The race is on … The DOJ Corporate Whistleblower Awards Pilot Program pits whistleblowers versus companies in a race to the DOJ to report criminal misconduct

On August 1, 2024, the US Department of Justice (DOJ) officially rolled out its Corporate Whistleblower Awards Pilot Program (Awards Program). The program is focused on financially incentivizing whistleblowers to report allegations of corporate crime.

DOJ and other federal enforcement agencies have been unshy in recent years about relying on whistleblowers to identify and build enforcement actions. For example, in February of this year, DOJ announced that False Claims Act settlements and judgments eclipsed US$2.68 billion in 2023. Notably, the government relies heavily on whistleblowers in selecting False Claims Act cases to pursue. In its February announcement, DOJ reported that “[w]histleblowers filed 712 qui tam suits in fiscal year 2023.” But, those were civil investigations.

The DOJ is now incentivizing whistleblowers to identify corporate crime. The new Awards Program is the next step in DOJ’s evolution over the past several years toward forcing corporate actors to bring cases to the DOJ. Following the DOJ’s 2015 Yates memo (that officially stated the DOJ was focused on holding individuals accountable for corporate misconduct), DOJ set out to incentivize self-reporting, with the idea that companies would both come forward early and identify individuals implicated by any potential wrongdoing. Now, the DOJ is offering bounties to individuals who provide the DOJ with “original and truthful information about corporate misconduct that results in a successful forfeiture.” The new program officially places companies and individuals in competition to see who can bring the information to the DOJ first.

The DOJ is limiting the Awards Program to individuals only and the scope of the program to corporate misconduct in the following four areas:

1. Financial institutions;
2. Foreign Corrupt Practices Act;
3. Domestic corruption (like bid rigging and bribery); and
4. Healthcare fraud involving private insurance plans (non-Medicare, non-Medicaid, etc.) (Importantly, whistleblowers in the government funded healthcare arena are expressly instructed to continue to utilize the qui tam provisions of the False Claims Act)

While a whistleblower may report his/her concerns internally, that is not necessary. Moreover, if the whistleblower does report his/her concerns to the company, he/she then has 120 days to report it to the DOJ to be eligible for the Awards Program. This 120 day period is important because it will also govern the company’s eligibility for a “presumption of a declination”—if the company does not self-report within that time, it loses that opportunity. (As you can see, the DOJ seeks to employ tight deadlines to expedite these disclosures.) Indeed, whether the company self-reports or not, we expect that the DOJ will scrutinize that company’s actions after receiving the complaint to evaluate its good faith, its diligence and its treatment of the whistleblower.

The financial awards involved are less promising than those offered to whistleblowers in the False Claims Act context. First, a whistleblower’s recovery is entirely discretionary and determined by the DOJ. Second, any award is tied to the amount forfeited by the government LESS restitution to individual victims … which could swallow the corpus of the forfeiture whole.  

Finally, the Awards Program’s focus on criminal conduct could raise a host of novel evidentiary issues. If DOJ is going to incentivize whistleblowers to obtain and report information sufficient to build a criminal case, then it is important to know whether the traditional safeguards that govern the government’s collection of evidence will also govern a whistleblower’s collection of evidence for the government. For example, if the government may not steal documents, then neither should a whistleblower be permitted to hand over stolen documents. If the government may not obtain information from privileged communications, then neither should a whistleblower be permitted to provide the government with information gleaned from privileged communications. Much of the DOJ’s whistleblower intake application appears focused on preventing these potential suppression of evidence issues.

Given the Awards Program’s likelihood to contribute to the race between companies and individuals to report alleged crimes, as well as the lack of clarity regarding evidentiary issues and what steps companies may take to protect internal information, companies should look closely at how this new program affects their existing compliance regimes.