In a landmark decision last month, the U.S. Supreme Court overturned two lower courts that dismissed whistleblower claims against employers. The nation’s highest court reaffirmed and strengthened the federal False Claims Act. The Court expanded the standard for determining a government contractor’s “false claim.”
The decision will ease the path to financial awards and protections for employees who report their employer’s illegal, false or fraudulent billings to the government.
Over the decades, especially since the Clinton administration strengthened the law, whistleblowers frequently succeeded against corrupt corporations.
The Act is a longstanding federal law that holds individuals and organizations that defraud the US government liable and accountable for their transgressions. It also provides an avenue for individuals with knowledge of the fraudulent activities to “blow the whistle” against their violating employer by filing suit on behalf of the government. Successful whistleblowers are also entitled to a significant percentage of any recovered damages.
Recent examples of successful whistleblowers occurred after the 2008 financial crisis. Whistleblowing employees from Wachovia and World Savings Bank (now owned by Wells Fargo) filed suit in 2011. They accused the banks of hiding billions of dollars in bad loans in off-balance sheet accounts. Referred to as the “Black Box,” the banks sold bundles of toxic loans without disclosing the risks. The banks received financial support from the Federal Reserve and FDIC in the sweeping efforts to shore up the country’s “too big to fail” financial institutions. Because of toxic loans, the banks’ balance sheets appeared to be solid. But there were millions in sub-prime loans fraudulently hidden or sold.
The banks were swindling the federal government and its taxpayers.
In response to the collapse of Enron and WorldCom due to fraudulent accounting schemes, Congress enacted criminal penalties against employers who retaliate against an employee who exposes fraudulent activity.
Vermont, like many states, protects the anonymity of whistleblowers that report wrongdoing by a state agency, employer or sub-contractor. They also prohibit retaliation against state employees who blow the whistle. A bill under consideration in the state legislature (H.253), would strengthen state whistleblower protections by prohibiting retaliation against any employee who reports possible violations with reasonable cause, participates in good faith in a public inquiry into the allegations or refuses to carry out an unlawful order.
The protections would apply if the employee alerted the employer of the violation(s) and allowed a reasonable opportunity for it to be corrected — or if reporting the violation would be futile. Revisions to the bill are expected as the Committee on General, Housing & Military Affairs may take up the bill for consideration this spring.
Under current federal and state laws and judicial interpretations, employees and sub-contractors of a broad variety of businesses and institutions – from banks and hospitals to state and federal government entities – are protected from retaliation. They are also rewarded for exposing illegal activities such as those described above.
Vermont has two additional provisions to protect employees who blow the whistle on improper employer conduct. One protects individual who report public and patient health and safety threats created by hospitals, clinics and other health care providers. The other protects employees who report unsafe conditions for employees or the public in the construction industry.
Our firm successfully prosecuted false claims act and whistleblower retaliation cases. Illegal retaliation may be in the form of employee dismissal, lay off, demotion or other forms of discipline. Employees who complain and pursue legal action may be reinstated, paid back wages with interest, receive compensation where reinstatement is impractical, punitive damages, reimbursement for attorneys’ fees and other remedies.
Our clients have been rewarded for their efforts. The public is also rewarded when prosecutors and courts, acting for the government, penalize swindling, corrupt practices and unsafe conditions.
If you have concerns about your employer’s activities or working conditions, we will provide a confidential consultation to determine the viability of bringing a whistleblower claim. Several of the laws have deadlines so it is important to discuss your concerns as soon as possible after your employer’s questionable conduct.