Exposing fraud at your company could earn you accolades and money -- or devastate your career. SHEILA NORMAN-CULP helps you avoid the pitfalls of whistle-blowing.
(AP Photo Illustration/Shazna Nessa)
asap Worklife columnist Sheila Norman-Culp. (AP Photo/Randall Hackley/Photo Illustration/Jacky Myint)
You've seen the movies -- "Erin Brockovich," "Silkwood," "All the President's Men." You know something's rotten at your company, and you're determined to stop it. You have enormous respect for those people who stood up against wrongdoing and you are ready to become a whistle-blower yourself.
Hold your horses, partner. Becoming a whistle-blower is a huge step. It could be the best thing you ever did, earning you wide accolades and/or millions in recovery fines, or it could be the ill-conceived move that devastates your career and makes you a pariah in your industry.
With that in mind, let's look at the right way to become a whistle-blower -- and hope that you never need to use this information.
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BECOMING A WHISTLE-BLOWER
More than 40 federal statutes cover whistle-blowing situations -- a legal hodgepodge that means some do-gooders have better job protection and chances for success than others.
The best law for whistle-blowers to file under is the Federal False Claims Act (31 U.S.C. §§ 3729-3733, begin a search here), which lays out the rules for filing claims of fraud against the federal government. Not only does this law protect whistle-blowers from being fired, demoted, suspended, threatened, harassed or discriminated against, it offers a financial incentive. If your lawsuit is successful, and the government receives money back from the offending company, you could receive 15 to 30 percent of that money. Whistle-blower complaints also remain under seal while the government investigates.
In the 2006 fiscal year, the U.S. government recovered more than $3.1 billion in settlements and court rulings charging fraud against the government. Whistle-blowers were awarded $190 million.
Similar laws also exist for fraud against about 40 state governments, as do local laws in some big cities.
Those complaining about non-governmental types of fraud face many more challenges. Protections, legal requirements, filing timetables all differ by industry.
Many whistle-blowers were employees who noticed their company was defrauding the government or breaking environmental laws, safety regulations or workplace rules. Others were family members reporting suspicious actions at loved ones' nursing homes or hospitals.
Some were government employees who felt appropriations or procurements were handled improperly. In one recent case, Bunnatine Greenhouse of the Army Corps of Engineers exposed millions in noncompetitive bids between the Army and a Halliburton subsidiary for services in Iraq.
Many lawyers will represent whistle-blowers on a contingency-fee basis, meaning they get paid only when fraud is proven and the government gets money back.
"Most people we see are unintentional whistle-blowers; they just thought they were doing the right thing," said Stephen M. Kohn, president of the nonprofit National whistle-blowers Center. "They don't even view themselves as a whistle-blower until the retaliation hits."
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KNOW YOUR RIGHTS
The worst and most common mistake people make is reporting fraud before understanding their rights.
"Who you go to and what you say could drastically affect your legal remedies," Kohn said. "If you raise the issue with your boss, and your boss is part of the problem" your identity is already compromised.
Remember, protection for cases not involving the government varies by industry. In the private sector, whistle-blowers have a better chance in cases involving truck safety, environmental laws, airline safety, nuclear energy safety and companies that commit fraud against shareholders, he said. In the public sector, cases involving waste, fraud, abuse and public safety issues are usually -- but not always -- better topics.
A single lawsuit -- say, one on asbestos contamination -- could fall under several different statutes, and you need legal guidance to pick the path that has the most chance of success. Kohn says it's very difficult to win that lawsuit under worker health laws, but easier to contest it under environmental regulations.
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RETALIATION
Managers take it personally when you report them to the authorities. Multiply that by 10 -- or 100 -- when your report of wrongdoing costs their company millions.
"Most people don't even see (retaliation) coming," Kohn said. "Companies have a huge incentive to play hardball. It's cheaper to fire the whistle-blower than solve the problem."
Whistle-blowers need to brace themselves for the retaliation as much as for the lawsuit itself. The company could fire them for offenses it had overlooked before, such as coming in late to work, misusing a sick day or exaggerating on an expense form.
The Department of Labor has several Web sites about laws protecting whistle-blowers' jobs: here and here.
In some cases the statue of limitations for harassment claim is only 30 days, so those targeted by managers should act quickly.
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FILE FIRST
Under the False Claims Act, the first to file a lawsuit about a specific fraud gets to be the whistle-blower, with the chance of reaping money recovered by the government. Wait around and get zilch.
If you've discussed the fraud with co-workers, they could file first. Or the government agency to whom you report allegations could beat you to court, and you'd get nothing for providing the original fraud report.
Also, if information about the case becomes public -- in a news article, for example -- you have lost the chance to file a federal claim.
To fight whistle-blowers and avoid damages, some companies have gone to great lengths to try to prove information was already public.
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KINDS OF FRAUD
Fraud comes in innumerable forms. Many lawsuits originate from the biggest government spending programs -- Social Security, Medicare, Medicaid and the military. Disasters like Hurricane Katrina also create ripe conditions for fraud.
Many claims involve overbilling the government for services rendered, such as claiming a patient was having individual sessions with a psychiatrist when they were actually in a group therapy with a social worker. Other fraud involves billing for services that were never performed; drugs that were never given; bidding procedures that should have been competitive but were not.
By industry, a whopping 72 percent of the money recovered in 2006 came from health care fraud -- $2.2 billion, including a $920 million settlement with Tenet Healthcare Corp., the nation's second largest hospital chain.
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asap contributor Sheila Norman-Culp has worked for The Associated Press for 24 years.
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