The whistle-blower law is coming under justifiable attack. Enacted in 1863 as the Federal False Claims Act, it was intended to punish contractors who sold defective supplies to the Union Army during the Civil War.
It was amended in 1986 to allow the government to recover triple damages from defrauding contractors and to give whistle-blowers 15 percent to 25 percent of any amount the government recouped.Generally speaking, it has been a good law. In the eight years since it was amended, a growing number of people have filed cases claiming multimillion-dollar awards for revealing fraud by government contractors, especially weapons man-u-fac-tur-ers.
In a dangerous practice that could inspire unfounded suits, many whistle-blowers are achieving ridiculous wealth on the basis of huge cash awards.
In the largest single award ever made under the whistle-blowers law, a former financial officer of a large company was recently awarded $22.5 million for exposing his company's fraudulent billing practices. To settle the case, the company agreed to pay the government $150 million, of which the whistle-blower got 15 percent.
In another case, a former sales manager for a large company tipped off the government to a scheme in which his employer and a competitor had overbilled federal and state health-care programs by $150 million. The whistle-blower now has so much money that he will never have to work again.
This is extreme, even given the considerable risks any whistle-blower must take to stand up for honesty, protect principle and save the government money.
Moreover, of the 700 whistle-blower suits filed since 1986, the Justice Department has intervened in about 100 cases, or 14 percent. Currently, 200 cases remain under seal and are being investigated.
There is bound to be a steady increase in big money settlements. That's why it is wise for Congress to consider amending the law to allow for some controls or limits on the percentage allowed whistle-blowers.
Until recently, most awards from whistle-blower cases have been confined to the range of several hundred thousand dollars. Now lawyers who specialize in such cases are expecting the number of multimillion-dollar awards to grow, especially since more of the suits are being filed by high-ranking employees.
The law should continue to protect the whistle-blower - but in a reasonable manner that does not impugn his motives or bring his own ethics into question.