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Posted on 06.30.2011

When the Whistle is Blown: Preparing for Public Disclosure of a Qui Tam Suit

Many key sectors of our nation’s economy operate in highly regulated environments.  Healthcare, financial services, energy, transportation … businesses in these spaces know all too well that following the letter of the law can be challenging – particularly when the laws are highly complex and ever-changing.  Highly ethical, disciplined companies can find themselves out of compliance with regulators and subject to a qui tam action. Too often, companies facing a qui tam lawsuit or other discussion with the federal government are so busy “keeping things quiet” they forget to plan for what is likely to be an inevitable public disclosure.  From early in the planning process, best practice is to prepare for the worst while hoping for the best. Have a trusted and experienced communications professional at the table. If your organization has a communications expert (not just a marketing professional) on staff, be sure to confidentially involve that person in your internal planning from the beginning.  If in-house communications counsel is better at “getting the word out” than “keeping a confidence,” consider outsourcing for professional communications and public relations assistance.  Look for an agency with experience in qui tam and litigation communications, regulatory actions and crisis communications, and involve them directly with legal counsel early in the process. Prepare for word to get out. In theory, until a government agency decides to intervene in a whistleblower suit, the only parties aware of a qui tam allegation are 1) the person(s) reporting the allegation to federal government (known as the relator) and their legal counsel; 2) the federal agency to which the relator is reporting; and 3) the company about which the allegation is being made.  From time to time, however, circumstances can bring a qui tam action to the forefront sooner than expected. Communicating about a whistleblower action requires legally sensitive wording and thoughtful delivery; last minute communications are really not practical – and certainly not recommended. Consider your stakeholders – and prioritize your notification to them. The weeks and months (and yes, sometimes even years) of preparation leading up to public disclosure of a government investigation or settlement can lead to a false sense of security.  Though your strategy team will have been aware of the issue for some time, it will be fresh – and perhaps shocking –information for many.  Be sure your priority audiences, such as investors, advisors, strategic partners, employees, retirees, etc., hear from the leadership of the company before they read about a whistleblower suit in the news. Continue to put out a good word. Though news of a qui tam suit almost always feels like a dark cloud, that cloud shouldn’t be allowed to linger for long.  Within a short period – perhaps even just a week or two – the flow of good news from a company under investigation should be restored or even ramped up.  Don’t hold off on announcements about new hires or expansions or industry awards.  The splash of bad news settles more quickly under a steady stream of positive announcements.

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