Myth That Internal Reporting Solves All Issues

One of the myths that can sometimes keep potential whistleblowers from coming forward is the myth that internal reporting solves all issues. There may be some very big companies out there with strong and protected internal reporting mechanism, which will protect the whistleblower and keep them anonymous, and allow the company to clean house and do the right thing via an internal reporting mechanism.

Even those companies would not have such internal reporting mechanisms if it were not for the possibility of an external reporting mechanism that would allow a whistleblower to go to the government and provide real information that the government could act upon. While reporting internally may seem easier, filing a whistleblower case is one of the best ways to ensure that those attempting to defraud the government are held accountable for their actions.

Necessity of Whistleblower Laws

The myth that internal reporting solves all issues is not only false, it can also be harmful. There must be whistleblower laws to allow whistleblowers to go to someone outside of their own company, outside the chain of command, in order to be able to be successful whistleblowers. The False Claims Act does that. It allows a whistleblower to go to the government with information, and if the government is the defrauded party, to report wrongdoing, and the government can hopefully pursue the claims. Most of the other whistleblower reward laws, with obvious procedural hurdles, also allow a whistleblower to go them at some point.

External Reporting

The SEC Whistleblower Program, CFTC Whistleblower, and the IRS Whistleblower Program, all also provide an external way for whistleblowers to report. Internal reporting has a place, but it cannot be, and should not be, a substitute for whistleblower reporting and whistleblower action outside of internal reporting. It may be extremely surprising to people to know how few cases are filed in the federal government and how few lawyers there are out there who pursue these cases on a full plan basis. The myth that there is a huge False Claims Act machine is seriously overblown.

The average number of False Claims Act cases filed in federal court in a year is somewhere just north of 700. Keeping in mind that the federal government spends trillions of dollars in any given year and that the vast majority of those cases are healthcare related, that means that the rest of the government spending is for defense, customs enforcement, all manners of contracting, and there may be 150-200 cases a year total. This is not a large number of cases and there is always room for good cases to be filed. Everybody who works in these matters, the government and private attorneys, are always going to hear what a whistleblower may know in an attempt to support the whistleblower and their claims.

Whistleblower Protection As a Myth

Besides the myth that internal reporting solves all issues, there is another myth that persists in discussions of whistleblowing, and that is the concept of whistleblower protection. It is not entirely a myth to talk about whistleblower protection, it is just more or less the wrong word. Whistleblower protection, statutes, laws, the anti-retaliation provision of the False Claims Act, allow a relator to sue if they have been retaliated against, either for reporting fraud or for attempting to prevent fraudulent activity from occurring. These laws are important and can provide great relief for clients and for whistleblowers. They do not necessarily stop retaliation from occurring initially.

They may provide a tremendous incentive to companies from retaliating against anyone, so in that sense they may provide an overall protection, but nobody enjoys being the subject of retaliation merely to be able to sue under a whistleblower anti-retaliation provision. It is not protection. The best protection for whistleblowers would be increased understanding of their value to society and the reason they should be honored for providing us with information that protects everyone.