Whistleblower cases arise when employees seek to “blow the whistle" on employers who are committing fraud on the state or federal governments. Cases may also follow when adverse action takes place against these whistleblower employees by their employers for their whistleblowing conduct. The types of employers subject to liability range from government organizations and corporations. Usually the employee reports fraudulent or corrupt conduct that is in violation of federal regulations governing, among other things, health and safety in the workplace, pharmaceutical regulations, environmental protection, or securities fraud. The purpose of whistleblower law is to protect these employees from adverse treatment such as termination from employment, deduction in pay, or transfers. As a result of whistleblower law, employees are also encouraged to uncover the fraud and corruption that can often occur in their places of employment. Whistleblower policy encourages employees to take action and not passively stand by while fraud and corruption occur.
False Claims Act
As a result of the False Claims Act, whistleblower cases under the FCA, also known as Qui tam lawsuits, have increased. More recently, typical whistleblower cases involve large corporations, Wall Street, and pharmaceutical companies. The largest whistleblower settlement in history occurred in early 2009 when pharmaceutical
giant, Eli Lilly & Company agreed to pay $1.4 billion in civil and criminal penalties based on the illegal and fraudulent marketing of its prescription drug Zyprexa. The whistleblowers were former Eli Lilly employees and under whistleblower laws, they were protected from:
* harassment, termination or demotion during the government’s investigation;
* awarded a significant share of the money recovered from Lilly; and
* remained anonymous for their protection.
Whistleblower Cases under Sarbanes-Oxley
As a result of Sarbanes-Oxley in 2002, makes it a felony to retaliate against a protected whistle-blower and protects employee whistleblowers once they’ve reported corporate fraud. Under Sarbanes-Oxley, a corporate whistleblower has the right to:
* reinstatement,
* back pay and
* other compensatory damages.