Under the False Claims Act, employees are encouraged to file a lawsuit against the company they work for on behalf of the government if they believe fraudulent behavior is happening. Through acting as a whistleblower, the employee holds the company responsible for acting fraudulently and can receive a piece of the government’s recovery.

While the False Claims Act is designed to keep businesses from acting unethical, having a false claim lawsuit brought against your business does have the power to ruin your reputation. Any business owner knows that the company’s reputation plays a key part in its success, so you will not want to do anything that may hurt your brand’s image.

To reduce the likelihood of false claims lawsuits rising against your company, here are a few steps you can take.

How to Protect Your Company Against False Claims Lawsuits

  1. Have the Appropriate Policies and Procedures

While you may not want to think about false claims lawsuits against your company, you still need to be prepared for what to do if they should arise. Through creating clear plans and policies for employees and managers to follow if a lawsuit does arise, you will be ready to deal with the issue when it comes.

Your plan and policy should create a clear path for employees to follow if they have a problem they would like to discuss. This includes telling them who they should bring their issues to, what to do if they feel fraudulent behavior is going on and what potential consequences may arise if those claims are not true.



  1. Properly Train Your Employees

While mistakes do happen, if a mistake made by an employee is potentially putting you at risk for a false claims lawsuit, your company could be in trouble. Because false claims can include everything from failing to perform a service adequately to underpaying what is owed to the government, improper employee behavior at any level may lead to a lawsuit. When employees are hired, spend an adequate amount of time to ensure they know all the rules, regulations and expectations related to the position.

You should also take time to review those trainings every so often. Employees can forget certain policies, important steps or grow used to doing things the wrong way. A consistent refresher in what is expected of them can help protect your company against false claims lawsuits.


  1. Create Standards and Enforce Them

False claims can happen at just about any level of the business. While you as a business owner may think you’ve got a clear eye out on the company, fraudulent behavior may actually be slipping right under your nose. You can prevent this from going too far by creating high standards and enforcing them throughout your company.

Be sure the same standards are applied to all employees, including upper management. There should be clear consequences or disciplinary steps if an employee does not uphold these standards, which should also be applied to all employees. When all employees are treated fairly and equally, one may be less likely to file a complaint.


  1. Stay Open and Honest With Employees

When an employee files a complaint under the False Claims Act, they usually do so because they are unhappy with the business and would like to see some consequences for their actions. These employees typically feel as if their concerns have been ignored or they have been lied to during their time in the business.

To prevent employees from whistleblowing, you should remain open and honest with every employee. Their questions should be answered appropriately, and their concerns should be addressed seriously. Each employee should feel valued and that they are a part of the bigger team.


  1. Respond to Complaints Appropriately

Most whistleblowers will turn to the government only after they feel they’ve been ignored within the company. If an employee of your business feels that they are being ignored or that their needs are unheard, they will turn outside the company to have those feelings addressed and validated.

Anytime an employee files a complaint within the company, follow the proper procedures to ensure it is investigated and taken care of. If anything is discovered, the company should ensure that the employee is recognized for pointing out the mistake and that their opinion and effort is valued.


  1. Create an Internal Monitoring System

Employees may be tempted to act fraudulently if they believe they won’t get caught. This not only puts the employee at risk, but it can also put the entire company at risk for a lawsuit if the fraudulent behavior is discovered. The best way to prevent employees from acting fraudulently in the first place is to create an internal monitoring system to watch out for any inconsistencies or unethical behavior.

An internal monitoring system can prevent employees from committing fraud by ensuring their work and behaviors will be checked. It can also set up a clear system for monitors to report fraudulent behavior, giving the company the ability to act on it before a lawsuit is created. This kind of advantage could save the company money as well as their reputation.


  1. Conduct Exit Interviews

Anytime an employee leaves the company, you should conduct an exit interview with them to understand how they feel about the business, the employees and the management. Because they are already leaving the company, they may be more tempted to tell you of a potential problem they noticed while they were still an employee.

Exit interviews also give you a last opportunity to determine whether or not an employee has information they may plan to share after leaving. You can require employees to disclose whether or not they feel unethical behavior is happening in the company. If they bring a problem to your attention, you can address it and make changes before they have a chance to file a lawsuit. If they do not mention a problem, you can use this during the investigation to show that they are not credible.


  1. Consider Beating the Employee to It

If you know that there was an ethical problem under your company, your best chance of saving money and your reputation is to bring the problem to the government yourself. When you self-report, you’re committing to staying honest with your employees and the public, which can pay off in your favor in the end.

In most self-reporting cases, you will have about 30 days from discovery to bring the case to the government. If you decide to self-report, you could cut your damages drastically. Self-reporting also allows you to control the conversation, completely eliminating the whistleblower from the equation. Before self-reporting, you will want to talk to an attorney about whether or not it is your best option.

The best way to avoid a false claim lawsuit is to remain aware of your behaviors, your employees and the processes you follow. If you do not pay close attention to what you are reporting, or what someone else is reporting, to the government, you may end up with a false claims lawsuit on your hands.

Through following these steps, you can ensure your entire company is working appropriately and ethically, dramatically reducing your risk of a false claims lawsuit. With the right systems in place and a clear plan if a problem arises, you can save money as well as your company’s reputation.

Categories: Blog

Sarah Landrum

Sarah Landrum is a marketing specialist, freelance writer and blogger. Her career blog, Punched Clocks, is all about creating a career you love and are happy in. Subscribe to her newsletter and follow her on social media for more tips on growing your career and your business.


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