Let’s begin this post by defining the term “whistleblowing” and distinguishing it from “leaking,” or disclosing government practices or documents. When we use the term “whistleblowing,” we’re talking about reporting on misconduct by individuals or companies that take advantage of the government or cause some public harm. Most specifically, since we are talking about litigation under the False Claims Act (“FCA”), we are talking about false or fraudulent claims to government agencies or programs for payments that are not permissible.
Whistleblowers Versus “Leakers”
The person or persons who report such conduct and initiate litigation on behalf of the government are known as whistleblowers or relators (which is a term frequently used in connection with the False Claims Act). Although the media often also refers to persons who “leak” government documents as whistleblowers – such as Eric Snowden or Chelsea Manning – this blog does not include such persons in the discussion. This is not a judgment call about such conduct; it is simply an effort to keep the discussion focused on FCA whistleblowers.
What is Internal Whistleblowing?
So what is an “internal” whistleblower? That is not really a defined term, but it generally means an individual who reports suspected misconduct up the chain of command at the person’s workplace. This can involve going to an audit department, a compliance officer, a supervisor, in-house legal counsel or even an internal “hot line” or “tip line.”
The misconduct that is reported can be financial wrongdoing, environmental violations, false claims, defective products, harmful medical practices, discrimination – practically anything that someone believes is wrong or illegal. The hope is that the internal company personnel will address the problem responsibly and correct or stop any actual wrongdoing.
When someone only reports misconduct internally, there is no government investigation or actual litigation. Any action that is taken is done by the company, internally, and generally without any penalties or settlements with outside parties.
In some instances, however, internal whistleblowing might lead to a company voluntarily reporting its corporate misconduct to an appropriate government entity in order to minimize the consequences of having the conduct picked up by that government entity and result in harsher sanctions.
What is External Whistleblowing?
External whistleblowing refers to an individual who observes misconduct by an entity or individual – generally an employer, customer, supplier or competitor – and reports that misconduct to an outsider, generally a private attorney. Whistleblowers might report directly to a government agency or prosecutor or utilize a public hotline designed for reporting fraud or abuse by private companies. If the reported conduct involves false or fraudulent claims on state or federal government programs, a private attorney is likely to recommend that the whistleblower file litigation under the False Claims Act.
What are the Differences Between Internal and External Whistleblowing?
One of the primary differences between internal and external whistleblowing is that external whistleblowing typically involves actual litigation. Many people who seek outside legal advice do not end up filing a case, but they typically are not considered whistleblowers, since they did not end up “blowing the whistle.” An external whistleblower takes more substantial steps – generally filing a qui tam lawsuit — often after the person’s attempts to deal with the problem internally were not productive.
Internal whistleblowing can sometimes be anonymous, as when a person reports through a confidential internal hotline. Also, depending on how the company handles complaints from individuals who identify themselves to company management or counsel, persons might never be “outed” to fellow employees or have any record of the whistleblowing that might come into play when they seek future employment opportunities.
External whistleblowing that involves a filed complaint, on the other hand, will typically result in the person’s identity becoming publicly released at some point in time. Generally this happens only after some preliminary period in which the allegations are investigated by the government. And under some of the statutes that permit private persons to make a filing on behalf of the government, such as the IRS whistleblower program, the entire proceeding – and possible reward – are done anonymously. Under the False Claims Act itself, however, the filer’s identity will virtually always be made public at some point.
There are also statutory rights of action for certain retaliatory actions by employers or related entities. Under 2010 amendments to the anti-retaliation provisions of the FCA, for example, a person is entitled to relief against discriminatory actions in the terms or conditions of employment because of actions “in furtherance of” bringing claims under the FCA or “other efforts to stop 1 or more violations” of the FCA. 31 U.S.C. section 3730(h)(1). These anti-retaliation provisions can apply to either an internal or an external whistleblower, and case law has been clear that persons can be protected even without the filing of actual claims.
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