At least one commentator has criticised the UK Government’s consideration of False Claims Act-type rewards by stating that it “presents a serious and insidious threat for UK companies”. That threat, it is asserted, arises from the encouragement that some individuals may receive from such financial incentivisation, to perpetuate problems and irregularities in a commercial context that could well have been stopped sooner.
The argument proceeds that the lure of a larger financial payment by allowing problems to develop will potentially jeopardise the employment of fellow employees; subvert good corporate compliance systems that require internal integrity; force companies to make a benchmarked payment to departing and often complicit individuals; and will ultimately subvert the credibility of potential prosecution witnesses. Respectfully, in the context of qui tam claims at least, such arguments bear little resemblance to the actual operation of the False Claims Act in the United States since 1986.
Practically speaking, the US experience demonstrates that, rather than undermining good corporate compliance systems, it promotes greater scrutiny of such systems. Further, under the US False Claims Act, any employee, contractor or agent is entitled to all relief necessary to make them whole if they are discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done by them or someone with whom they are associated in furtherance of an action under the Act or to stop one or more violations of section 37291. Additionally, coupled with relevant “proceeds of crime” legislation, complicit individuals are unlikely to receive the benefit of any recovered funds.
Claims under the US False Claims Act are also limited in time. The limitation of liability is the later of either 6 years after the date on which the violation of section 3729 is committed,2 or 3 years from the date when facts material to the right of action are known or reasonably should have been known by the official of the United States with responsibility to act in the circumstances, but in no event more than 10 years after the date on which the violation is committed.3
Finally, in practice the “first in time” rule often sees claims brought sooner rather than later, for fear of being shut out of any recovery action. US courts will dismiss any action or claim if substantially the same allegations or transactions alleged in the claim have already been publicly disclosed in a Federal criminal, civil or administrative hearing in which the Government or its agent is a party, in a congressional, Government Accountability Office, or other Federal report, hearing, audit or investigation, or by the news media.4