Courts have granted a number of substantial whistleblower awards during the past three months, with some of the cases offering reminders worth heeding.  The cases summarized below remind us that:

• The False Claims Act violations can be extremely costly
• A firm may face consequences for its contractor’s misdeeds, even if the firm itself engaged in no wrongdoing
• Small private institutions are not exempt from whistleblower statutes
• Whistleblower employees are not always saints, but discipline, if warranted, must be clearly reasonable and distinct from whistleblowing activity
• Whistleblowers do not have to be employees

$10.9 million is the expected award for the whistleblower in a Government Services Administration (GSA) False Claims Act case.  The whistleblower had voluntarily resigned from his executive-level position with a major corporation engaged in government roofing contracts before filing his whistleblower suit in 2010. The suit, settled in August 2013, alleged that the corporation had illegally overcharged government agencies for roofing products and services. The government investigated and intervened in the False Claims Act qui tam complaint.

The False Claims Act allows private parties to file suit on behalf of the United States, and to share in any recovery.  In this case, the total settlement was for $61 million, with a reported 17.9% to be shared with the whistleblower.

$400,000 went to a security manager who was fired by a private contractor, allegedly in retaliation for plan to tell the Nuclear Regulatory Commission about his safety concerns at two nuclear power plants.  In addition to the award, the former manager is asking to regain his old job.

Although the nuclear plant operator was not part of the court case, the NRC asserts that the operator is responsible for its contractors’ actions.  The operator has been asked to provide information about all actions it is taking to ensure the firing doesn’t have a chilling effect on future potential whistleblowers.

$395,000 was awarded to a former dean of a private, for-profit university under Minnesota’s whistleblower law.  The former dean had held the position for a little over a year before she was terminated. The university alleged the termination was because of poor performance and lack of leadership. The dean alleged it was because of complaints she had made about the school’s job placement and admissions practices.

During the case, the university argued the former dean did not engage in activity protected by the Minnesota whistleblower statute because the complaints were made to supervisors rather than to an outside official or agency. The jury and court disagreed, awarding $205,000 for lost wages and $109,000 for emotional distress.

Ethical Advocate highlighted the issue of how or if internal reporting affects protection under whistleblower laws in its September 10, 2013 blog post “Dodd-Frank Whistleblowers and Ethics Hotlines.”

$134,000 plus attorney fees and costs was awarded to a New Mexico Department of Health employee who a jury determined was wrongly fired for reporting problems in the department. The department alleged the employee was terminated for insubordination, a series of inappropriate internal emails, and refusal to attend meetings.

The defense attorney acknowledged that the employee had sent “nasty” emails, but argued that other employees engaged in similar poor behavior had barely been reprimanded.  Ultimately the jury accepted the argument that the employee was a whistleblower who was fired for reporting fraud.

An as yet undetermined award may go to the operator of a small paper shredding business who filed a whistleblower lawsuit against three other shredding companies under the False Claims Act. Two of the firms settled the pending lawsuit for $1.1 million plus attorneys’ fees.  The lawsuit against the third firm is pending.

Ethical Advocate knows that most organizations try to do the right thing. Organizations with strong ethics and compliance programs, training and education, and an anonymous, ethics hotline can identify and correct problems early and internally.

References:

“$61 Million False Claims Act Roofing Settlement,” PR Newswire, August 28, 2013.

“Feds Warn NJ Nuclear Plant Operator Over Firing”, Associated Press, July 26, 2013.

“Minnesota Jury Awards Whistleblowing Dean Nearly $400,000,” martindale.com, September 5, 2013.

“Jury Says DOH Worker Wrongly Fired”, Albuquerque Journal, August 10, 2013.

“Two Shredding Companies Settle Whistleblower Suit”, Florida Securities Fraud Lawyer Blog, July 11, 2013. .