Whistleblowers: Rewards For Employees Who Report Bad Employer Conduct

Money damages for “whistleblowers” have become more common in recent years, in part because the Obama administration has emphasized prosecution of company and hospital officials who benefitted from their false claims for federal payments or reimbursements.

Private whistleblowers have also received monetary awards for exposing wrongful or illegal activities of their corporate employers. In the federal realm, the “False Claims Act” prohibits contractors from seeking payments or reimbursements for goods or services delivered to the government.  The law was enacted during the Lincoln administration in order to penalize companies seeking reimbursement or payments for military goods for the U. S. effort in the Civil War.  

In recent years, the federal government has prosecuted many organizations for making false claims.  Many states have enacted similar provisions.  Vermont enacted laws protecting state government (3 V.S.A. §§ 971-978) and health care workers (21 V.S.A. §§ 507-520) who blow the whistle on illegal activities such as fraud, waste and abuse of authority or threats against such employees. The statutes protect employees who blow the whistle on such activities from retaliation by their employers.

In the past few years, our Vermont Whistleblower law firm has handled such proceedings.  One case resulted in a recovery for our client of almost $1 million.  Another case, involving a charge of illegal billing of the governments, funds were recovered from a local hospital.  The state received more than $80,000, the federal government received $1.5 million and our client received $334,000 plus other benefits. In addition to health care and state employees, Vermont also protects a broader range of workers with its guarantee concerning “public policy.”  What is “public policy?”

The definition depends upon the subject matter and the occasion.  An employee who was disadvantaged after blowing the whistle on his/her employer may sue the employer for retaliation if the employer’s conduct violates the standards and values of the community.  The state supreme court has notice a wide range of conduct that violates public policy.  Examples include dismissal for: serving on a jury, refusing to perjure oneself and for filing a workers compensation claim.

Other state courts have recognized similar conduct as violating public policy:  Exercising a legal right or interest, refusal to engage in illegal activity, exposing an employer’s wrongdoing and performing an important public obligation. Employers’ acts against workers that demonstrate bad faith, malice or retaliation are especially vulnerable to an employee’s assertion whistleblower liability. The legal analysis is not complex.  The supreme court’s 2003 decision delineated the analysis: An employee asserting a public policy claim must be able to demonstrate that (1) she was engaged in activity protected by public policy; (2) defendant employer knew of the protected activity; (3) defendant fired her; and (4) the sole or principal reason for her discharge was that she had engaged in protected activity.

Concerning ethical considerations, the court described other examples of employer public policy violations.  Where the employer’s or industry’s ethical code is sufficiently clear to notify the employer of its duty.  This is especially true where the code’s protections benefit the public in general, such as a medical clinic’s duty to preserve the confidentiality of a patient’s records. An employer who directs its employee to engage in unethical activities may be subject to liability where it discharges the employee for refusing to comply.  An employee’s good faith belief that the employer’s demand, if complied with, would be unethical, complies with the rule.

It should be noted that dismissals complying with these principles apply to both so-called “at-will” employees and contractual employees. In sum, if an employee believes the employer has demanded too much — acts that the employee believes contravene public policy, as described, should consult an attorney immediately.  In addition to helping to protect the public from injury, the reporting employee may earn a significant money reward.