From that delicate balance between preserving the public good and the right of private action has emerged that most persuasive, and potent, moderator – the whistleblower claim. In our laws, the purpose of whistleblower provisions has been to enable employees, representatives and even business partners to report behavior that has harmed or could potentially cause harm to the interests of the government or the public it serves. The underlying rationale is that reporting this behavior removes the potential harm, punishes the offenders and makes an example of their behavior as a deterrent against future bad acts, therefore “blowing the whistle” should be encouraged and the person or persons who do it should be rewarded. Over the years, several well-recognized statutory programs based on federal law have included whistleblower provisions. These include the Occupational Health and Safety Act, the Internal Revenue Service Code and the Fair Labor Standards Act. State laws are also armed to respond to whistleblower complaints.
For example, a $327 million judgment against drugmaker, Johnson & Johnson, under the South Carolina Unfair Trade Practices Act was just reported to have been upheld. A whistleblower claim triggered this case, which has so far led to lawsuits by multiple states alleging that their Medicare and Medicaid programs have been defrauded. The South Carolina fine was calculated by assessing $4,000 for every “Dear Doctor” letter the company sent to physicians claiming that the drug was better than the competition and $300 for every sample it gave away to healthcare professionals.
But it’s not just big pharmaceutical companies that have been caught in the dragnet of a whistleblower complaint. In the healthcare arena, the threat is very real for distributors of durable medical equipment and for physicians, physician assistants and nurse practitioners who participate in treating patients and reporting the services provided. Outside of healthcare, recent whistleblower claims were filed by Alcohol, Tobacco and Firearms (ATF) agents (click link for story), to report violations of the Occupational Health and Safety Act, the Internal Revenue Service Code and the Fair Labor Standards Act.
Here are some useful tips for handling whistleblower scenarios. For employers:
- Develop and communicate a procedure for reporting potential compliance violations that is confidential, responsive and can be accessed by employees outside the regular chain of command. Maintain confidentiality as much as possible, and inform the employee of the outcome of your investigation.
- Carefully address any complaints raised by employees that involve potential violations of federal or state law, and document the resolution.
- Often, companies do not know the identity of the whistleblower until the indictment as been unsealed. Even if you receive this information, do not take any personnel action against an employee or business partner because they filed a whistleblower complaint.
- If possible, discuss your concerns with your managers, or if you feel uncomfortable about doing so, with your company’s compliance officer.
- Continue to observe the rules and requirements of which you are aware while the investigation is progressing, and to do your job.
- You may choose not to raise the issue internally and report it directly to the government, usually with the assistance of a qui tam lawyer. Supporting facts are very important to substantiate a whistleblower complaint, so be prepared to present information that would adequately support your case in court.
Federal and state whistleblower cases may request civil and/or criminal penalties and often disqualify companies or persons found guilty from participating in government fee-for-service or procurement programs. The fines are usually high and are a significant source of revenue for cash-strapped government agencies as well. The number of these cases, especially in the healthcare field, has been increasing and the trend is expected to continue.