Today we are hosting a blog post by the US attorneys Marc Stephen Raspanti and Pamela Coyle Brecht.
Marc is the name partner of the US law firm Pietragallo Gordon Alfano Bosick & Raspanti, LLP located in Philadelphia, Pennsylvania, the founder of the firm’s White Collar Criminal Defense Practice Group, as well as the firm’s global Qui Tam/False Claims Act Practice Group (firstname.lastname@example.org).
Pam serves as the firm’s Practice Chair for the firm’s global Qui Tam/False Claims Act Practice Group (email@example.com). Their firm websites are: http://www.pietragallo.com and http://www.falseclaimsact.com
Member States of the European Union, over the last several years, have passed a series of so-called “Whistleblower Laws.” These laws are being implemented allegedly to bolster anti-corruption efforts throughout Europe. While corruption is no stranger to either side of the Atlantic, the European Union would advance their fraud fighting efforts exponentially by taking a focused look at the highly successful American False Claims Act.
France, Ireland, Italy, Greece, Germany, Netherlands, Sweden, Hungary, Lithuania, Malta, Slovakia, the United Kingdom, as well as others, have passed or amended some type of a putative whistleblower law. Here is the issue. None of these whistleblower statutes, in our opinion, contain the basic tenents of a strong and effective whistleblower program. The development of the whistleblower statutes within the United States of America illustrates the bedrock elements of an effective and successful whistleblower law.
In 1986, the U.S. Congress amended the existing whistleblower statute, the False Claims Act, which was passed during the American Civil War by President Abraham Lincoln. The 1986 Amendments to the False Claims Act included provisions that finally gave the law real fraud combatting teeth. Examining these 1986 Amendments (and even more recent Amendments) illustrates the changes needed in the European Union member States’ whistleblowing statutes. Without such robust amendments the European Union laws will never have a real and palpable impact on fraud, waste and abuse.
The American statute, known as federal False Claims Act, or the Qui Tam Law, has at its heart the following key provisions:
- The United States has what is known as a “qui tam” or whistleblower provision.
- A whistleblower who comes forward and meets the statutory requirements is authorized by the statute to bring an action on behalf of the government and is entitled to receive a set amount of any settlement or judgment the government receives from the defendant from 15% to 30%. This strong financial incentive has, singlehandedly, made the American statute the most successful fraud, waste and abuse statute in the world. Of this fact there is no debate.
- The United States’ Congress has provided strong protections against professional retaliation against whistleblowers. In contrast, the European statutes contain weak non-existent or watered down versions of this protection. In fact, some of the European laws actually put the whistleblower at risk if he or she is incorrect in their allegations.
- The American whistleblower statute attracts skilled lawyers who take these cases on a contingent-fee basis, award legal fees and costs to whistleblowers and their counsel, if they prevail in their claims against a defendant.
- The American statute provides government attorneys with muscular investigative powers. For example, while the case is under seal, the government can issue document requests, written interrogatories, take depositions of key individuals, etc. These broad investigative tools are lacking in most of the current European statutes.
- As a result of the key amendments in 1986, the American whistleblower statute has returned more than $62 billion to the U.S. Treasury. No other whistleblower law in Europe (or anywhere) has had such success.
The European legislative bodies still do appear to be committed (culturally or legally) to the type of whistleblowing legislation that will not make a real difference for their respective countries. Here are some of the reasons why the statutes in Europe shall continue to be as ineffective as the pre-1986 American Whistleblower Law:
- The European statutes do not truly embrace the concept that whistleblowers need to be encouraged to come forward to expose corruption inside large, well regarded institutions. The majority of the European laws do not contain any financial reward for successful whistleblowers. Most importantly, none of the European statutes have a strong financial reward that would balance the risks against the rewards. The European laws seem to go through the motions of supporting, yet not incentivizing, whistleblowers.
- There is no clear and distinct prosecutorial entity in charge of effectively enforcing the individual European statutes.
- Many of the European statutes lack strong protections for whistleblowers who come forward and risk their careers and livelihood. While there is a lot of “lip service,” there is no economic insurance that they will be protected.
While Americans and Europeans have shared and adopted approaches to governance over the centuries, their differences in efforts to curtail fraud, waste and abuse through whistleblower statutes is considerable. Europe need look no further than its young sister state across the Atlantic for lessons that may be worth billions of dollars in recoveries.