{"id":57518,"date":"2024-08-07T20:05:00","date_gmt":"2024-08-07T20:05:00","guid":{"rendered":"https:\/\/www.dinsmore.com\/?post_type=publications&p=57518"},"modified":"2025-11-24T18:31:09","modified_gmt":"2025-11-24T18:31:09","slug":"dojs-corporate-whistleblower-awards-pilot-program-emphasizes-the-importance-of-internal-compliance-and-reporting-policies","status":"publish","type":"publications","link":"https:\/\/www.dinsmore.com\/publications\/dojs-corporate-whistleblower-awards-pilot-program-emphasizes-the-importance-of-internal-compliance-and-reporting-policies\/","title":{"rendered":"DOJ\u2019s Corporate Whistleblower Awards Pilot Program Emphasizes the Importance of Internal Compliance and Reporting Policies"},"content":{"rendered":"\n
\"\"\/<\/figure>\n\n\n\n

On August 1, 2024, the Department of Justice (\u201cDOJ\u201d) rolled out its Corporate Whistleblower Awards Pilot Program after announcing the initiative in March. Described as \u201c[s]upercharging DOJ\u2019s corporate investigations and prosecutions,\u201d[1]<\/a> the Pilot Program dramatically expands the pool of would-be whistleblowers and underscores the importance of robust compliance and reporting programs. This marks a significant change to the federal whistleblower landscape, as whistleblowers now have a financial incentive to report corporate misconduct involving companies billing private health insurance plans and misconduct involving privately held companies doing business abroad.<\/p>\n\n\n\n

New Focus Areas<\/strong><\/p>\n\n\n\n

Intended to fill identified gaps in existing federal whistleblower programs, the three-year Pilot Program seeks information about certain corporate misconduct not covered by the federal False Claims Act (\u201cFCA\u201d) or other federal whistleblower programs, such as those under the Securities and Exchange Commission (\u201cSEC\u201d), the Commodity Futures Trading Commission (\u201cCFTC\u201d) and the Financial Crimes Enforcement Network.<\/p>\n\n\n\n

Specifically, the Pilot Program targets information in four subject matter areas:<\/p>\n\n\n\n

    \n
  1. certain crimes and violations by financial institutions or their agents;<\/li>\n\n\n\n
  2. foreign corruption and bribery involving privately held companies;<\/li>\n\n\n\n
  3. domestic corruption involving privately held companies; and<\/li>\n\n\n\n
  4. health care fraud against private benefit programs or patients and \u201cany other federal violations involving conduct related to health care not covered\u201d by the FCA.[2]<\/a><\/li>\n<\/ol>\n\n\n\n

    In light of these focus areas, health care providers should review existing compliance programs to ensure they are prioritizing investigations of complaints about incorrect billing to private insurance. Privately held companies doing business abroad should consider whether they have sufficient processes in place to encourage and investigate internal complaints about violations of the Foreign Corrupt Practices Act.<\/p>\n\n\n\n

    Whistleblower Incentives<\/strong><\/p>\n\n\n\n

    The Pilot Program provides potential financial incentives for whistleblowers who report original, truthful information about criminal misconduct that falls within one or more of these four areas.[3]<\/a> A whistleblower will only be eligible for an award under the Pilot Program if they are ineligible for an award through another federal whistleblower program or a qui tam<\/em> action.[4]<\/a><\/p>\n\n\n\n

    A whistleblower who provides information leading to a successful prosecution and a forfeiture greater than $1 million may<\/em>, in the DOJ\u2019s discretion, receive a portion of the net proceeds forfeited.[5]<\/a> A whistleblower is eligible to receive up to 30% of the first $100 million in forfeited net assets and up to 5% of any forfeiture between $100 million and $500 million.[6]<\/a><\/p>\n\n\n\n

    Strong Compliance Programs Are Essential<\/strong><\/p>\n\n\n\n

    The DOJ has long emphasized the importance of strong compliance programs and has provided cooperation credit to companies that emphasize compliance and self-report violations.[7]<\/a> Two aspects of the Pilot Program heighten the need for companies to review and enhance their compliance programs.<\/p>\n\n\n\n

    First, to be eligible for an award, a whistleblower must<\/em> report the misconduct to the DOJ within 120 days of reporting internally.[8]<\/a> Second, the DOJ temporarily amended its Criminal Division Corporate Enforcement and Voluntary Self-Disclosure Policy so that a company that self-discloses misconduct to the DOJ within 120 days of an internal whistleblower report, and before the DOJ reaches out to the company, may be eligible for a non-prosecution agreement\u2014even if the whistleblower has already reported the misconduct to the DOJ.[9]<\/a><\/p>\n\n\n\n

    In many instances, particularly those where the reported conduct involves complex or wide-ranging issues, the 120-day deadline for a company to both conduct an internal investigation and determine whether to self-disclose to the DOJ will be challenging, if not unfeasible. Companies may find themselves in the difficult position of deciding whether to self-disclose before they feel certain that misconduct has occurred, calling into question how effective the 120-day deadline will be in encouraging voluntary self-disclosures.<\/p>\n\n\n\n

    For that reason, companies should act quickly to review existing compliance programs with an eye toward the DOJ\u2019s new focus areas and the 120-day deadline. If you have questions, please reach out to your Dinsmore attorney or the authors of this alert.<\/p>\n\n\n\n

    \n\n\n\n

    [1]<\/a> Corporate Whistleblower Awards Pilot Program Fact Sheet (hereinafter \u201cDOJ Fact Sheet\u201d), available at<\/em> https:\/\/www.justice.gov\/criminal\/media\/1362326\/dl?inline.<\/p>\n\n\n\n

    [2]<\/a> Department of Justice Corporate Whistleblower Awards Pilot Program Guidance (hereinafter, \u201cProgram Guidance\u201d), \u00a7 II.3, available at<\/em> https:\/\/www.justice.gov\/criminal\/media\/1362321\/dl?inline.<\/p>\n\n\n\n

    [3]<\/a> The DOJ provides extensive guidance on what is and is not \u201coriginal information\u201d under the Pilot Program. Perhaps most notably, a whistleblower\u2019s information is not original if they obtained it as (a) \u201can 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\u2019s processes for identifying, reporting, and addressing possible violations of law\u201d or (b) an employee charged with \u201ccompliance or internal audit functions\u201d and the information relates to, or derives from, those functions. The DOJ will only consider information from this type of source as \u201coriginal\u201d if 120 days have passed since either (a) the person disclosed the information through relevant internal audit channels or (b) the person received the information under circumstances where it was clear that the relevant audit committee, chief legal officer or chief compliance officer already knew of the information. Program Guidance \u00a7 II.2.f.<\/p>\n\n\n\n

    [4]<\/a> Program Guidance \u00a7 II.1.b. Additionally, an individual who \u201cmeaningfully participated\u201d in the conduct they reported, including by \u201cknowingly profiting from that criminal activity,\u201d is not eligible for an award under the Pilot Program. Id. <\/em>\u00a7 II.1.e. This goes beyond other whistleblower programs, such as the SEC and CFTC programs, which prohibit awards to whistleblowers who \u201cdirected, planned, or initiated\u201d the reported conduct. See <\/em>17 C.F.R. \u00a7 240.21F-16; \u00a7 165.17; DOJ Fact Sheet at 2. Among other eligibility requirements, the whistleblower must also be an individual\u2014companies and other entities are not eligible for an award. Id. <\/em>\u00a7 II.1.a. This is different from the federal FCA, where it is becoming more common for whistleblowers to create limited liability corporations for the sole purpose of filing a qui tam<\/em>. Employees of the DOJ or any law enforcement organizations, their immediate family members and elected\/appointed foreign government officials are ineligible for an award under the Pilot Program. Id. <\/em>\u00a7 II.1.c. A whistleblower will also be ineligible if they acquired the reported information from a person not eligible under the Pilot Program, unless they are providing the DOJ information about possible violations involving that person. Id. <\/em>\u00a7 II.1.g.<\/p>\n\n\n\n

    [5]<\/a> Program Guidance \u00a7\u00a7 II.1, II.7.<\/p>\n\n\n\n

    [6]<\/a> Program Guidance \u00a7 III.1.b. There is no award on net proceeds forfeited above $500 million. Id.<\/em> Moreover, if the DOJ \u201cdetermines in its sole discretion\u201d that an award is appropriate and there is no reason to decrease an award, \u201cthere is a presumption that the [DOJ] will award a whistleblower the maximum 30% of the first $10 million in net proceeds forfeited.\u201d Id.<\/em> \u00a7 III.1.c. Any awards are made in the DOJ\u2019s discretion and based on considerations such as the significance of the whistleblower\u2019s information to the outcome and the degree of assistance the whistleblower provided. Id.<\/em> \u00a7 III.3.<\/p>\n\n\n\n

    [7]<\/a> Program Guidance \u00a7 I (\u201cProviding individuals with incentives to report corporate crime may also motivate corporations to create more robust compliance programs that detect and deter criminal conduct, including by encouraging internal reporting of complaints. Strong compliance programs can prevent, identify and remediate misconduct before it begins or expands, and enable companies to report misconduct to the Department when it occurs.\u201d); DOJ Fact Sheet at 2 (\u201cDOJ recognizes the value of companies\u2019 internal compliance programs and has designed the pilot program to encourage employees to report misconduct internally before submitting information to DOJ.\u201d). However, there is no requirement that an individual first report internally before submitting information to the DOJ, calling into question how effective the Pilot Program will be in encouraging internal reporting prior to reporting to the DOJ.<\/p>\n\n\n\n

    [8]<\/a> Program Guidance \u00a7 II.2.d; DOJ Fact Sheet at 2.<\/p>\n\n\n\n

    [9]<\/a> Criminal Division Corporate Enforcement and Voluntary Self-Disclosure Policy (August 1, 2024 Amendment); DOJ Fact Sheet at 2, n.2. Companies who receive internal complaints must be careful not to engage in any activities that could be perceived as retaliatory. The Pilot Program specifically instructs whistleblowers to report any retaliation and states that the DOJ may decline to award cooperation credit and\/or initiate enforcement actions if a company retaliates against a whistleblower. Program Guidance \u00a7 IV.4.<\/p>\n","protected":false},"excerpt":{"rendered":"

    On August 1, 2024, the Department of Justice (\u201cDOJ\u201d) rolled out its Corporate Whistleblower Awards Pilot Program after announcing the initiative in March. Described as \u201c[s]upercharging DOJ\u2019s corporate investigations and prosecutions,\u201d[1] the Pilot Program dramatically expands the pool of would-be whistleblowers and underscores the importance of robust compliance and reporting programs. This marks a significant\u2026<\/p>\n","protected":false},"author":8,"featured_media":0,"menu_order":0,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"tags":[],"publication-type":[12],"class_list":["post-57518","publications","type-publications","status-publish","format-standard","hentry","publication-type-legal-alerts"],"acf":[],"yoast_head":"\nDOJ\u2019s Corporate Whistleblower Awards Pilot Program Emphasizes the Importance of Internal Compliance and Reporting Policies - Dinsmore & Shohl<\/title>\n<meta name=\"description\" content=\"DOJ\u2019s Corporate Whistleblower Awards Pilot Program Emphasizes the Importance of Internal Compliance and Reporting Policies Read insights and legal analysis from attorneys at Dinsmore & Shohl LLP.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.dinsmore.com\/publications\/dojs-corporate-whistleblower-awards-pilot-program-emphasizes-the-importance-of-internal-compliance-and-reporting-policies\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"DOJ\u2019s Corporate Whistleblower Awards Pilot Program Emphasizes the Importance of Internal Compliance and Reporting Policies\" \/>\n<meta property=\"og:description\" content=\"DOJ\u2019s Corporate Whistleblower Awards Pilot Program Emphasizes the Importance of Internal Compliance and Reporting Policies Read insights and legal analysis from attorneys at Dinsmore & Shohl LLP.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.dinsmore.com\/publications\/dojs-corporate-whistleblower-awards-pilot-program-emphasizes-the-importance-of-internal-compliance-and-reporting-policies\/\" \/>\n<meta property=\"og:site_name\" content=\"Dinsmore & Shohl\" \/>\n<meta property=\"article:modified_time\" content=\"2025-11-24T18:31:09+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.dinsmore.com\/wp-content\/uploads\/2024\/08\/Whistleblower-alert-Header.jpg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"7 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.dinsmore.com\/publications\/dojs-corporate-whistleblower-awards-pilot-program-emphasizes-the-importance-of-internal-compliance-and-reporting-policies\/\",\"url\":\"https:\/\/www.dinsmore.com\/publications\/dojs-corporate-whistleblower-awards-pilot-program-emphasizes-the-importance-of-internal-compliance-and-reporting-policies\/\",\"name\":\"DOJ\u2019s Corporate Whistleblower Awards Pilot Program Emphasizes the Importance of Internal Compliance and Reporting Policies - 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