DOJ Corporate Whistleblower Program Makes Its Debut

This month, the U.S. Department of Justice (DOJ) provided much-anticipated details and guidance on its new corporate whistleblower policy, first announced in March 2024, which offers financial awards to persons who come forward and voluntarily report criminal conduct.

The Corporate Whistleblower Awards Pilot Program (Program), the official name, focuses on four main priority areas, none of which were previously covered by an existing whistleblower program: (1) foreign corruption, (2) financial institution crimes, (3) public corruption in the United States and (4) healthcare fraud involving private insurance companies. The inclusion of private healthcare insurance fraud as a priority marks a significant development. Until now, the DOJ enforcement activity traditionally addressed only federal healthcare programs, such as Medicare or Medicaid. With the inclusion of private health insurance fraud in the Program's priorities, the number and intensity of such investigations will no doubt accelerate.

For the first time, DOJ has its own non-statutory financial awards program. It will pay eligible whistleblowers so long as (1) they provide “original information” and (2) at least $1 million is recovered as a result of that information. Under the program, the DOJ may award up to 30% for the first $100 million of the “net proceeds forfeited,” which means the “value of any assets DOJ forfeits after compensating victims and paying other investigation costs.” Another tier allows for 5% for net proceeds between $100 and $500 million. There is no additional award based on net proceeds exceeding $500 million.

The determination of the recovery amount will be decided at the sole discretion of the DOJ based on, among other factors, the whistleblower’s cooperation and the importance of the information. But the DOJ prohibits payment to any person who “meaningfully participated” in the criminal activity that they report. Nor will whistleblowers be eligible if they learned of misconduct because they had “management oversight” such as being an officer, director, or in a compliance or audit role. Under the program, an employee who internally reports wrongdoing to the company may still be eligible for an award if they provide the information to the DOJ within 120 days of reporting to the company. Similarly, if a company self-reports to the DOJ within 120 days and before the DOJ contacts it, the company will be eligible for the presumption of a declination if it cooperates fully.

The Program is yet another—and key—whistleblower tool being added to the wide array that are presently available such as the False Claims Act as well as the whistleblower programs of other federal enforcement agencies, such as SEC. It once again underscores DOJ’s continuing and increasing emphasis on (1) voluntary self-disclosure by companies and (2) effective corporate compliance programs that are not static but evolving to address the risks of the business sector. Finally, the importance of timely internal investigations to address possible company misconduct cannot be overlooked. The Program is an effort to have companies police themselves more aggressively. How it affects “smaller” businesses and interacts with the existing programs such as the FCA will be thorny areas that merit watching.

If you have any questions about the information in this alert, please contact Jonathan Feld, Mark Chutkow, Chantel Febus, and Jennifer Beidel.