Excellent article by Jay Greene, Crain’s Detroit Business.  Interviewed for the piece was David Haron, a partner with Troy-based Frank Haron Weiner PLC and one of our colleagues at Employment Law Group (ELG), R. Scott Oswald.  Greene asks the question of whether the State of Michigan should beef up their False Claims Act legislation similar to that of California and New York.

Haron does a good job of connecting the federal False Claims Act (FCA), also known as Lincoln Law, established during the Civil War into present day and why Michigan should expand beyond Medicaid fraud.  President Lincoln urged Congress to pass a law during the Civil War because government contractors were not supplying the goods paid for including mules, horses, uniforms, blankets and food.  This piece of legislation played a significant role in laying the ground work to protect tax payer interests .  As time has passed, a broad spectrum of lawsuits have been filed to protect the public interest and recover money wasted or stolen.

The range of fraud is limitless and fraudsters are slick.  Not only does fraud exist in government contracting and grant funding, FCA now extends to consumer protections.  State Attorney General Kamala Harris pulled out of settlement negotiations with banks on mortgage fraud.  See our article here. 

Oswald explains what a whistleblower encounters and how difficult the journey, “It takes internal fortitude to step forward and it is very difficult,” he said. “Most do not want to be whistleblowers.”  Here, Oswald hit the nail on the head.  A would be whistleblower faces a moral dilemma to protect others or go along to get along.  For most whistleblowers, they just want to do their job.  They do not want a reward.  A naive whistleblower may believe that if they just get the information to the right person, a corporation, a nonprofit or the governmental agency will fix the problem.  After all, plenty of legislation exists to protect whistleblowers.

But protection for the whistleblower seldom occurs without protracted litigation.  Instead the focus comes off the wrongdoing and on to the whistleblower.  Why?  Because it is much easier to fire one person and put them in a compromising position so they will never work again than hold those responsible for the fraud accountable.  There is always a cost/benefit calculation in how a whistleblower is going to be treated.  Few corporations are going to tell the SEC, DOJ, State Attorney Generals or an Inspector General at the Department of Health and Human Services (HHS) they have been ripping off the tax payers.  Always easier to crush the whistleblower.

Oswald further articulates the import of having whistleblowers come forward in government and industry.  They protect health, safety, security, financial, environmental, commerce, utilities…  Whistleblowers play an invaluable role in making public interest disclosures.  As States scramble for money, they need to consider how to get a piece of the pie.  States are being cheated by fraudsters.  Wise legislators would do a lot of good by recovering monies owed.  As Oswald so aptly put it, “It will serve as a deterrent effect.”

Our organization was delighted to help with the recommendation of experts who contributed to Greene’s article.

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