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Whistleblowers earned more than $532m in 2011 through lawsuits alleging fraud against the US government, a record for such payouts, according to a law firm study published on Friday.
Private parties suing on the behalf of the government collected $140m more than they did the previous year, even as the Justice Department's total civil fraud sanctions remained consistent, the law firm Gibson, Dunn & Crutcher said.
The DOJ recovered some $3.02bn last year through cases under the False Claims Act - the third-largest recovery ever, just shy of the $3.09bn it won through cases in 2010.
But for the whistleblowers that helped bring them, 2011 was an even better year.
"The bounty provisions are so attractive," said Andrew Tulumello, who helps lead Gibson Dunn's Washington office and worked on the report. "When you look at $540m going to basically the plaintiffs bar, that is going to attract more and more interest."
The Justice Department has used the Civil War-era law, designed to root out unscrupulous contractors, to aggressively go after healthcare providers and pharmaceutical companies for overcharging Medicare and Medicaid.
The law provides for whistleblowers to earn up to 30% of any recovery and in recent years such tipsters - referred to as relators in False Claims parlance - have helped bring an increasing number of the government's cases.
Eighty-four percent of such cases opened last year were brought by whistleblowers, up from 75% the year before. Twenty-five years ago, only 8% of the government's cases were based on lawsuits from relators.
The record payouts in 2011 come amid the ramp-up of a new whistleblower bounty programme created by the Dodd-Frank financial regulatory overhaul to encourage individuals with information about securities law violations to come forward. That program has yet to provide its first award.
The 2011 numbers - based on the government's fiscal year from October through September - are helped by one of the largest payouts ever, to a former GlaxoSmithKline employee.
In October 2010, a GSK quality manager won $96m for exposing manufacturing defects at a plant in Puerto Rico. The company paid $750m to settle the charges.
Whistleblowers earn a cut based on how far they advance a case before the government takes over. In cases where the Justice Department declines to intervene, they can win an even greater share of any eventual settlement.
The vast majority of the 2011 awards - some $490m - came in cases where the Justice Department joined the case. Another $42m came from cases the government declined to pursue.
