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Survey, Study Reveal Increase in Whistleblower Retaliation

Dec 15, 2014

A new study and a separate survey indicate that corporate whistleblowers are suffering from increasing retaliation after making whistleblower reports. Meanwhile, the United States Chamber of Commerce has recently initiated what experts are describing as an aggressive lobbying campaign against what is considered the most successful protection for whistleblowers, the False Claims Act. The campaign does not address the issue of whistleblower retaliation.

Qui tam refers to civil lawsuits whistleblowers may bring under the False Claims Act, which provides whistleblowers with protection and the ability to be compensated for their work. The Act was passed in 1863, during the Civil War, and now includes various amendments that were added in 1986. The amendments increased damage and penalty amounts so that whistleblowers would be likelier to come forward. Today, whistleblower awards range from 15 to 30 percent of damage and penalty amounts, which means that whistleblowers may receive awards in the millions of dollars.

The Dodd-Frank Whistleblower Law enables whistleblowers who report securities fraud complaints to retain their anonymity while working through a whistleblower attorney. Under the Law, anonymity is maintained until a cash award is paid; however, once the award is paid, the whistleblower name must be released. One large benefit under the Law is that, should the Securities Exchange Commission (SEC) opt to not pursue a securities fraud action, the whistleblower name will not be released.

Whistleblowers have long been crucial in assisting the federal government in recovering billions of dollars that were illegally obtained by drug and device makers. Whistleblowers have also helped save the lives of untold numbers of patients who were unaware of the side effects of their medical devices and other treatments. Whistleblowers lawyers have also been critical in the resolution of cases involving securities fraud and have been equally important in maintaining whistleblower anonymity in these cases.

Based on a recent survey, the Ethics Resource Center (ERC), a nonpartisan, nonprofit research organization in operation since 1922, indicates that 45 percent of workers in the U.S. report having witnessed “misconduct” at their places of business. Of this 45 percent, most—65 percent—made reports of misconduct and 22 percent of the reporters indicate that they suffered retaliation for making their reports. In 2007, another ERC survey found that just 10-11 percent of whistleblowers experienced retaliation, indicating a doubling in whistleblower retaliation in the past seven years.

“Not only is retaliation on the rise nationally, it is rapidly becoming an issue, even at companies with a demonstrated commitment to ethics,” according to the ERC. Senior managers, the ERC indicated, face the greatest risk of retaliation and retaliation against this group shows considerable increase. “One of the most common reasons that employees choose not to report misconduct is fear of retaliation” the ERC wrote. “The more an employee persists in reporting a concern, the more likely he/she is to experience retaliation,” the ERC added.

Separately, a study conducted at the University of Chicago Booth School found that, while “employees clearly have the best access to information,” whistleblowers were “fired, quit under duress, or had significantly altered responsibilities. In addition, many employee whistleblowers report having to move to another industry and often to another town to escape personal harassment.” The study authors also wrote that, “Not only is the honest behavior not rewarded by the market, but it is penalized…. Given these costs, however, the surprising part is not that most employees do not talk; it is that some talk at all.”

Whistleblower attorneys are not only necessary in maintaining whistleblower confidentiality, whenever possible, whistleblower attorneys may help to increase the size of whistleblower awards.

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