Turning Whistleblower Lemons into Compliance Lemonade

As a compliance officer or lab manager, it’s important to be prepared for any potential whistleblower activity in your lab. After all, a False Claims Act (FCA) whistleblower lawsuit can do significant damage to your lab and its reputation, even if the case lacks truth and merit.

But retaliating against whistleblowers is like throwing gasoline on the fire. In 1986, Congress amended the FCA to protect whistleblowers, aka qui tam relators, from retaliation by those they sue. Specifically, Section 3730(h) protects relators from being “discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment” because they took action to “stop [one] or more violations” of the FCA. Here’s a look at whistleblower retaliation liability risks and how to defuse them.¹

Retaliation Liability Risks

Under the FCA, victims of retaliation are entitled to reinstatement with the same status they would otherwise have, plus “[two] times the amount of back pay, interest on the back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys’ fees.”¹

Being found liable for retaliation can set your lab back millions of dollars. A New Jersey medical clinic learned this lesson the hard way. The problems began when a hematology technician who had been with the clinic for 20 years expressed concerns that staffing practices in the blood bank didn’t comply with the state sanitary code and lab regulations. He went to supervisors, HR, and upper management to complain. But nobody did anything. In addition to ignoring his complaints, the blood bank supervisor targeted the technician for a series of disciplinary actions, ruining his previously unblemished record. He then got fired.

The technician contacted the New Jersey Department of Health, which investigated the lab, found that the allegations were true and ordered the clinic to implement a plan of correction. Vindicated, the technician then sued the clinic for retaliation. After a six-day trial, the jury ruled in the technician’s favor and awarded him $2.14 million, including $80,640 in lost wages, $60,000 for pain and suffering, and $2 million in punitive damages [Doculan v. Bayonne Medical Center, (No. HUD-L-6670-10)].

What Makes Whistleblowers Tick

While commonly despised as “traitors,” the truth is that whistleblowers have been responsible for uncovering huge scandals that might otherwise have gone unnoticed. Just think what might have happened had there not been whistleblowers at Theranos.

Whistleblowers pay a price, often sacrificing their careers in the interest of justice. A 2021 study published in Frontiers in Psychology (aptly named “Snitches Get Stitches and End Up in Ditches: A Systematic Review of the Factors Associated With Whistleblowing Intentions”) have found that whistleblowers are highly principled people who do what they do not to garner money and attention, but to right a public wrong. They value truth and justice above blind loyalty.²

How to Protect Your Lab

Often, labs and other providers don’t get sued by whistleblowers unless something about their compliance program is amiss. The best thing you can do to protect your lab is to turn potential whistleblowers into compliance allies.

Recognize that it’s actually beneficial when employees come forward to let you know wrongdoing may be taking place at your lab as it gives you an opportunity to identify and correct problems before they result in investigation, prosecution, and whistleblowing lawsuits. After all, employees only become whistleblowers when they think you’re covering up, stonewalling, or ignoring their concerns. In other words, you’re on the same side—or at least you should be.

Strategically, your best bet for avoiding whistleblower lawsuits is to implement a policy to encourage rather than discourage employees to come forward and report wrongdoing to you. Although there’s no such thing as a one-size-fits-all formula, the Model Whistleblower Protection Policy on the G2 Intelligence website includes the six essential elements such a policy should contain, including:³

1. Statement of General Compliance Principles

Start the policy by expressing your lab’s commitment to maintain the strictest standards of compliance with regulatory, ethical, and professional standards. Acknowledge the key role employees play in enabling you to meet that compliance commitment by reporting potential wrongdoing, illegal activity, or problems that you may currently be overlooking.

2. Assurance of Non-Retaliation

In addition to being illegal, retaliation and even the fear of retaliation defeats the purpose of whistleblower prevention by discouraging employees from coming forward to report illegal activity. Thus, it’s imperative to make a clear statement assuring employees that they won’t suffer retaliation for such reporting. Double down by indicating that those who do commit retaliation in violation of the policy will be subject to discipline, up to and including termination.

Strategic Pointer: Protection from retaliation should extend only to employees who report wrongdoing in good faith and with the reasonable belief that the allegations are true. Those who level accusations that they know to be false, for example, in a deliberate attempt to disrupt operations, tie up resources, or harass the accused, should be subject to the full gamut of discipline.

3. Key Definitions

There are a few key definitions you need to nail down to ensure your whistleblower protection policy is clear and comprehensible to employees, including the meanings of:

• “Retaliation” that the policy bans
• “Illegal activity” that employees may report
• “Whistleblowing” activity that the policy protects
• “Employees” that the policy safeguards from retaliation

4. Reporting Procedures and Mechanisms

There needs to be a way for employees to report the wrongdoing they see or are concerned about. The first challenge is to ensure that employees provide the information you need to process and investigate the complaint, including a description of the alleged illegal activity, when it happened, and, if known, the names of the persons who committed it.

Also recognize that the actual reporting mechanism is likely to influence an employee’s decision to report. Thus, for example, requiring reports to be signed and submitted to the supervisor will deter employees from reporting wrongdoing that those supervisors allegedly committed or condoned. Accordingly, your lab should have at least three reporting mechanisms:

• Reporting to an immediate supervisor or manager
• Reporting to an alternative internal source if the supervisor or manager is mixed up in the wrongdoing
• As recommended by the U.S. Department of Health and Human Services Office of Inspector General, anonymous reporting to a hotline administered by an independent and external website host or other third party⁴

5. Investigation Procedures

As the Doculan case illustrates, employee reports of internal wrongdoing are worse than useless if they’re ignored. That’s why your policy should establish clear procedures for investigating employee reports. Investigations should be prompt, fair, thorough, and, above all, carried out by a person who not only is, but is also perceived to be, objective and uninvolved. In some cases where compliance problems reach deep into the lab and have a widespread impact on operations, it may be necessary to use an external investigator. You should also have procedures for communicating the status and, if possible, results of the investigation so employees can see that you’re actually taking action.

6. Assurances of Confidentiality

If possible, allow employees to report wrongdoing without having to reveal their identity. In addition to anonymity, assure employees that you’ll keep their reports confidential and not disclose them, except i.) where allowed by law, and ii.) as necessary to carry out a proper investigation.

Takeaway

The mission of the compliance officer is to discover potential legal problems when there’s still time to prevent them from festering into liability. In this regard, employees who are willing to come forward and report what they know are of enormous value. As long as you listen, investigate, and correct the problems you identify, employees who voice concerns are more like reconnaissance and intelligence agents than whistleblowers. It’s only when you stonewall, ignore, suppress, and intimidate that employees with compliance concerns become whistleblowers.

References:

1. https://www.govinfo.gov/content/pkg/USCODE-2011-title31/pdf/USCODE-2011-title31-subtitleIII-chap37-subchapIII-sec3730.pdf
2. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8523783/
3. https://www.g2intelligence.com/compliance-tool-model-whistleblower-protection-policy/
4. https://oig.hhs.gov/documents/compliance-guidance/806/cpglab.pdf