As discussed in a recent post, a whistleblower is typically entitled to a percentage of the of total recovery the government receives from a party that has defrauded the government. When the government intervenes in a case, this percentage is set by statute to be at least 15% of the proceeds of the action or settlement, but not more than 25%. As a general rule, the whistleblower (also referred to as the relator) is aligned with the government in a whistleblower case. For instance, the whistleblower files suit on behalf of the government and provides the government with all the information and documents he or she has to assist the government in its investigation. That being said, when it comes time to determine the percentage of the recovery to which the whistleblower is entitled, there is a divergence of interest. Obviously, the government would like to keep as much of the recovery as possible. If the government and the whistleblower are unable to reach an agreement on the percentage, the court will ultimately make the decision.
A recent case in the federal court for the Eastern District of Missouri illustrate how the courts can analyze such issues. In U.S. ex rel. Peterson v. Sanborn Map Company, Sanborn Map Company had entered into a contract for mapping services with the United States Corps of Engineers. Peterson was a vice president of the defendant company and filed an action against the defendant in 201 asserting that Sanborn had used unapproved overseas contractors and mischarged time on government projects. The government intervened and settled the case approximately 2 years later for $2.1 Million. The government attempted to limit the relator’s share to 15% and the relator sought 25%. The relator argued that he substantially contributed to the Government’s recovery. Specifically, he stated that he identified the fraud of which the government was not aware, that he spent hundreds of hours reviewing and analyzing emails, contracts and other documents to assess the extent of the fraud, that he provided the government with thousands of pages of documents and a summary of the fraudulent scheme and performed other acts to assist the government in its investigation and evaluation.
The government took a very different position. The government asserted that the Relator delayed in the initial reporting of the fraud, that he violated the court order and disclosed the case to others and that he actually harmed the investigation. In fact, the government indicated to the court that they made a conscious decision after receiving the initial disclosures from the relator to not further involve him in the investigation due to concerns over his behavior.
Ultimately, the court awarded a 19% recovery to the whistleblower. In the next post, I will discuss how the court came to its decision and the factors it considered. If you have any information about a company that is defrauding the government or any questions about whistleblower cases, please feel free to contact us for a free confidential consultation.