Whistleblowing Reaches Center Stage: Court Cases and Events Involving Whistleblowing Are Appearing in News Headlines with Greater Frequency, and Awareness about the Importance of Speaking Up When Witnessing Wrongdoing Continues to Grow
Verschoor, Curtis C., Strategic Finance
Whistleblowing continues to emerge as an important tool in uncovering wrongdoing and prosecuting or punishing offenders. Several recent court cases have been settled successfully based on whistleblowing efforts, and advocacy groups and government regulators in both the United States and the United Kingdom took additional steps toward supporting whistleblowers.
The latest progress comes from the U.S. courts system. In the span of a few weeks, a whistleblower lawsuit filed by a former University of California-Irvine (UCI) professor and anesthesiologist who blew the whistle on illegal practices resulted in an agreement by the California Board of Regents to pay $1.2 million to the United States. In Alaska, an employee was granted a settlement of $3.5 million in a whistleblower retaliation case after suing his former employer for wrongful termination. And in Maine, a security worker was awarded more than $200,000 in damages and attorney fees for wrongful termination in a whistleblowing case.
During this same time, several Texas healthcare companies agreed to pay $2.3 million to settle civil allegations that they engaged in false or fraudulent conduct by doublebilling the Texas Medicaid program, among others. In Florida, a nonprofit hospital repaid nearly $3 million it received from overbilling the government before the matter came up in federal court. In New York, a former employee of celebrity tailor Mohanbhai Ramchandani will receive a $1.1 million reward for blowing the whistle on Ramchandani for underreporting millions of dollars of income and sales taxes. Stephen A. Weiss, who represented the whistleblower, noted that the "settlement demonstrates how necessary and effective whistleblower laws are in uncovering small business fraud that may be known and visible only to company insiders."
Government agencies and other groups are also making progress in increasing whistleblowing efforts. The Government Accountability Project, a U.S. whistleblower advocacy organization, is engaged in its 2012-2013 American Whistleblower Tour, which visits college campuses and other locations to promote its message of "corporate and government accountability by protecting whistleblowers, advancing occupational free speech, and empowering citizen activists." It uses social media and other means to convey to the public its core message of strengthening whistleblower rights.
The U.S. Securities & Exchange Commission (SEC) released the first full-year report of its Office of the Whistleblower, which was established under the Dodd-Frank Act of 2010. The Office administers an initiative to promote payment of monetary awards and increased protection to individuals providing significant new information helpful in prosecuting large, successful enforcement actions.
The 2012 Annual Report on the Dodd-Frank Whistleblower Program shows that the agency received and processed 3,001 tips, complaints, and referrals (TCRs) during the 2012 fiscal year. Additionally, in the four months of the year that a telephone hotline was available, the agency received 3,050 calls. The most common subjects of the TCRs were corporate disclosures and financials (18.2%), offering fraud (15.5%), and manipulation (15.2%). An "other" category made up 23.4% of the TCRs.
Of the TCR submissions received, 83.5% were from within the U.S., with the remaining 16.5% coming from other countries, including 3.5% from the U.K., 1.5% from Canada, 1.1% from India, and 0.9% from the People's Republic of China.
"In just its first year, the whistle - blower program already has proven to be a valuable tool in helping us ferret out financial fraud," then-SEC Chairman Mary L. Schapiro said in November 2012. "When insiders provide us with high-quality road maps of fraudulent wrongdoing, it reduces the length of time we spend investigating and saves the agency substantial resources."
The SEC's Investor Protection Fund awarded the Commission's first Whistleblower Award Program recipient in 2012, but the case and individual haven't been made public. …