We enjoyed reading Catherine R. Allen and David M. Nair’s article in the March 2019 The CPA Journal, “Disclosure of Noncompliance with Laws and Regulations: What Whistleblower Protections Exist for CPAs?” (http://bit.ly/2YkPREs). We are whistleblower lawyers, and our clients regularly confront the problems faced by CPAs and other professionals in various fields when they blow the whistle.
The article does a good job of surveying several of the legal protections for CPAs (and others) who might need to blow the whistle in order to protect the public from fraud; however, the article omitted from its discussion many other laws that may also provide important protections for CPAs. For example, a CPA who encounters fraud involving a federal contract or program could blow the whistle under the federal False Claims Act (FCA). The FCA allows whistleblowers to file lawsuits on behalf of the federal government and to recover up to three times the amount defrauding companies or individuals stole from the taxpayers. If a whistleblower’s lawsuit is successful, then he is eligible for a reward of between 15% and 30% of the funds recovered. Significantly, the FCA also includes a strong antiretaliation provision that protects whistleblowers who engage in a wide variety of protected conduct while on the job, even if they don’t formally file a lawsuit on behalf of the government.
More than half of the states have FCA laws of their own, and each of those statutes similarly prohibits retaliation against whistleblowers. Of particular interest to the NYSSCPA and its readership, the New York FCA is broader in scope than all other FCA laws in two important respects. First, New York’s is the only FCA law that explicitly allows whistleblowers to file lawsuits alleging tax fraud against the state; the federal FCA and most other state FCAs explicitly prohibit whistle-blower tax fraud lawsuits, and instead leave that work to the IRS and its state counterparts. Second, the New York FCA offers additional protections to whistleblowers, as it prohibits post-termination retaliation, as well as blacklisting and other retaliation by prospective employers. Moreover, like the federal FCA, the New York law makes clear that its protections extend not only to “employees,” but to independent contractors and agents as well. Many state FCAs—including New Jersey’s—do not contain this language, which certainly may be significant to CPA whistleblowers.
Finally, if a CPA is an employee or independent contractor working for a federal contractor or subcontractor, then she may also be protected under a specific federal law intended to encourage and protect disclosures of information to the federal government—41 USC 4712. Under this law, employees and independent contractors are protected if they disclose any reasonable concerns regarding gross mismanagement of a federal contract, gross waste of federal funds, abuse of authority relating to a federal contract, a substantial and specific danger to public health or safety, or a violation of a law, rule, or regulation related to a federal contract (including the competition for or negotiation of a contract). In order to be protected, the disclosure must be made to a member of Congress or a representative of a committee of Congress, an Inspector General, the Government Accountability Office, a federal employee responsible for contract or grant oversight or management at the relevant agency, an authorized official of the Department of Justice or other law enforcement agency, a court or grand jury, or a management official or other employee of the contractor, subcontractor, or grantee who has the responsibility to investigate, discover, or address misconduct.