Everyone knows that if you blow the whistle on your company for ripping off the Federal Government that the False Claims Act will protect you. In fact, the law specifically states that …. Any employee who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment by his or her employer because of lawful acts done by the employee on behalf of the employee or others in furtherance of an action under this section, including investigation for, initiation of, testimony for, or assistance in an action filed or to be filed under this section, shall be entitled to all relief necessary to make the employee whole. Such relief shall include reinstatement with the same seniority status such employee would have had but for the discrimination, twice 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. An employee may bring an action in the appropriate district court of the United States for the relief provided in this subsection.
However, under a new decision of December 2006 this law will not apply unless, like the detectives in Drag Net you have the facts. Just the facts. The whistleblower can’t rely on rumors to report fraud.
This fact became painfully clear to Sharon Lang in a December court decision. Ms. Lang worked for Northwestern University at the Northwestern Medical Faculty Foundation (lets just call it the Foundation). Ms. Lang was working at the Foundation when it was applying for a bond rating with the Federal Reserve. She heard rumors that the Foundation big wigs were lying to the Fed Reserve Board about some very important information. Their intent was to paint a sunny picture to the Fed so the Foundation would get a better bond rating, which would lead to better loan rates. When Sharon found this out she felt it was her obligation to report this activity to the FBI, which she promptly did.
Unfortunately, Sharon forgot to get something that was very important to a Qui Tam case. EVIDENCE. In this case the United States Court of Appeals for the 7th Judicial Circuit found that Sharon’s whistle blowing was based strictly on rumors. The reason is that the legislature never meant for whistle blowing to be based on rumors. Without some “objective” basis for the claim the whistleblower isn’t actually blowing the whistle but in fact simply acting like “chicken little” (yes the Federal Judge actually compared Sharon to the old fable and recent movie star). Since Sharon and the other gossips had no hard evidence or even any first hand knowledge of the “alleged” fraud she did not become an official “whistleblower” under the statute.
Needless to say, the Foundation was not happy with Ms. Lang. Therefore, after making the complaint to the FBI, Ms. Lang was fired. This was upsetting to Ms. Lang as she claimed she was discharged in retaliation for her report to the FBI. Hard to imagine, but maybe it’s true. (Sorry about the sarcasm.)
Ms. Lang then sued Northwestern Foundation for violating her rights under the False Claims Act. The trial judge said, you’re a gossip and not a whistleblower and threw her claim out of court. The actual holding was that Sharon did not have a remedy under 31 USC 3730(h) because there was no action filed, or to be filed, under the False Claims Act, but it works the same way.
The Court of Appeals agreed with the trial judge and affirmed his decision. The appeals court based their decision on Neal v. Honeywell, Inc., 33 F.3d 860 (7th. Cir. 1994), which limits protection to legitimate False Claims Act violations and does not give protection to employees who… "behave like Chicken Little… without advancing any goals of the False Claims Act."
The Court in Lang’s case said that she played the part of Chicken Little by calling the FBI about imaginary fraud without having any objective basis for her belief. They went on to say that if Lang was a problem for her management team that was too bad for her because the False Claims Act is not intended to protect problem employees who are likely more problems then they are worth to management. They also said that Lang’s intent was irrelevant and that without objective facts the False Claims Act simply does not protect her.
“What Lang actually believed is irrelevant, for people believe the most fantastic things in perfect good faith; a kind heart but empty head is not enough. The right question is whether her belief had a reasonable objective basis, and sensible jurors could find that it did.”
So, my friends, while I agree that the FBI can’t chase down rumors of crazy employees, there is an obvious danger here. That danger is that employees often see and hear about fraud but are never in a position to gather any real evidence of that fraud. Certainly we don’t want employees to run amok with allegations of fraud that border on the fantastic; but what about the rational and reasonable claims. Is it really a “fantastic” or irrational claim that the foundation was falsifying information to the Federal Reserve to save a percentage point or two on multimillion dollars of debt? Sure sounds reasonable to me. Further, if the FBI had investigated and found evidence of fraud, wouldn’t Ms. Lang then get protection? It appears not.
If you hear any good gossip don’t spread the rumor. Keep it to yourself and go find hard evidence. Then find a good Qui Tam attorney to document the case. After fully documenting and preparing a solid case turn in the crooks. If you don’t properly set up your case, the bad guys are going to get off every time.
Brian F. LaBovick, Esq.
