Many people have heard the term “whistleblower” in the news, but what does it mean, exactly? The simplest definition of a whistleblower is someone reporting waste, fraud, abuse, or corruption to someone in authority who can correct the wrongdoing.
Learn more about whistleblowers in this article, and talk to our whistleblower and False Claims Act (FCA) attorneys at Nix Patterson for assistance. Our attorneys have handled many notable whistleblower cases over the years, including a $400 million settlement in The Johnson Lawsuit on behalf of the United States government.
A whistleblower is a person who has insider information about illicit, illegal, and/or fraudulent activities in a company or other organization and brings that information to light. A whistleblower may be an employee, contractor, client, supplier, volunteer, or anyone else who knows about questionable business activities and chooses to do something to stop, prevent, or otherwise address them.
Broadly, anyone can be a whistleblower in any context—that is, someone with knowledge of improper conduct can bring that conduct to light for the purposes. A whistleblower may report the improper conduct to authorities, the press, a regulatory body, or some public domain.
Specifically, an array of federal and state laws create reporting mechanisms whereby whistleblowers can report fraud and other improper conduct. In certain instances, these laws (a) protect whistleblowers from retaliation and/or (b) provide a financial incentive to the whistleblower for reporting fraud.
Whistleblowers have protections against retaliation under many federal programs from the Sarbanes-Oxley Act, Occupational Safety and Health Administration (OSHA), and the Securities and Exchange Commission (SEC). Furthermore, the Whistleblower Protection Act of 1989 protects federal workers from retaliation.
The use of “whistleblower” goes back to the 19th century, but it is believed that Ralph Nader popularized the term in the 1970s to avoid the negative association with the term “informer.” The word combines the words “whistle” and “blower” to reference an individual who issues an alert by blowing a rhetorical “whistle” on possibly illegal activities.
“Blowing the whistle” means reporting or bringing the improper conduct to the attention of someone who can do something to stop, prevent, or otherwise address it. Whistleblowers may report improper conduct to police and similar authorities, the federal or state government, regulatory bodies, oversight bodies, or even the shareholders of a company.
The hallmark of a whistleblower is insider information. This means a whistleblower learns something that is not broadly known through their own personal experience or investigation. The whistleblower then reports this insider information to appropriate authorities.
Many organizations have departments and personnel dedicated to whistleblowing, but some organizations focus on certain aspects of the practice. OSHA focuses on whistleblowing as it pertains to violations of securities laws. Many organizations offer tempting financial awards to those who can provide critical information to uncover potential wrongdoing.
A whistleblower could release critical information to organizational managers or a large regulation or government organization. If there is fraud or related illicit activity involving high-level managers or executives, it is usually best to report the wrongdoing to U.S. regulatory bodies.
Whistleblowers have protections from retaliation if the information they provide is accurate. This means companies and other organizations are prohibited from taking punitive or otherwise adverse action against someone who reports or tries to address improper conduct in the workplace.
For example, the federal False Claims Act provides protection for employees of a hospital who report fraud upon Medicaid to the hospital’s board. If the board fires or demotes the employees for reporting the fraud, the False Claims Act retaliation protections may entitle the employee to reinstatement, double back pay, and attorneys fees.
It is common for organizations to take one or more of the following illegal actions against a whistleblower:
- Public Embarrassment or Humiliation
- Unwarranted Performance Improvement Plans
- Salary Cuts
- Loss of Privileges
Whistleblowers are also protected from the company taking legal action against them to cover losses incurred during the investigation. In some cases, the whistleblower can get additional protections if there are threats of violence against the person or their family.
Whistleblower can receive compensation for reporting illegal activities. Certain federal and state laws provide financial incentives to whistleblowers who report fraud upon the government that results in the recovery of fraudulently-obtained funds. For example, whistleblowers who properly file a complaint under the False Claims Act that results in the recovery of the government’s money may receive up to 30% of the amount recovered in return.
Many organizations have programs established to inform managers of wasteful practices. But unfortunately, in some situations, the practices could even be illegal. So, it is essential to understand if the practice isn’t illegal, you may not be entitled to whistleblower protections.
Still, many organizations encourage employees and others to provide information about how to reduce waste, and the person making the report can still be recognized for their attempt to enhance efficiency in the organization.
Every year, there are notable whistleblower cases that make national news. In 2022, the following were some of the most significant federal whistleblower cases around the U.S.:
On Sept. 26, 2022, Biogen, Inc., agreed to settle a lawsuit brought by an ex-employee relator in the Massachusetts U.S. district court. According to qui tam provisions in the False Claims Act, a whistleblower can sue on behalf of the government as a “relator,’ and can receive between 15 to 25% of a recovery when the government gets involved. They also may receive 25 to 30% if the government does not get involved.
The relator received 29.6% of the settlement, or $250 million. The relator began working at Biogen in 2004 and filed a lawsuit when he left in 2012. He alleged that the firm had set up a huge scheme to pay millions in kickbacks to healthcare companies to coerce them to prescribe several of the company’s drugs.
On Aug. 5, 2022, the U.S. Court of Appeals for the Second Circuit overturned a jury award of $1 million that was granted to an ex-employee. The plaintiff was employed as a strategist in mortgage securities at UBS Securities, and one of his roles was to ensure that his reports had been produced independently and reflected his opinions.
However, he claimed that two trade desk workers pressured him to change his research and publish reports that backed their business strategies. He said he was fired for complaining about the pressure. After the case, the Second Circuit ruled against the employee’s award, and it remains to be seen if the U.S. Supreme Court will get involved in the case.
If you have a whistleblower case, speak to our FCA and whistleblower attorneys at Nix Patterson today. False-claims lawsuits are complex, but our attorneys have the experience to navigate them successfully.