The Importance of Whistleblowers – Part Five: Legal Protections the Obligation of Our Laws

Over the past week, we have explored several assertions advanced in a recent report by the National Whistleblowers Center, a non-profit, non-partisan group working to advance the cause of whistleblowers facing workplace retaliation. As we discussed previously, the Chamber of Commerce through its Institute for Legal Reform, presented a view point in its recent Congressional submission suggesting a near disdain for whistleblower protections, including the argument that internal compliance systems work much better in eliminating fraud.

Contrary to that position, NWC asserted that whistleblowers are only protected under anti-retaliation laws (which derived from anti-discrimination litigation and jurisprudence) when reporting pursuant to the FCA or similar whistleblower statutes. Employees choosing to abide by the internal compliance structure are not protected against retaliation and these employees are often at a serious risk of termination, demotion or resignation by duress.

In today’s post, we continue to examine NWC’s positions on various issues raised by the ILR. We review the position of the NWC with regard to the filing of frivolous suits, how whistleblower lawsuits affect free market policies and various suggestions by the NWC to help protect employees against the threat of retaliation, even if they choose to internally report as opposed to accessing justice through a government regulatory agency.

Capping Whistleblower Rewards is a Bad Idea

Several opponents to the FCA believe that capping whistleblower rewards is a good way rein in, but not totally eliminate, the existence of qui tam laws. However, as the NWC points out, the numbers don’t lie: in 2006, without a whistleblower statute, the IRS recovered approximately $200 million from wayward taxpayers after launching an investigation into unlawful overseas banking activity.

After the implementation of a whistleblower program, the IRS is reporting collections topping $4 billion and counting. Further, the idea of large rewards incentivizes people to report when they may have otherwise been fearful, sheds a positive light on these programs and serves as a disincentive for other companies considering fraudulent behavior. Keep in mind, the rewards are a portion of the overall penalty and are not an additional fine incurred by the target corporation.

Compliance Programs and the FCA are not Mutually Exclusive

NWC further argues in opposition to the ILR that there is no reason why the FCA cannot co-exist with robust internal compliance protocols. Why must one exist without the other? In fact, as NWC points out, weakening the FCA and similar statutes would thereby weaken the corporate ambition to self-regulate, further proving that one cannot, and should not, exist without the other.

Frivolous Reports are (Generally) Not an Issue

One issue raised by the ILR involved the influx of frivolous claims by those hoping to collect a big pay day. To rebut this assertion, NWC points to data showing that qui tam lawsuits amounted to a mere 0.3 percent of federal lawsuits filed in 2012.

Requiring Employees to Forgo Reports to Regulator Agencies Amounts to Obstruction

In its final point, the NWC equates employment policies requiring internal reporting with criminal obstruction of justice. This practice, which is necessitated by a corporation’s desire to avoid anti-retaliation legal hassles, prevents an employee from going to the DOJ or SEC with claims of fraud. This arguably triggering the federal obstruction of justice statute, which criminalizes any behavior tampering with the livelihood of an individual wishing to report a crime.

Know Your Rights – Talk to an Attorney Today

Employer retaliation in response to an internal fraud allegation is not uncommon, and many companies engage in this process openly and unapologetically. If you are facing this situation, contact a confidential and reputable whistleblower attorney today.