Hurricanes Harvey, Irma and Maria left a trail of destruction across the southeast and the Caribbean. Now the federal and state governments are pouring billions of dollars into disaster relief in Texas, Florida, Georgia, Puerto Rico and the U.S. Virgin Islands. But already the feds are bracing for hurricane fraud.
Whistleblowers who file suit under the False Claims Act can help the government stop fraud and get its money back, while at the same time getting paid up to 30% of the amount recovered.
Hurricane Relief Will Cost the U.S. Billions
Katrina cost the federal government an estimated $120 billion, but the recent spate of hurricanes is expected to shatter that number. Texas Governor Greg Abbott has said his state needs “far in excess” of $125 billion in aid. Houston Rep. Sheila Jackson Lee said she wanted to see $150 billion, a “record-breaking” number according to CNN. Likewise, Irma is going to cost the Government billions of dollars. And no one seems sure yet just how much Maria is going to cost.
How Bad is the Fraud Going to Be?
Obviously no one knows just how big the fraud will be, but let’s put it this way – after Katrina, the Government Accountability Office released a report that concluded that the government had paid out at least $1 billion as a result of hurricane fraud.
Katrina Whistleblowers Filed Suit Under the FCA, Helped Government Recover Millions
After Katrina, two sisters sued State Farm under the False Claims Act, which gives whistleblowers the right to file suit on behalf of the United States. The sisters said that State Farm was reclassifying wind damage as flood damage. The decision cost the U.S. because State Farm was supposed to cover wind damage; the U.S. covered flood damage. State Farm appealed the case all the way to the Supreme Court of the United States, but ultimately the sisters recovered $758,000 for the United States. The sisters netted $227,000 for themselves for their help in stopping the fraud. They also received $3 million from State Farm in attorney’s fees and expenses.
In addition to the State Farm case, the federal government also collected in a False Claims Act suit against Lighthouse Disaster Relief and its partners, Gary Heldreth and Kerry Farmer. Lighthouse Disaster had a contract to build and operate a basecamp that would feed and house first responders who were arriving in New Orleans. The U.S. accused the three of talking their way into getting paid in advance and then failing to build and staff a sufficient basecamp. The three jointly accepted a judgment, repaying $4 million of the $5.3 million they had been paid.
Whistleblowers Can Stop Hurricane Fraud
The National Center for Disaster Fraud and the U.S. attorney offices from the District of Puerto Rico, Southern District of Florida, Middle District of Florida and Northern District of Florida, have set up a hotline for people to report fraud. Ultimately, though, the government’s best defense against fraud is whistleblowers willing to bring suit under the False Claims Act. These whistleblowers can earn millions by helping the Government recover the billions it loses to hurricane fraud.