How the change in U.S. False Claims Act enforcement policy will affect business?

The Yates Memorandum (September 10, 2015) announced a fundamental change in enforcement policy in FCA matters. The U.S. DOJ will now seek responsible individuals within the corporation and pursue individual prosecutions, rather than mere plea agreements and corporate integrity agreements.

This change copies certain European models known from quality assurance and pharmacovigilance, where specific job roles (e.g. QPPV) come with significant legal (administrative, civil and criminal) liability.

Whilst these clauses are very rarely used in practice, these roles intrinsically carry significant risk for the employee/contractor in case of internal clashes over resources, competencies, authority, and support in ensuring corporate compliance with relevant legislation.

In the U.S., whistleblowing affairs mainly cover FCA, FCPA, and OSHA. The most significant recoveries come from FCA. Qui-tam initiated suits are steadily increasing, especially in the healthcare sector (major peaks in 1997 and 2013). In Europe and Australia the definition of whistleblowing differs and includes other types of corporate misconduct as well.

Fraud Statistics Overview 1987 – 201

Whistleblowing-related business loss is becoming a significant risk, due to its impact on reputation and often high financial recoveries. Its impact on the rapporteur is much less clear, and much less understood. There is no easy way how to get reliable data on survival rate, career projection, and personal and professional life of whistleblowers.

Whistleblower’s Risk Assessment Guide:

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If the Yates memorandum seeks to prosecute individuals responsible for specific actions made within and on behalf of a corporation, we can potentially see an increase in the number of people who will feel pressured to speak up to protect their professional and personal credentials if inappropriately pressured by the organization.

What are the best ways how to allow insiders to resolve any conflicts internally instead of going out and talking to journalists and regulators? What do you think?

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