While whistleblowers already have several means to report fraud to the federal government—including the False Claims Act, the IRS whistleblower program, and the SEC and CFTC whistleblower programs—there is a new, bipartisan, fraud-fighting law on the books that rewards whistleblowers for valuable information in the auto industry. Since late 2015, the Motor Vehicle Safety Whistleblower Act (MVSWA) has offered monetary incentives to reward individuals who report information about life-threatening automobile safety issues to the U.S. Department of Transportation and/or the National Highway Traffic Safety Administration. The law was passed as part of the Fixing America’s Surface Transportation Act (FAST Act) and can be found at 49 U.S.C § 30172. It was modeled on the whistleblower laws and programs mentioned above and was co-sponsored by Senators John Thune (R-SD) and Bill Nelson (D-FL) in the aftermath of several high-profile automobile safety issues, including Volkswagen’s emissions scandal, and massive recalls by General Motors (ignition switches), Takata Corporation (airbags), and others. I had the remarkable honor of testifying before Congress about this law, while the legislation was still being considered.
Last week, the first reward under the MVSWA was announced—a minimum $1.7 million award to three whistleblowers who exposed Takata’s airbag defects that have resulted in at least 20 deaths and countless injuries worldwide. Takata has already pled guilty to criminal violations and will pay a penalty of at least $1 billion. As explained below, whistleblower rewards range from between 10 percent and 30 percent of the money the government recovers, depending on the whistleblower’s cooperation and contribution. Accordingly, the Takata whistleblower will almost certainly see an increase in the size of their rewards.
So, how does this new law work? The top seven key components of the MVSWA are discussed below.
1. The MVSWA only permits industry insiders to blow the whistle on auto safety issues. This generally pertains to employees and independent contractors working for automobile manufacturers, parts suppliers, and dealerships. Consumers who discovery safety issues in vehicles that they have purchased are not considered “whistleblowers” under this law.
2. Whistleblowers need not be U.S. citizens, and the safety issues they report need not arise in the United States (as long as the safety issues affect vehicles sold in the United States).
3. The MVSWA requires whistleblowers to come forward voluntarily; individuals who report safety issues in response to a government investigation or subpoena will not be considered for whistleblower rewards.
4. Whistleblowers are not required to file a lawsuit on behalf of the government. They may submit their information directly to the government online, or by mail or even fax. Whistleblowers may submit their information to the government anonymously, as long as they are represented by a lawyer; otherwise, whistleblowers are not required to use an attorney (although many report that working with a knowledgeable, experienced whistleblower attorney is preferable than going it alone). Even if the government knows the whistleblower’s identity, it will do its best to keep that information confidential.
5. The MVSWA only rewards whistleblowers who provide information that results in at least $1 million in sanctions by the federal government against one or more bad actors. Rewards to successful whistleblowers range from between 10 percent and 30 percent of the money the government recovers, depending on the whistleblower’s cooperation and contribution.
6. Certain employees are not eligible for whistleblower rewards under the MVSWA. Individuals who either are criminally convicted in connection with the auto safety issue, or deliberately caused the issue (and were not acting under the direction of a manufacturer, supplier or dealership) are not eligible for a reward. Neither are individuals who provide the same information to the government that another whistleblower has already provided; however, multiple whistleblowers are permitted to work together and may share a single reward. Finally, if the whistleblower’s employer has implemented an internal compliance program that allows employees to report issues internally, then the whistleblower must make an internal report before contacting the government; otherwise, such employees will risk losing their rewards. However, if the whistleblower reasonably believed that reporting internally would result in retaliation, then he/she is not required to do so.
7. Speaking of retaliation against whistleblowers, employees and contractors who blow the whistle on auto safety issues are protected from retaliation under the Moving Ahead for Progress in the 21st Century Act (MAP-21), found at 49 U.S.C. § 30171. Under this related law, employers are prohibited from discriminating against employees who refuse to participate in activities they believe will lead to auto safety issues, or who notify the government about such issues. Whistleblowers who experience retaliation will be entitled to reinstatement to their former positions; recovery of any lost back pay; restoration of all privileges associated with their employment; an award of compensatory damages; and payment of their employment attorneys’ fees.
The Motor Vehicle Safety Whistleblower Act is designed to keep America’s roads and highways safe from known, preventable dangers. Fortunately, the law recognizes that whistleblowers are essential to that mission, as they have not only the knowledge of auto safety-related issues, but also the integrity to speak up and speak out. With last week’s announcement, we have merely scratched the surface of the amazing potential of the MVSWA to change an entire industry for the better, while keeping us all a lot safer from unnecessary risks.