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Protecting Whistleblowers since 1977

Why Federal Whistleblowers Are Flocking to Alabama, South Carolina, and Florida

R. Scott Oswald, April 27, 2018

Which federal court should you use if you’re a whistleblower ready to report fraud against the government by filing a complaint under the federal False Claims Act?

Of course, there are legal limitations. But there’s also a common-sense answer, now supported by data: If you can, you should find a judicial district where the local U.S. Attorney wants to investigate cases like yours. This is what many whistleblowers are already doing.

My law firm recently examined 10 years of district-level statistics on False Claims Act (FCA) cases filed by individual whistleblowers, which we obtained via a Freedom of Information Act request. We learned that a few U.S. states have captured an outsized chunk of these “qui tam” lawsuits — and that such states generally matched up with U.S. Attorney Offices known for welcoming FCA whistleblowers.

Atop the heap: Well-lawyered states with a tradition of whistleblower friendliness, such as New York and Massachusetts, plus the special case of the District of Columbia. These states attract FCA fraud complaints at a rate  well above the national average after accounting for their population and level of federal spending.

Meanwhile, a band of up-and-comers — including South Carolina and Alabama — also punch above their weight because of national outreach by savvy U.S. Attorneys.

You can read the full analysis on my firm’s Web site, but here are some highlights:

  • We calculated 10-year nationwide rates for the filing of qui tam complaints based on two main factors: population and federal spending.
     
  • We then calculated the equivalent rates for each U.S. state, including the District of Columbia. A clear majority of states fell below the national rate, meaning there’s plenty of room for improvement.
     
  • If an individual state (including D.C.) outdid the national rate and the median state rate on both measures by at least 25%, we called it a “hot state” for qui tam complaints.
     
  • We found just five hot states for the 10-year period: D.C., New York, Massachusetts, Tennessee, and New Jersey.
     
  • If a state beat the national rate and the median state rate by at least 25% on one measure and also showed strong evidence of filings from out-of-state law firms, we deemed it a “trending state” for qui tam complaints.
     
  • We found seven trending states: South Carolina, Tennessee (again), Alabama, Nevada, Georgia, Florida, and Utah.
     
  • D.C. is a unique case because its U.S. Attorney has special responsibilities and relationships with regard to the False Claims Act.
     
  • The remaining “hot” and “trending” states all boasted at least one U.S. Attorney who actively marketed his/her district to whistleblowers during the 10-year period.
     
  • Exhibit #1 is Lee Bentley, the former U.S. Attorney for the Middle District of Florida, whose district was the clear qui tam leader for the most recent five years, with 30% more filings than its closest rivals in California and New York.
     
  • Exhibit #2 is Bill Nettles, the former U.S. Attorney for South Carolina, the top trending state and also the fourth-fastest growing judicial district. Like Mr. Bentley, he promoted his district to whistleblower attorneys nationally — including at conferences and other events.
     
  • We identified “dormant” states for qui tam complaints, too, with rates well below the national level on both of our key metrics. There are many explanations for low-ranked states; often they may not be viable as legal venues.
     
  • Most dormant of all, even after accounting for its sparse population: North Dakota, followed by Hawaii and Iowa.

What can we learn from our study?

First and most obviously, the law is driven by human beings. All judicial districts are not created equal: Federal prosecutors, who play a huge role in FCA cases, are individuals with agendas that may match a whistleblower’s focus (pursuing Medicare fraud, for instance) or be totally unrelated (imprisoning drug kingpins). Their priorities will be reflected in their numbers.

The second lesson follows directly: If you are a whistleblower — or a whistleblower’s lawyer — you should look beyond your local area when considering where to file a qui tam complaint. A U.S. Attorney who sits 1,000 miles distant may be looking to investigate cases exactly like yours, and may offer a higher reward to successful qui tam litigants.

As the man said: You must choose — but choose wisely.

And third, alas, our analysis must have limited predictive value in 2018. With the Trump Administration’s purge of U.S. Attorneys last year, a new crop of prosecutors is reviewing each district’s posture toward qui tam relators.

A “new normal” will emerge slowly, but we can look for early hints — in the attendee list of this fall’s conference of the Taxpayers Against Fraud Education Fund, for instance, a gathering where U.S. Attorneys and their staff have previously declared themselves “open for business.”

If you’d like to read our firm’s analysis in full, it’s available here. We’ve even included links to the raw, year-by-year data we got from the U.S. Department of Justice, so that you can dig deeper by yourself.

R. Scott Oswald is managing principal of The Employment Law Group, P.C, a whistleblower law firm based in Washington, D.C.  Mr. Oswald serves as vice chair of the Qui Tam Section of the Federal Bar Association.