National Fraud Enforcement Division Criminal Tip Rewards Pilot Program

Introduction

The National Fraud Enforcement Division (“Fraud Division”) Criminal Tip Rewards Pilot Program [Endnote 1] (the “Fraud Rewards Program”), which is subject to an initial three-year term, accelerates fraud detection by providing a defined, $10,000 to $30,000 financial reward for actionable tips at the charging stage of a criminal case. While most existing Government whistleblower rewards programs provide for payments only after the final resolution of a criminal matter, including the forfeiture and appeals process, the Fraud Rewards Program rewards whistleblowers at a much earlier stage of a prosecution, and does not require the matter to result in large fines or forfeiture. These early-stage rewards aim to encourage prompt disclosure of information by giving whistleblowers more certainty about the amount and timing of a possible reward payment, while still leaving whistleblowers eligible for potentially larger rewards should their tips ultimately lead to large financial penalties or forfeiture. By incentivizing actionable tips with earlier rewards, the Fraud Rewards Program will uncover criminal conduct, strengthen investigations, help prevent losses, and enable the Department of Justice (“Department”) to effectively respond to both latent and emerging criminal fraud threats.

Pursuant to 28 U.S.C. § 530C(b)(1)(L), the Department may pay rewards pursuant to public advertisements for assistance to the Department in accordance with procedures established or issued by the Attorney General. Exercising this authority is in the Department’s sole discretion. This document sets forth criteria that individuals must meet to qualify for an early-stage reward under the Fraud Rewards Program. Should an individual meet the criteria below, including that the tip leads to criminal charges, he or she may be eligible for a reward of between $10,000 and $30,000, to be paid at or around the time charges are filed. Eligibility for the $10,000 to $30,000 reward under the Fraud Rewards Program does not preclude an individual from also recovering whistleblower payments at a later stage of the proceedings pursuant to other Government whistleblower programs, such as the Department’s Corporate Whistleblower Awards Pilot Program.

The Department of Justice will approve awards pursuant to the Fraud Rewards Program in its sole discretion and may decline to pay a reward as it deems appropriate. At this time, the $10,000 to $30,000 reward payments that are made pursuant to the Fraud Rewards Program will be limited to: (1) Federal health care offenses and related crimes involving health care benefit programs or fraud against patients or others in the health care industry; or (2) fraud on programs or benefits administered by the Department of Agriculture (e.g., the Supplemental Nutrition Assistance Program), the Department of Labor (e.g., unemployment fraud), the Department of Health and Human Services, the Department of Housing and Urban Development, the Department of Education (e.g., student aid fraud), the Department of Veterans Affairs, or the Small Business Administration. The Fraud Rewards Program places a particular emphasis on submissions involving the following subject matter areas: hospice, home health care, day care, and special services fraud.

The Fraud Rewards Program could, in the future, be expanded to include additional categories of fraud.

Eligibility for Submission and Definitions Pursuant to the Fraud Rewards Program

1. Tipster Reward Eligibility: An individual may be eligible for a reward if he or she voluntarily provides the Department with truthful and complete original information in writing pursuant to the conditions and procedures set forth below, and that information leads to criminal charges in the programmatic areas outlined below. An individual is not eligible for a reward under this program if:
   1. The tipster is a company or another type of entity. A qualifying tipster must be an individual.
   2. The tipster is, or was at the time he or she acquired the original information provided to the Department, an official, employee, or contractor of the Department or any law enforcement organization or a spouse, parent, child, sibling or other close relative of an employee, or contractor of the Department, or the tipster resided in the same household as an official, employee, or contractor of the Department.
   3. The tipster is, or was at the time he or she acquired the original information provided to the Department, an elected or appointed foreign government official.
   4. The tipster meaningfully participated in the criminal activity he or she reported, including by directing, planning, initiating, or knowingly profiting from that criminal activity.
   5. In the tipster’s submission, dealings with the Department, or dealings with another authority in connection with a related action, the individual knowingly and willfully made or makes any false, fictitious, or fraudulent statement or representation, withheld or withholds material or significant information, or used or uses any writing or document knowing that it contains any false, fictitious, or fraudulent statement or entry with intent to mislead or otherwise hinder the Department or another authority, or otherwise interfered or interferes with or obstructed or obstructs any Department investigations.
   6. The tipster acquired the original information from a person: (1) who is ineligible under paragraphs (b) through (e), unless the tipster is providing the Department with information about possible violations involving that person; or (2) with the intent to evade any provision in this document.
2. Original Information: An individual must provide, in writing, original information, meaning:
   1. Information that is derived from the individual’s independent knowledge or independent analysis.
      1. Independent knowledge means factual information in the individual’s possession that is not derived from publicly available sources. The individual may gain independent knowledge from their experiences, communications, and observations in their business or social interactions.
      2. Independent analysis means the individual’s own analysis, whether done alone or in combination with others. Analysis means the individual’s examination and evaluation of information that may be publicly available, but which reveals information that is not generally known or available to the public.
   2. Information that is non-public and previously not known to the Department. This assessment will focus on whether the information itself is original, non-public, and not previously known to the Department, regardless of whether the Department had or had not already opened an investigation related to the information provided.
   3. Information that materially adds to the information the Department already possesses. Even if the Department already has information about a matter from other sources at the time an individual makes his or her submission, the Department will consider the individual an original source of any information he or she provides that is derived from his or her independent knowledge or analysis and that materially adds to the information that the Department already possesses, if he or she meets the other criteria for original information specified herein.
   4. An individual’s information is not original if:
      1. He or she obtained the information through a communication that was subject to the attorney-client privilege, including any third parties’ attorney-client privilege, unless disclosure of that information would otherwise be permitted by an attorney pursuant to the crime-fraud exception or other exceptions under the applicable state attorney conduct rules.
      2. He or she obtained the information in connection with the legal representation of a client on whose behalf the individual or the individual’s employer or firm is providing services, and he or she seeks to use that information to submit a tip for personal benefit.
      3. The information he or she submitted is contained entirely in an allegation made in a judicial or administrative hearing, in a government report, hearing, audit, or investigation, or in the news media, unless he or she was a source of that information.

      4. He or she obtained the information because he or she was: (a) an officer, director, trustee, or partner of an entity and another person informed them of allegations of misconduct, or they learned the information in connection with the entity’s processes for identifying, reporting, and addressing possible violations of law; (b) an employee whose principal duties involve compliance or internal audit responsibilities, or they were employed by or otherwise associated with a firm retained to perform compliance or internal audit functions for an entity, and the information relates to or is derived from these responsibilities or functions; (c) employed by or otherwise associated with a firm retained to conduct an inquiry or investigation into possible violations of law and the information relates to or derives from that retention; or (d) an employee of, or other person associated with, a public accounting firm, if they obtained the information through the performance of an engagement required of an independent public accountant and that information related to a violation by the engagement client or the client’s directors, officers, or other employees. 

         A. However, the exceptions in Paragraph (iv) of this section shall not apply—and the information provided may be considered “original”—if an individual: (a) has a reasonable basis to believe that disclosure of the information to the Department is necessary to prevent the relevant individual or entity from engaging in criminal conduct that is likely to harm national security, result in crimes of violence, result in imminent harm to patients in connection with health care, or cause imminent financial or physical harm to others; (b) has a reasonable basis to believe that the relevant individual or entity is engaging in conduct that will impede an investigation of the misconduct; or (c) is someone described in (iv)(a) or (iv)(b) and at least 120 days have elapsed since they provided the information to the relevant entity’s audit committee, chief legal officer, chief compliance officer (or their equivalents), or their supervisor, or since they received the information, if they received it under circumstances indicating that the entity’s audit committee, chief legal officer, chief compliance officer (or their equivalents), or their supervisor was already aware of the information.

      5. He or she obtained the information or knew that the information was obtained by a means or in a manner that violates applicable federal or state criminal law. [Endnote 2]
      6. He or she obtained the information obtained from an audit, accounting, or compliance relationship, or from an internal investigation.
      7. He or she obtained the information from a person who is subject to this section, unless the information is not excluded from that person’s use pursuant to this section, or he or she is providing the Department with information about possible violations involving that person.
3. Voluntary: An individual’s submission must be voluntary.
   1. An individual’s submission of information is voluntary if it occurs:
      1. before any request, inquiry, or demand that relates to the subject matter of the submission is directed to the individual or anyone representing him or her (e.g., a legal representative) by the Department in connection with any investigation, by federal law enforcement, or by a civil enforcement agency regarding the same misconduct;
      2. where the individual has no preexisting obligation pursuant to an agreement in connection with a criminal prosecution or civil enforcement action to report the information to the Department, any Department component, or any federal law enforcement or civil enforcement agency; and
      3. in the absence of any government investigation or threat of imminent disclosure to the government or the public. 
   2. An individual’s submission is not voluntary if the Department directed a request, inquiry, or demand to them or their representative before their submission, even if he or she responds to such a request voluntarily. 
4. Truthful and Complete: An individual must provide truthful and complete information, meaning he or she must provide all information of which he or she has knowledge related to any misconduct, including misconduct in which he or she participated or of which he or she is aware, the complete extent of his or her own role, if any, in the misconduct, and all matters about which the Department may inquire.
   1. Information is not truthful and complete if the individual is involved in the misconduct but lies about, conceals, or mischaracterizes his or her role in the misconduct.
5. Cooperation: An individual must cooperate with the Department in its investigation of related conduct and criminal or civil actions. This includes but is not limited to providing truthful and complete testimony and evidence, whether in interviews, before a grand jury, or at any trial or other court proceeding; producing documents, records, and other evidence when called upon by the Department; and, if requested, working in a proactive manner under the supervision of, and in compliance with, United States law enforcement officers and agents.
6. Subject Area: An individual’s information must pertain to:(1) Federal health care offenses and related crimes involving health care benefit programs or fraud against patients or others in the health care industry; or (2) fraud on programs or benefits administered by the Department of Agriculture (e.g., the Supplemental Nutrition Assistance Program), the Department of Labor (e.g., unemployment fraud), the Department of Health and Human Services, the Department of Housing and Urban Development, the Department of Education (e.g., student aid fraud), the Department of Veterans Affairs, the Department of War, or the Small Business Administration.[Endnote 3] The Fraud Rewards Program places a particular emphasis on submissions involving the following subject matter areas: hospice, home health care, day care, and special services fraud. Such fraudulent conduct could involve, but is not limited to, submitting or causing the submission of claims that were procured through the payment of illegal kickbacks and bribes, or that were medically unnecessary, not provided as represented, or not provided at all. Examples include:
   1. Hospice fraud, in which individuals or entities purporting to provide end-of-life hospice care defraud federal government-funded health programs, including but not limited to Medicare and Medicaid.
   2. Home health care fraud, in which individuals or entities purporting to provide patients with home health care services defraud federal government-funded health programs, including but not limited to Medicare and Medicaid. 
   3. Day care fraud, in which individuals or entities purporting to provide childcare services defraud federal government-funded programs designed to subsidize childcare. 
   4. Special services fraud, in which individuals or entities purporting to provide special needs services such as autism care defraud federal government-funded programs, including but not limited to Medicare and Medicaid. Such fraudulent conduct also could involve, but is not limited to, falsely diagnosing patients with conditions such as autism, paying kickbacks to parents in exchange for enrolling children in special needs programs, or using the personal identifying information of individuals without their knowledge to obtain government benefits.
7. Leading to Criminal Charges: The original information must lead to criminal charges involving one or more of the programmatic categories outlined above.
   1. Criminal charges means the Department obtained and unsealed an indictment, information, or criminal complaint. 
   2. No reward is payable while the relevant criminal charge or charges remain under seal or otherwise non-public, unless the Department determines in its sole discretion that such a reward should be paid prior to unsealing. 
   3. In assessing whether an individual’s submission of original information led to criminal charges, the Department will consider whether:
      1. The individual provided the Department with original information that was sufficiently specific, credible, and timely to cause the Department to open an investigation, reopen an investigation that the Department had closed, or to inquire about different conduct as part of an ongoing investigation, and that original information led the Department to obtain criminal charges.
   4. An individual is eligible for one award between $10,000 and $30,000 for each distinct tip. It is within the Department’s sole discretion whether multiple tips are distinct or related.

Additional Considerations for Payment of a Reward Pursuant to the Fraud Rewards Program

Where the original information provided leads to criminal charges in one or more of the programmatic categories, the tipster may be eligible for a reward as outlined below. Rewards are entirely discretionary and a reward is not guaranteed; however, as noted above, the Department intends, through the exercise of its discretion, to incentivize those with information about specific types of government benefits fraud to report original information about criminal conduct. When assessing whether to make a discretionary reward, the Department will consider the following.

1. Amount of Reward: The determination of whether an individual is eligible for a reward and the amount of a reward is in the sole discretion of the Department. While providing a reward and the amount of the reward are entirely discretionary, rewards of between $10,000 to $30,000 are anticipated. Rewards may be given to more than one tipster in connection with the same matter provided each tipster has individually met the criteria.
2. Culpability: As noted above, an individual is not eligible for payment if he or she meaningfully participated in the criminal activity, including by directing, planning, initiating, or knowingly profiting from that criminal activity. Notwithstanding this requirement, an individual remains eligible for an award if the Department determines, in its discretion, that the individual’s minimal role in the reported scheme was sufficiently limited that the individual could be described as “plainly among the least culpable of those involved in the conduct of a group.” U.S.S.G. § 3B1.2 cmt. n.4 (defining “minimal participant”). In such cases, the Department will consider the individual’s role in the criminal violations in assessing the amount of an award for which they may be eligible.
   1. An individual profited from the scheme if he or she received a financial benefit from the scheme outside of ordinary compensation, for example by receiving a kickback or through the payment of a special bonus from his or her company.
   2. If the individual’s company received a benefit from the scheme and that benefit was passed on to the individual through an increase in their ordinary salary or bonus, the Department will assess whether he or she knowingly took steps to benefit from the wrongdoing through this indirect profit.
3. Management role and oversight of offices and personnel involved in misconduct. The Department will assess whether the tipster held a management role over the personnel or offices involved in the misconduct, including a role as corporate executive, and the whistleblower’s actions in that role. The Department may use this consideration to deny a reward. In considering this question, the Department will take into account whether the whistleblower:
   1. Was a senior executive or otherwise had decision-making authority related to the misconduct;
   2. Contributed to failures of the compliance system to detect and prevent the misconduct at issue;
   3. Created a corporate culture that deprioritized compliance programs and systems; or
   4. Received information regarding red flags identifying potential misconduct but took no steps to address the issues.

Additional Guidance for Public Awareness

1. Confidentiality: The Department will not publicly disclose any information, including information you submit to the Department, that could reasonably be expected to reveal the identity of a tipster, except as required by law or Department policy as determined by the Department in its sole discretion, unless and until required to be disclosed to a defendant in connection with a judicial or administrative proceeding. If, in its sole discretion, the Department determines that it is necessary to accomplish a valid law enforcement purpose or to protect the public, the Department may provide your information to another federal, state, local, tribal, or international enforcement agency.
2. Anonymous Submissions: You may submit your information anonymously if you are represented by an attorney. If you are submitting on your own behalf, you must include information so that we can contact you and verify your identity. The Department reserves the right to require information regarding your identity at any time the Department, in its sole discretion, deems it necessary to the prosecution of a case, the conducting of an administrative action or proceeding, or to meet the Department’s legal obligations, policies, or procedures. Before the Department will pay any award to you, you must disclose your identity to the Department, and your identity must be verified by the Department.
3. Representation: You do not need to be represented by an attorney to submit information through the Fraud Rewards Program. However, if you wish to submit information anonymously you must do so through an attorney.
4. Retaliation: If you experience retaliation as a result of your report, please provide that information either in your submission or in follow-up submissions. The Department will consider any retaliation in assessing whether a company or individual cooperated with or obstructed the Department’s investigation and may, in its sole discretion, decline to award the company any cooperation credit in connection with any corporate resolution and/or institute appropriate enforcement action in response to any retaliation.
5. Communications with the Department: If an entity or person takes any action to impede an individual from communicating directly with the Department about a possible criminal violation in the enumerated programmatic areas, including enforcing, or threatening to enforce, a confidentiality agreement (other than confidentiality agreements with the Department as discussed in this document or agreements related to the legal representation of a client) with respect to such communications, the Department may consider such action in assessing the entity’s cooperation credit and compliance program and the entity’s or person’s culpability, including for obstruction. Further, if you are a director, officer, member, agent, or employee of an entity that has counsel, and you have initiated communication with the Department relating to a possible criminal violation, the Department is authorized to communicate directly with you regarding the possible criminal violation without seeking the consent of the entity’s counsel.
6. Bar for Frivolous or Fraudulent Submissions: The Department shall have the authority to impose a permanent bar on a person who sends submissions or applications that are frivolous or fraudulent, or that would otherwise hinder the effective and efficient operation of the Fraud Rewards Program. If the Department issues such a bar, it will not accept or act on any other submissions from the barred person. The Department may issue a permanent bar in the following, non-exhaustive circumstances: (i) if a person makes three or more submissions that the Department finds to be frivolous or fraudulent or that otherwise hinder the effective and efficient operation of the Program; or (ii) if a person knowingly and willfully makes any materially false, fictitious, or fraudulent statement or representation, or uses any writing or document knowing that it contains any materially false, fictitious, or fraudulent statement or entry with intent to mislead or otherwise hinder the Department. False or fraudulent statements to the government in connection with the Fraud Rewards Program may also result in prosecution for criminal false statements, perjury, or other federal crimes.

Procedures for Submission of Original Information

1. To be eligible for a reward under the Fraud Rewards Program, you must submit your information about a possible criminal violation in one of the programmatic categories by submitting a completed and signed Intake Form through www.america.gov/fraud. If you submit information to the Department through a mechanism other than www.america.gov/fraud, you may still be eligible for a reward, at the Department’s discretion, if the information is submitted in a manner that allows the relevant decisionmakers within the Department to act upon the tip in a timely manner. Accordingly, to ensure that your information is processed in a timely manner, we recommend that you use the www.america.gov/fraud  intake form.
2. If you are providing your original information to the Department anonymously, then your attorney must submit your information on your behalf pursuant to the procedures specified herein. When your attorney makes the submission on your behalf, your attorney will be required to certify that he or she:
   1. Has verified your identity; and
   2. Has reviewed the submitted information with you for accuracy and that the information contained therein is true, correct, and complete to the best of the attorney’s knowledge, information, and belief.

Procedures for Award Determinations

1. If the Department, in its sole discretion, determines that an individual may be eligible for a reward, Department personnel will contact the individual or their representative prior to making a payment. 
2. Department personnel will evaluate, in its sole discretion, all timely reward claims. In connection with this process, the Department may require that you provide additional information relating to your eligibility for an award or satisfaction of any of the conditions for a reward. Following that evaluation and any other internal Department process, the Department will send you a Reward Determination setting forth a determination as to whether the claim was granted or denied. 
3. The Department’s Reward Determination is entirely discretionary, 28 U.S.C. § 530C(b)(1)(L), and neither appealable nor subject to judicial review. 

Endnotes

[Endnote 1] This memorandum does not create or confer any privileges, benefits, or rights, substantive or procedural, enforceable by any individual, organization, party, or witness in any administrative, civil, or criminal matter.

[Endnote 2] Submitting information that an individual obtained from a violation of law does not provide that individual with any protection from prosecution for unlawfully obtaining the information.

[Endnote 3] With respect to these categories of fraud, it is not necessary that the initial fraudulent conduct be directed specifically at a federal government program, so long as some loss would ultimately be borne by a federal government program. For example, fraudulent claims are often submitted in the first instance to a state, local, or tribal program, but those programs are ultimately reimbursed by a federal program.