10 Things Every Whistleblower Should Know Before Reporting Fraud

Imagine that you are working in bookkeeping for a healthcare provider, and you notice that reimbursement claims are being submitted to Medicare or Medicaid for patients you’ve never heard of or for office visits that never happened. Or consider the possibility of working for a public company and coming across evidence that someone is cooking the books, such as by misreporting revenue or classifying expenses as assets. Or maybe you consult for a government contractor and see telltale signs that work is not being done as promised, or that costs are being significantly padded, or that the contractor lied about its eligibility for a job.

Any of those situations might leave you contemplating whether to become a whistleblower and report the fraud to a government enforcement agency. Whistleblowers are an important source of information that can unearth corporate malfeasance.

The U.S. government has won billions of dollars in fines and other penalties from companies committing wrongdoing in part based on tips from whistleblowers. Offering an incentive for coming forward, whistleblowers can be entitled to a portion of those recoveries (sometimes as much as 30 percent). If you uncover evidence of bad behavior, you may be tempted to take your findings immediately to an enforcement agency in hopes of getting a reward.

But reporting fraud at an employer or a company you do business with is a serious undertaking that deserves careful consideration. Whistleblowers can face significant personal and professional risks, and there can be a lot riding on whether you make the right move.

Here are 10 things every whistleblower should know before reporting fraud.

1. You Have Rights: Federal laws and regulations generally prohibit employers from retaliating against you for reporting certain kinds of wrongdoing, including issues having to do with possible fraud, employee safety, discrimination, and wage and hour violations. Retaliation might include demotion, denying overtime payments or promotions, reducing pay or hours, or firing you. Federal employees are also broadly protected from retaliation when reporting problems in their agencies under the federal Whistleblower Protection Act.
2. There May Be Incentives: Before reporting fraud or other wrongdoing, it may be helpful to understand what programs offer incentives and additional protections for blowing the whistle. Under the federal False Claims Act, private citizens who report fraud against the government (for instance, falsifying Medicare claims or billing on government contracts) can be eligible for up to 30 percent of recoveries. Whistleblower incentives may also be available under the Dodd-Frank Act for reporting financial fraud or foreign corruption. Both the U.S. Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC) operate whistleblower programs that offer significant financial rewards.
3. You May Be Able to Remain Anonymous: While it depends on what kind of allegation you are making, some programs allow whistleblowers to shield their identities. The SEC, IRS, and CFTC are often protective of the rights of whistleblowers who choose to remain anonymous and, in most instances, have awarded funds to whistleblowers without naming them publicly. That said, whistleblower identities may have to be disclosed when cases are brought in court. An experienced attorney can provide you with insight into these processes.
4. You Face Risks: Although it is likely illegal for your employer to retaliate against you for blowing the whistle, many companies and agencies will still try to discourage reporting wrongdoing or punish people who do so. You should be aware before coming forward that you may endure financial consequences, such as being fired or demoted or having your pay reduced. Sometimes companies might pressure you in other ways through intimidation tactics (which may also be illegal). You may also face reputational blowback in your industry, although that problem may resolve itself when it becomes clear that you were doing the right thing. These are all topics we are going to discuss with you before any decisions need to be made.
5. You May Not Win: Unfortunately, not every tip (even every good tip) results in a successful case against a company or agency, yielding a reward for you. The government may also choose not to act on your tip, or to take up your case. For False Claims Act cases, whistleblowers file complaints as relators on behalf of the government. The government investigates the claims and decides whether to intervene. Sometimes the government does not intervene, and False Claims Act plaintiffs are left to battle in court on their own, which can be much harder.
6. You Should Consult an Attorney: Whistleblower law is complex, there are many deadlines and special requirements, and you may open yourself up to considerable downsides. From the very beginning, having an experienced attorney walking you through the process is often essential to getting a good result. It will also likely improve your peace of mind.
7. You Should Not Break the Law: If you are taking on an employer, another company or an agency in court, you should expect to be under a legal microscope yourself. Anything you might do to break the law could reflect badly on you and harm your case. You should especially be careful not to engage in any legal violations against the company or agency, such as hacking into servers and taking sensitive information or stealing anything from the business.
8. You Should Document Everything: Thorough documentation is important for bringing a strong legal case. As a whistleblower, you can improve your chances of winning a case — and a reward — if you become an expert note-taker and keep track of all your interactions with your employer or company that may be accused of wrongdoing.
9. You Do Not Need to Be a Citizen: U.S. whistleblower laws allow anyone, regardless of citizenship, to step forward and report wrongdoing. And non-citizens are also eligible to collect awards from whistleblower programs. This is true regardless of whether you are a Green Card holder or a foreign national.
10. You Can Win: Bringing a whistleblower claim can be a long, lonely, and difficult process. But it is important to keep in mind that it is absolutely possible to win. In 2021, the U.S. Department of Justice paid $237 million in awards to whistleblowers who brought cases under the False Claims Act. The U.S. Securities and Exchange Commission has awarded more than $1.2 billion to whistleblowers since its program began in 2012 and awarded $229 million in fiscal year 2022 alone. Being a whistleblower can be tough, but there are rewards for success. And you will also have the respect of law enforcement.