There are many reasons why an individual “blows the whistle.” The debate often centers on whether these individuals are frivolous, disgruntled employees seeking financial gain or people with legitimate concerns who suffered personal loss. A wealth of academic research clearly shows it is the latter.
The False Claims Act is the primary vehicle empowering whistleblowers to shine the light on fraudulent conduct. Two Harvard Business School professors studied the experiences of 2,400 False Claims Act relators.[1] In a recent interview,[2] the professors discussed some of their findings.
First, the reason someone became a whistleblower in the vast majority of cases was not for financial gain. It was because the wrongdoer ignored the allegation of fraud. The individual (often an employee) first told the wrongdoer (typically an employer) of fraudulent conduct. Only after the employer ignored the employee’s allegations did the employee initiate a lawsuit.
In almost two-thirds of cases studied, the company flat out ignored the whistleblower’s allegation of fraud.
In another 10 percent of cases, the company actually engaged in a cover-up.
On top of that, some companies retaliated against the whistleblower, with firing being the most severe form of retaliation.
We see this in our practice. A personal sense of integrity and genuine desire to protect the public motivates our clients. Oftentimes, the employer ignores the allegations of fraud. The whistleblowing employee faces serious consequences for bringing the wrongdoing to light – including being fired.
Why do people become whistleblowers? People become whistleblowers because they have legitimate concerns of wrongful conduct who suffer retaliation from their employer, including termination, for bringing fraudulent conduct to light.
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[1] Dey, Aiyesha and Heese, Jonas and Perez Cavazos, Gerardo. Cash-for-Information Whistleblower Programs: Effects on Whistleblowing and Consequences for Whistleblowers (April 30, 2021). Available at https://ssrn.com/abstract=3837308 or http://dx.doi.org/10.2139/ssrn.3837308.
[2] White, April. Truth Be Told: Accounting for the Costs and Benefits of an Employee Who Reports Wrongdoing. Harvard Business School Alumni Newsletter (Dec. 6, 2021). Available at https://www.alumni.hbs.edu/stories/Pages/story-bulletin.aspx?num=8524.