Discovering fraud at work can put an employee in a difficult position, especially when they have already received money, bonuses or other benefits connected to the misconduct. Some employees may have participated without fully understanding what their employer was doing.
For workers, benefiting from fraudulent activity does not automatically eliminate the possibility of becoming a qui tam whistleblower. However, the extent of their involvement can affect their legal rights and potential financial recovery.
Does participating in fraud disqualify a whistleblower?
Under the federal False Claims Act, individuals with information about fraud involving government funds may bring a qui tam lawsuit, even if they previously participated in the wrongdoing.
However, their involvement can create complications. Courts may reduce a whistleblower’s share of any recovery if they planned and initiated the fraudulent conduct. A criminal conviction arising from their role in the fraud can result in dismissal from the qui tam action and loss of their share of the proceeds.
For example, an employee who received bonuses tied to inflated Medicare claims may still have information supporting a whistleblower lawsuit. Whether they knowingly helped falsify those claims could affect their legal position.
What should you do before reporting the fraud?
Employees who benefited from suspected fraud should carefully consider their next steps. Important precautions include:
- Preserving relevant records they can lawfully access.
- Avoiding further participation in suspected fraudulent conduct.
- Refraining from altering or destroying documents.
- Seeking confidential legal guidance before approaching government investigators.
Colorado’s False Claims Act also provides a framework for certain whistleblower actions involving fraud against state or local government funds.
An experienced qui tam legal professional can evaluate whether an employee’s involvement affects their eligibility to bring a claim. Early support can help protect the whistleblower’s interests while determining how to disclose the suspected misconduct appropriately.