The Prosperity for US Foundation, a public policy group focused on economic freedom and accountability, is warning about emerging alliances between whistleblowers, prosecutors, and financial backers that it says are treating False Claims Act litigation as a business model.
“Whistleblowing should be about integrity, not industry,” said Bob Carlstrom, the foundation’s executive director, in a press release. “We are witnessing the rise of a cabal of professional whistleblowers, prosecutors, and even venture capitalists who treat whistleblower cases like financial instruments.”
“They destroy reputations, livelihoods, and entire businesses, not to protect the public, but to enrich themselves,” Carlstrom said.
Carlstrom’s statement comes amid continuing debate over the use of the False Claims Act (FCA), a Civil War-era law designed to protect taxpayers from fraud against government programs.
His organization said some whistleblowers operate in ways that bypass due process, including leveraging sealed indictments to limit public defense and pursuing cases without a direct connection to the alleged misconduct.
”In recent years, a handful of so-called ‘professional whistleblowers’ have filed dozens or even hundreds of cases under the False Claims Act, collecting massive payouts in settlements and judgments,” said Carlstrom’s press release. “Individuals have built careers, and fortunes, on a system increasingly incentivizing opportunism over justice.”
He said these issues escalated under the Biden Administration, but that the Trump Administration is “focusing more intently at rolling back the weaponization of the Department of Justice.”
Federal court filings and earlier investigative reports have outlined examples of such practices. In 2019, the U.S. Department of Justice moved to dismiss a series of FCA cases brought by the National HealthCare Analysis Group (NHCA), an investment-backed entity described by the DOJ as filing multiple lawsuits through shell companies and “cloned complaints,” according to Reuters.
The DOJ alleged NHCA built lists of potential informants from public data and contacted them under the guise of research without disclosing that the information could be used in litigation.
A Dark Daily report detailed one whistleblower case resulting in more than $100 million in settlements, including $241 million from Quest Diagnostics. The report said the whistleblower had no personal connection to the alleged fraud but advanced the case through public campaigns and legal partnerships.
Critics say some FCA lawsuits have affected healthcare delivery. In Texas, repeated lawsuits against rural hospitals and laboratories reportedly led to closures, job losses, and reduced patient access to services, according to the report.
Reform proposals under discussion include capping lifetime damages, requiring disclosure of litigation history and funding sources, and implementing review processes to address potential prosecutorial misconduct or conflicts of interest. Supporters of such measures say they would maintain the FCA’s intent while reducing opportunities for misuse.
