It Pays to Be First: DOJ Continues to Ramp Up Pressure to Self-Disclose with New Whistleblower Pilot Program

August 5, 2024

On August 1, 2024, the Department of Justice ("DOJ") finally released its much anticipated Corporate Whistleblower Awards Pilot Program, yet another DOJ program intended to incentivize the prompt investigation and disclosure of misconduct. The pilot program offers significant financial rewards to individualsfor reporting financial fraud, bribery, and healthcare fraud engaged in by corporations. First announced in March of this year, the program continues to ramp up the pressure on companies to quickly self-disclose allegations of misconduct-perhaps even before corporations are able to determine if disclosure is necessary.

A Rush to Report

The program may well result in a significant increase in whistleblower reports. Corporations would be well advised to review their investigation protocols to ensure reported misconduct can be expeditiously investigated. Fortunately, the new program does continue to allow corporations to receive traditional self-disclosure benefits-even if an employee has submitted a whistleblower report-if the company reports the same conduct to the DOJ within 120 days and DOJ has not contacted the company first.

As a result, when allegations of misconduct come to light, corporations must now be ready to quickly assess the claims, deploy investigators, and decide whether to disclose conduct to the DOJ before the benefit of self-disclosure is lost. After all, employees will be incentivized to report the conduct to DOJ and the 120 days clock may already be ticking.

Key Policy Takeaways

To be eligible for financial compensation, a whistleblower must:

1. Be first in the door and provide information previously unknown to the government;
2. Voluntarily report truthful information about:
3. 1. crimes by financial institutions-including cryptocurrency businesses-or their agents;
   2. corruption, whether foreign or domestic; or
   3. health care fraud involving private insurance plans;
4. Cooperate during the investigation; and
5. The report must result in forfeiture of assets over $1 million.

Even if an individual was involved in an apparent scheme but was "minimally culpable", they could still be eligible to receive a financial incentive (in addition to a non-prosecution agreement). The program creates substantial incentives to report; whistleblowers are eligible for a staggering 30% of the first $100 million in net proceeds and up to 5% of additional recoveries between $100 to $500 million.

Corporations must assess their protocols and efficiency

The launch of this pilot program carries important policy and operational implications for corporations, their compliance programs, and general counsel. Corporations should immediately and systematically reassess and strengthen their internal compliance mechanisms to head off wrongdoing before it occurs and enhance their ability to quickly assess and investigate allegations of misconduct. When misconduct is reported, being able to quickly and effectively assess and investigate allegations of misconduct will be crucial to mitigating liability, reducing legal costs, and avoiding criminal exposure.

In addition to reassessing the efficiency of their assessment and investigative protocols, general counsel may also want to examine the criteria used to determine when to bring in outside counsel to investigate allegations of wrong doing. Corporations should consider establishing a panel of trusted outside investigative counsel to facilitate efficient investigations and establish standard procedures for outside counsel for data collection, review, witness interviews and reporting. Quick, thorough, and effective investigations are required to appropriately assess whether a company should self-disclosure misconduct or be prepared respond to a government inquiry to demonstrate the matter was promptly investigated and properly determined to be unsubstantiated.

Dentons' Global Compliance and Investigations group (GCI) have conducted investigations and defended enforcement actions in 90+ countries. We can help empower you on your journey. Our team help you reduce risk and enhance compliance, while expediting the flow of business. Check out Dentons - Compliance and Investigations hub.