Since the first qui tam provision appeared during the middle ages, hundreds of whistleblowers came forward to fight all kind of frauds and scams. The history we’re going to tell you in this article tries to draw a timeline of the evolution of qui tam as well as the beginning and enactment of the False Claims Act (FCA).

Governments around the world spend massive sums on healthcare, defense, and infrastructure to keep society running safely and efficiently. Corrupt individuals and businesses often take advantage of the bureaucracy’s limited oversight capabilities to steal, overbill and cheat the authorities in order to maximize their own business profits. These fraudulent practices create a greater tax burden on citizens, as well as endanger public welfare by lowering the quality of goods and services provided.

Because fraud has always been hard to detect, many nations have historically relied on private citizens to report on corruption, theft, and corporate misconduct. Lawmakers turned to private citizens to uncover and deter illegal schemes as early as the 7th century. The basic principle of those early statutes was to reward individuals a portion of the stolen money they helped uncover, the same assumption that lives on in modern whistleblower law.

The birth of Qui Tam in Medieval England

The concept of whistleblowing on behalf of one’s government dates back to 7th century England. The term qui tam, which today usually refers to False Claims Act cases, is shortened from the Latin phrase “qui tam pro domino rege quampro se ipsoin hac partesequitur that translates to “he who prosecutes for himself as well as for the King Modern lawmakers adopted the term to be synonymous with whistleblowers who sue corrupt companies on behalf of their government.          
The earliest example of this type of ruling dates to 695, in the declaration of King Wihtred of Kent, which explained that “if a freeman works during [the Sabbath], he shall forfeit his [profits], and the man who informs against him shall have half the fine, and [the profits] of the labor

Whistleblowers in Early America

Since its foundation, America has fostered and embraced a culture of civic responsibility in order to protect and benefit the public good. Benjamin Franklin became one of the first American whistleblowers in 1773 when he exposed confidential letters showing that the royally appointed governor of Massachusetts had intentionally misled Parliament to promote a military buildup in the Colonies.

The legislative fundamentals of our modern laws were laid during the 18th century when many state legislatures adopted qui tam rulings. These laws resembled our current ones in that they incentivized private individuals to report wrongdoing for both the benefit of their nation and for their own personal gain. For example, a 1686 Colonial Law of Massachusetts rewarded any inspector who reported fraud in the sale of bread one-third of the collected fines.

Several of the first Federal litigations heard in the United States involved whistleblower claims. However, qui tam laws generally fell out of use around the beginning of the 19th century and would not re-emerge until after the Civil War.

The idea of becoming a whistleblower can be scary, especially if you’re an insider who works for the company you want to report. Fear of retaliation is common in potential whistleblowers. Luckily, the CFTC has ways to protect good Samaritans who want to do the right thing. 

ANONYMITY 

The first line of protection is anonymity. If a whistleblower is represented by an attorney when submitting a TCR, their identity can remain a secret. If the whistleblower becomes eligible for an award, they must reveal their identity to the Commission. Even then, the CFTC does not disclose the identity of the whistleblower or what amount was awarded to them. However, this protection is not absolute.

EXCEPTIONS TO ANONYMITY 

There are a few circumstances under which the CFTC might release the whistleblower’s identity to the defendant or third parties. It might happen if the whistleblower consents to have their identity revealed. It’s also possible that disclosure might be required in connection to a public proceeding with a different government entity. The Commission only discloses this information in situations where it is necessary to accomplish the purposes of the Commodities Exchange Act.

THE ANTI-RETALIATION CLAUSE 

Even if the whistleblower’s identity is revealed, there is still a second line of protection: the anti-retaliation clause. Employers are prohibited from firing, demoting, harassing, suspending, or discriminating against a whistleblower who has reported a violation. Employers are not even allowed to restrict the communication a potential whistleblower has with the CFTC, including enforcing a confidentiality agreement or an arbitration clause in the employment contract. 

The Dodd-Frank Act prohibits retaliation by employers against whistleblowers. Employers may not take any action to impede would-be whistleblowers from communicating directly with the Commission’s staff about possible violations of the Commodity Exchange Act (CEA), including by enforcing, or threatening to enforce, a confidentiality agreement or predispute arbitration agreement with respect to such communications. Nor may employers discharge, demote, suspend, threaten, harass, directly or indirectly, or in any other manner discriminate against a whistleblower in the terms and conditions of employment for coming forward with information about possible violations of the CEA. The CFTC and the whistleblower may separately bring actions against an employer for retaliation against the whistleblower.