Whistleblower claims have become common in several industries since the Enron financial scam in Texas that became public knowledge in the 1990s. The enacting of the Sarbanes-Oxley Act and the Dodd-Frank Act by Congress gave whistleblowers standing to file a qui tam lawsuit if they were involved in any illegal activity occurring at work in which they were required to take part. In exchange for legal protection and a percentage of the recovered assets, whistleblower testimony and information are used in the prosecution of the purported fraudulent party. Companies who are accused in these lawsuits must defend their actions against the claims to the government.
Defending a Sarbanes-Oxley Act lawsuit
With the SOX provisions cases being subject to immediate filing in federal court, defending whistleblower claims is similar to representing standard federal lawsuits. The oversight government agency assumes the role of the plaintiff, as the actual whistleblower is granted protections in the initial closed court hearing that verifies whistleblower status. Cross-examining the information provider can be difficult per government protection. And while this issue clearly complicates cases, there are still several other claim elements that can be defended per qualification rules.
Defending a Dodd-Frank claim
Defending a claim in a Dodd-Frank False Claims Act lawsuit begins with taking the case first through the Department of Labor. This can extend the amount of time and litigation required in defense of the whistleblower claims, but it can also result in the case never making its way to court. Attorneys who are defending whistleblower claims will have an opportunity to have the case dismissed even before it gets started when evidence can be discharged through the DOL.
Texas businesses managers should never think there is no defense against a whistleblower qui tam claim. Many times the evidence being provided can be evaluated in negotiations before any litigation filing begins depending on the overlying legislation standing.