Whistleblower Topic of the Week: Can I still report fraud if I signed a release keeping me from filing a lawsuit against my employer?
Even If You Signed A “Release” With Your Company, You Should Still Report Fraud
Companies that engage in fraudulent behavior don’t want to get caught. And they really don’t want to get caught because someone at the company reported their behavior to regulators.
At the time an employee-whistleblower leaves the company committing fraud, that employee will nearly always be required to sign a release that purports to waive the employee’s right to bring a lawsuit against the company.
Companies draft “release” language in a variety of ways. Sometimes it is quite boilerplate, and other times it gets very specific about “waiving” claims under various whistleblower laws.
Of course, such language is worrisome to whistleblowers. It also offends public policy interests in having whistleblowers come forward to report on fraud. For this reason, many courts will not enforce a release of this nature.
Recently, the Second Circuit Court of Appeals, an important federal appellate court, held in a case U.S. ex rel. Ladas v. Exelis, Inc., et al., that an employment release was “unenforceable as a matter of public policy.” This is because, as the Court reasoned, the “goal of [the False Claims Act] is to prevent and rectify frauds … by incentivizing private individuals to uncover and prosecute FCA claims.”
Still, the Court relied on a commonly used balancing test to determine whether to enforce the contract, a test that boils down to whether a whistleblower’s information is sufficiently valuable and previously undisclosed to the government such that the release should not be enforced.
There are many factors to consider in deciding whether to bring a whistleblower claim. But having signed a release of your purported “right” to file a whistleblower does not rule out that option.
The best way to intelligently evaluate how your case might be applied to this framework is to talk with an experienced, accomplished whistleblower attorney.
