When people think of whistleblowers, they usually think of insiders: conscientious employees working to expose fraud or other illegal conduct by their employers. Many whistleblowers fit this definition; but there are also plenty of whistleblowers who don’t.
The federal False Claims Act—which is the most prominent and important whistleblower law in the United States—does not require whistleblowers to be company insiders. It simply requires that the whistleblower come forward with non-public information about fraud against the United States. As a result, there are plenty of examples of “non-traditional” (i.e. non-insider) whistleblowers who have successfully recovered millions of dollars for the federal government. These include business competitors, data analysts, and customers.
A recent case from the United States Court of Appeals for the First Circuit addresses this phenomenon and provides a good example of how outsiders can effectively detect and pursue fraud against the government. The whistleblowers in that case were two doctors who regularly used a particular type of hip-replacement device when performing total hip replacement on their patients. The doctors chose this device, at least in part, because it was marketed as having a low five-year failure rate—only 4.5%. However, based on their own patient records and independent analysis, the doctors were able to determine that the devices being provided were actually far less reliable than claimed and had a much higher five-year failure rate. Based on this experience, and their knowledge that doctors would not use this device—or bill Medicare or Medicaid for it—if these defects had been properly disclosed, the doctors filed a False Claims Act case against the manufacturer.
The district court initially dismissed their claims, asserting that the doctors did not have enough specific evidence of what they were alleging. But the court of appeals overturned, holding that the evidence in their complaint adequately alleged that the manufacturer had caused doctors to unknowingly submit false and fraudulent claims to Medicare and Medicaid for defective products. See United States ex rel Nargol v. DePuy Orhtopaedics, Inc. 865 F.3d 29 (1st Cir. 2017).
The lesson here is that certain outsiders can be familiar enough with a particular product, a particular company, or a particular industry, to give them the kind of detailed, non-public knowledge that makes for effective whistleblowing. At the same time, outsiders looking to come forward and blow the whistle have to be mindful of the numerous hurdles and limitations that exist for them under the law. Organizations, for example, face certain unique concerns that individuals do not. And certain types of individuals—most notably lawyers and government employees—must also be particularly careful in proceeding as whistleblowers.
That is all the more reason why anyone considering being a whistleblower—either an insider or an outsider—confer with knowledgeable attorneys before moving forward.
To learn more about our Whistleblower & Qui Tam practice click here. Our firm is located in Nashville, Tennessee but we represent whistleblowers all around the country.
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