the program bars coverage for a particular off-label use or because the program places other conditions on coverage that are not satisfied, the claim is false. FERA 2009 Amendments
On May 20, 2009, Congress issued significant amendments to the FCA through the Fraud Enforcement and Recovery Act of 2009 ("FERA").
The impetus was to correct past court decisions, such as:
United States ex rel. Totten v. Bombardier Corp., 380 F.3d 488 (D.C. Cir. 2004): Making presentment a requirement for a qui tam claim.
Allison Engine v. United States ex rel. Sanders, 128 S. Ct. 2123 (2008): Requiring a relator to prove the defendant's specific intent.
Expanded Coverage to Contractors
FERA Redefined "claim" under the FCA to mean "any request or demand, whether under a contract or otherwise for money or property and whether or not the United States has title to the money or property" that is (1) presented directly to the United States, or (2) "to a contractor, grantee, or other recipient, if the money or property is to be spent or used on the Government's behalf or to advance a Government program or interest" and the Government provides or reimburses any portion of the requested funds.
Expanded Coverage to Include Reverse False Claims
FERA redefined "obligation" under the FCA to include "retention of any overpayments." Accordingly, such language imposed FCA liability on any provider who received Medicare/Medicaid overpayments (accidentally or otherwise) and fails to return the money to the Government. FERA raised questions as to what exactly is involved in the "retention of overpayments" – for example, how long a provider had to return monies after discovering an overpayment. PPACA 2010 Amendments
On March 23, 2010, President Barack Obama signed the Patient Protection and Affordable Care Act ("PPACA").
Under PPACA, overpayments under Medicare and Medicaid must be reported and returned within 60 days of discovery, or the date a corresponding hospital report is due. Failure to timely report and return an overpayment exposes a provider to liability under the FCA. Anti-Kickback Liability
The federal Anti-Kickback Statute, 42 U.S.C. 1320a-7b(b) ("AKS") is a criminal statute that makes it improper for anyone to solicit, receive, offer or pay remuneration (monetary or otherwise) in exchange for referring patients to receive certain services that are paid for by the Government. Many, but not all, courts interpreted the FCA to mean that claims submitted as a result of AKS violations were false claims and therefore gave rise to FCA liability (in addition to AKS penalties). Anti-Kickback Liability
PPACA changed the language of the AKS to provide that claims submitted in violation of the AKS automatically constitute false claims for purposes of the FCA.
The new language of the AKS provides that "a person need not have actual knowledge…or specific intent to commit a violation" of the AKS. Providers will not be able to successfully argue that they did not know they were violating the FCA because they were not aware the AKS existed. Willis v. United Health Group
In U.S. ex rel. Willis v. United Health Group, Inc, 10-2747, 2011 WL 2573380 (3d Cir. June 30, 2011), the Third Circuit upheld a relator's qui tam claim on the basis of non-compliance with the AKS. "The Government does not get what it bargained for when a defendant is paid by CMS for services tainted by a kickback." The defendant submitted claims to the Government for payment knowing it violated the AKS. ----------
Recently, in U.S. ex rel. Willis v. United Health Group, Inc, 10-2747, 2011 WL 2573380 (3d Cir. June 30, 2011), the Third Circuit upheld a relator's qui tam claim on the basis of non-compliance with the AKS.
The relators successfully alleged that the defendant submitted claims for payment to the Government at a time that they knowingly violated the AKS, which was a condition for receiving payment from the Government.
The court reached its conclusion on the basis of implied false certification. Willis v. United Health Group
Compliance with the AKS was an express condition of payment to which the defendant agreed when it entered into an agreement with the Centers for Medicare & Medicaid Services ("CMS").
The relator need not allege a relationship between the AKS violations and the claims the defendant submitted to the Government. The complaint is sufficient because the relator pleaded that the defendant knowingly violated the AKS while submitting claims for payment to the Government. No Presentment Requirement
After FERA, a relator need not show that a claim was presented directly to an officer or employee of the Government.
FCA liability attaches so long as the entity "knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval."
Corrects Totten decision. False Certification
Legally false claims can rest on:
false certification of compliance, or an implied false certification. Express false certification is actionable only where payment of the claim is conditioned on compliance with a contract provision or statute or regulation. ----------
See United States ex. rel. Siewick v. Jamieson Sci. & Eng'g Inc., 214 F.3d 1372, 1376 (D.C. Cir. 2000).
FERA removed the specific intent to defraud requirement of Allison Engine. Under, 31 U.S.C. § 3729(b), the terms "knowing" and "knowingly" mean that a person, with respect to information
(I) has actual knowledge of the information; (2) acts in deliberate ignorance of the truth or falsity of the information; or (3) acts in reckless disregard of the truth or falsity of the information. Materiality Requirement
A qui tam relator must be able to prove that the defendant's false statement had the "natural tendency" to cause the payment of a false claim at the time the false statement was made. ----------
See, e.g., United States v. United Tech. Corp., 2008 WL 3007997 (S.D. Ohio. Aug. 1, 2008) (invoices submitted by the defendant violated the FCA because the natural consequence of the defective pricing data was to cause an overstated price). No Actual Loss Requirement
Courts have found that Section 3729(a)(7) does not require that the false statements result in an actual loss to the Government. "Even in cases where there is no dollar loss, for example where a defense contractor certifies an untested part for quality yet there are no apparent defects-the integrity of quality requirements in the procurement programs is severely undermined." United Stares ex rei. Balmmi v. Conagra, Inc., 465 F.3d 1 189, 1203 (10th Cir. 2006). Pleading Requirements
Courts apply the heightened pleading requirements of Rule 9(b) to qui tam actions to ensure that the complaint provides a defendant with fair notice of the claim and adequate information to frame a response. See United States ex rel. Gross v. AIDS Research Alliance-Chicago, 415 F.3d 601, 604 (7th Cir. 2005); See also Fed R. Civ. P. 9(b); See also Ackerman v. Nw. Mut. Life Ins. Co., 172 F.3d 467, 469 (7th Cir. 1999) (the heightened pleading standard requires the plaintiff to do more than the usual investigation because public charges of fraud can harm a company's reputation.
A complaint must identify actual false or fraudulent claims submitted to the Government to preclude dismissal on summary judgment. See, e.g. United States ex rel. Karvelas v. Melrose-Wakefield Hosp., 360 F.3d 220 (Mass. 2004) (Court of Appeals dismissed a 93-page complaint, finding that the detailed and lengthy complaint failed to state a claim under the FCA because it did not allege with sufficient particularity any actual false claims submitted to the Government). Defenses and Limitations
Primary Defenses/Limitations
The two most common defenses to and limitations on qui tam claims are:
Public Disclosure Bar, and Original Source Exception Public Disclosure Bar
The original 1863 qui tam provisions of the FCA imposed no limits on who could serve as a qui tam relator.
There were some opportunistic lawsuits in which relators sued based on information already made known to the public and received shares of recoveries that the Government could have obtained without the relators' assistance. Public Disclosure Bar
To reduce this risk, Congress included the public disclosure bar in the 1986 amendments of the FCA, under which courts lack jurisdiction over a qui tam action based on information already in the public domain, including information provided by: (1) a criminal, civil, or administrative hearing; (2) a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation; or (3) the news media. See 31 U.S.C. § 3730(e)(4)(A).
The public disclosure bar, however, does not apply where a relator is an "original source." PPACA 2010 Amendments
PPACA amended the language of the FCA to allow the federal Government to have the final word on whether a court may dismiss a case based on a public disclosure.
Public disclosure bar does NOT include information learned in collateral litigation, such as under a § 3730(h) retaliation claim
Disclosure by Gov't or Media Only
"The court shall dismiss an action or claim under this section, unless opposed by the Government, if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed-- (i) in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party; (ii) in a congressional, Government2 Accountability Office, or other Federal report, hearing, audit, or investigation; or
(iii) from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information." 31 U.S.C. § 3730(e)(4)(A).
Schindler Elevator v. U.S.
In its recent decision in Schindler Elevator Corp. v. U.S. ex rel. Kirk, 131 S. Ct. 1885, 1893 (2011), the U.S. Supreme Court held that Government responses to Freedom of Information Act ("FOIA") requests constitutes public disclosure and bars qui tam suits. Daniel Kirk cited to FOIA responses he received from the Dept. of Labor to establish Schindler's noncompliance with the Vietnam Era Veterans Readjustment Assistance Act ("VEVRAA").
A written agency response to a FOIA request falls within the ordinary meaning of "report."
Any records the agency produces along with its written FOIA response are part of that response, "just as if they had been reproduced as an appendix to a printed report." If an allegation or transaction is disclosed in a record attached to a FOIA response, it is disclosed "in" that FOIA response and, therefore, disclosed "in" a report for the purposes of the public disclosure bar. Original Source Exception
The FCA defines an original source as someone who voluntarily provides information to the federal Government about fraud before filing suit. See 31 U.S.C. § 3730(e)(4)(B). Original Source
An original source must have "direct and independent knowledge" of the information underlying the allegations in the lawsuit, rather than information that was the basis for prior public disclosure. Rockwell Int'l Corp, 127 S. Ct. 1397, 1407 (2007). Original Source
In other words, the relator must have gained the information through his own experience or investigation. Under PPACA, an original source is someone who has "knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions." See 31 U.S.C. 3730(e)(4)(B).
See United States ex rel. Hansen v. Cargill, Inc., 107 F. Supp. 2d 1172 (N.D. Cal. 2000) (relator was not original source where relator was not witness to facts upon which the allegations were based and did not have firsthand knowledge). Original Source
For example, a relator cannot pursue a qui tam action against a hospital for an alleged "kickback scheme" based on information obtained from patient complaints and informal discussions in lounges and staff meetings. See United States ex rel. Lam v. Tenet Healthcare Corp. 287 Fed. Appx. 396, 401 (Tex. 2008). Original Source
The public disclosure bar precludes the original source exception when the relator's knowledge depends on a review of public information, even if that information is not a "public disclosure" within the meaning of the FCA's public disclosure provisions. See United States ex rel. Atkinson v. PA. Shipbuilding Co., 473 F.3d 506 (Pa. 2007). Qui Tam Rewards
§ 3729(G) provides a civil penalty of not less than $ 5,000 and not more than $ 10,000, plus 3 times the amount of damages which the Government sustains because of a false claim.
Courts levy these penalties per false claim, so civil fines can be large in multiple invoice cases.
A successful qui tam relator can recover 15% to 30% of the Government's total recovery, which varies primarily based on whether or not the Government intervenes. § 3730(d)(1)-(2). Qui Tam Rewards
Under § 3730(c)(5), relators are also entitled to a share of the Government's recovery through any alternate remedy available to it, including any administrative proceeding to determine a civil money penalty. § 3730(d) of the FCA authorizes whistleblowers to recover attorney fees and litigation costs. Qui Tam Rewards
Factors that affect the relator's share include: Government Intervention
Promptness of Report Safety Concerns Government Knowledge Relator Assistance Relator Cooperation Size of Recovery Qui Tam Rewards
Relator brings an action that is not "based upon" publicly disclosed information.
"Original source" brings an action that is "based upon" but not "primarily based" on publicly disclosed information.
"Original source" brings an action that is "primarily based" on publicly disclosed information, but the "original source did provide that information."
"Original source" brings an action that is "primarily based" on publicly disclosed information, and "original source" did not provide that information.
Relator brings an action that is subject to dismissal under § 3730(e)(4).
A relator alleging fraud must disclose knowledge of the fraud to the Department of Justice before filing suit. The qui tam action is then filed under seal in federal court. The Government has sixty days within which to investigate the alleged fraud and determine whether to intervene. See § 3730(b)(2). Courts routinely grant the Government extensions; some cases remain under seal for years before the Government decides to intervene. Procedures
If the Government intervenes, DOJ takes over the prosecution of the case. The case is unsealed and the defendant is served. A relator is entitled to notice of any settlement and is entitled to a hearing on the relator's share of the settlement. Procedures
If the Government declines to intervene in the qui tam action, the relator may proceed with the action against the defrauding contractor or entity, at which time the action will be unsealed and served on the defendant. § 3730(c)(3). Client Admonitions
The United States has a right to take control
The Government has the right to settle the case without consent, but with court approval The Government can refuse to pay the relator's share The Government may also prosecute under criminal statutes, which may reduce the size of a civil award Public disclosure of fraud might be grounds for dismissal No guarantee the DOJ will intervene (less than 18%) Must allege fraud with specificity False Claims Act Retaliation
FCA Retaliation The FCA prohibits an employer from retaliating against an employee "because of lawful acts done by the employee…in furtherance of an action" under the FCA. 31 U.S.C. § 3730(h). Prohibited retaliation includes termination, suspension, demotion, harassment and any other act that would dissuade a reasonable person from reporting violation of the FCA. Qui Tam v. FCA Retaliation Potential Qui Tam Claim
An employee with knowledge of his or her employer's fraud committed against the federal Government sues on behalf of the Government to recover losses caused by the fraud. Potential FCA Qui Tam Retaliation Claim The employee engages in protected activity by, for example, bringing the fraud to the employer's attention. With knowledge of the employee's protected activity, the employer retaliates by, for example, terminating the employee. FCA Retaliation Elements An employee must prove:
(1) that the employee engaged in protected activity, (2) that the employer knew that the employee engaged in protected activity, and
(3) that the employer discriminated against the employee because of his protected activity. Protected Conduct "Acting in furtherance" of a qui tam action includes: (1) investigating a violation of the FCA, (2) initiating an FCA action, (3) testifying for an FCA action, or (4) assisting in an FCA action. The Supreme Court has specifically noted that "proving a violation of § 3729 is not an element of a § 3730(h) cause of action." Graham County Soil & Water Conservation Dist. v. U.S. ex rel. Wilson, 545 U.S. 409, 416 n.1 (2005).
Protected Conduct Specific examples of protected activity include: bringing illegal conduct to an employer's attention; refusing to participate in a scheme to defraud the Government;
reporting to a supervisor that flawed devices were being provided to the military; and reporting internally the existence of fraudulent activity. After FERA, protected conduct includes any efforts to stop one or more violations of the FCA. Causation To prevail under section 3730(h), a plaintiff need not prove an actual violation of the FCA.
In particular, "an employee engages in protected activity when litigation is a 'distinct possibility, 'when the conduct 'reasonably could lead to a viable FCA action…or when…litigation is a 'reasonable possibility.‘” Causation To prevail in an FCA retaliation claim, a plaintiff must show that "the retaliation was motivated at least in part by the employee's engaging in protected activity." S. Rep. No. 99-345, at 35, reprinted in 1986 U.S.C.C.A.N. at 5300. A § 3730(h) plaintiff need not prove "but for" causation. Id. at 125 n.13 (distinguishing Gross v. FBL Fin. Servs., Inc., 129 S. Ct. 2343, 2350 (2009)). Pleading The heightened pleading requirement of Rule 9(b) does not apply to FCA retaliation claims. An FCA retaliation plaintiff claims need only meet the Rule 8(a) notice pleading standard. After FERA, a Plaintiff need not demonstrate that she raised concerns about an actual violation of the FCA. ---------
See Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1103 (9th Cir. 2008); U.S. ex rel. Williams v. Martin-Baker Aircraft Co., 389 F.3d 1251, 1251 (D.C.Cir. 2004). Remedies A prevailing plaintiff in an FCA retaliation action is entitled to reinstatement, double back pay, special damages, interest on back pay, litigation costs and reasonable attorney's fees.
Damages As most whistleblower retaliation claims authorize both compensatory damages and front pay in lieu of reinstatement, potential damages can be very substantial.
A vocational rehabilitation expert can evaluate the extent to which the whistleblower's career prospects have been diminished and the time to regain a comparable employer. An economist can estimate frontpay. Dodd-Frank 2010 Amendments The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 ("Dodd-Frank") amended § 3730(h):
Extends protection to individuals "associated" with the whistleblower Broadens protected conduct to include activity "in furtherance of an action under this section"
Statute of limitations is 3 years after retaliation occurred (prompted by Graham County Soil & Water Conservation Dist. V. U.S. ex rel. Wilson, 545 U.S. 409 (2005) (Court should apply most closely analogous state statute of limitations) Additional Practice Tips
Qui Tam with Retaliation
Litigating an FCA retaliation claim while a qui tam claim is under seal:
A qui tam relator can prosecute a retaliation claim without violating the seal, but this requires planning, including a strategy for responding to questions during the plaintiff's deposition about the plaintiff's disclosures to the Government. Qui Tam with Retaliation
Before filing a retaliation claim, the qui tam relator should disclose the fraud to the Government to ensure that the relator will qualify as an original source.
Consider filing the retaliation claims with the qui tam action under seal. Be prepared to justify the plaintiff's damages with specificity to avoid the appearance that the employer is settling more than just an employment claim. SEC Whistleblower Rewards
Under Dodd-Frank
Section 922 of the Dodd-Frank Act created a new rewards program for SEC whistleblowers.
The SEC is required to pay a reward to individuals who provide original information to the SEC resulting in monetary sanctions exceeding $1 million in civil or criminal proceedings. See 15 U.S.C. §§ 78u-6(a)(1), (b). Qualified Whistleblowers To qualify for a whistleblower reward, 15 U.S.C. § 78u-6(b)(1) requires that the individual voluntarily provide original information to the Commission that leads to the successful enforcement of the covered judicial or administrative action, or related action. Original Information
"Original information" means information that
(A) is derived from the independent knowledge or analysis of a whistleblower; (B) is not known to the Commission from any other source, unless the whistleblower is the original source of the information; and (C) is not exclusively derived from an allegation made in a judicial or administrative hearing, in a Governmental report, hearing, audit, or investigation, or from the news media, unless the whistleblower is a source of the information. See 15 U.S.C. § 78u-6(a)(3) Disqualified Whistleblowers
Pursuant to 15 U.S.C. § 78u-6(c)(2), no award shall be made to a member, officer, or employee of—
(i) an appropriate regulatory agency;(ii) the Department of Justice;(iii) a self-regulatory organization;(iv) the Public Company Accounting Oversight Board; or(v) a law enforcement organization;
(B) to any whistleblower who is convicted of a criminal violation related to the judicial or administrative action for which the whistleblower otherwise could receive an award under this section;(C) to any whistleblower who gains the information through the performance of an audit of financial statements required under the securities laws; or(D) to any whistleblower who fails to submit information to the Commission in such form as the Commission may, by rule, require. Appeal of Reward
If the amount awarded is less than 10 percent or more than 30 percent of the amount recouped, a whistleblower may appeal the SEC's determination by filing an appeal in the appropriate federal court of appeals within 30 days of the determination. See 15 U.S.C. § 78u-6(f). Miscellaneous
15 U.S.C. § 78u-6(d) provides that any whistleblower who makes a claim for an award under subsection (b) may be represented by counsel and requires that any whistleblower who anonymously makes a claim for an award under subsection (b) be represented by counsel if the whistleblower anonymously submits the information upon which the claim is based.
SEC Form WB-DEC
Qui Tam Cases:
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