The Problem of Knowledge
Those whom we accuse of organizational wrongdoing are sometimes
quite clearly and knowingly guilty of the misdeed. Debra
Halbrook observed that two district attorneys in adjacent North Carolina counties
each agreed to hire the other’s wife to work in his office, receiving full pay
for less than full-time hours[1]. And Dr.
Theodore Schiff figured out that from 2008 to 2014 dermatologist Gary
Marder billed Medicare for medically unnecessary treatments. After more than three years of litigation, the
court ruled against Marder and he agreed to pay $18
million to the Department of Justice in settlement of the allegations[2].
On its turn, HomeFirst knowingly
billed the County of Santa Clara and HUD for property rental expenses that
were not
contractually reimbursable. In addition,
the company knowingly rented apartments to individuals who failed to meet the
requirements set forth in loan
agreements covering the property. The
money HomeFirst improperly kept from HUD,
the County
of Santa Clara, and the City
of San Jose was obtained innocently, but it was intentionally retained
after the impropriety was identified.
Far more often, the accused disputes whether the alleged activities
were violations at all, often in ways that critics, especially its accuser,
consider disingenuous. Paul
Bishop and Robert Kraus observed that their bank employer (World Savings,
acquired by Wachovia which was acquired by Wells Fargo) was misstating its
financial position by moving mortgages off its balance sheet. But the legality of this highly technical
operation, which is reminiscent of the accounting fraud that contributed to Enron’s
collapse, may be disputed by reasonable people, as Wells Fargo has done for five
years and counting.
Or the accused may contend that the alleged actions never
occurred at all. In a recent case, Michael
Bachmann and Sarah Steele claimed that the San Francisco Bay Area Air
Quality Control District destroyed important documents concerning air
pollution. The District countered that
the pair’s allegations had been investigated previously without finding any
problem and that the destroyed documents had been duly scanned prior to
destruction.
The licensing
violation that I alleged HomeFirst had committed involved a technical
question concerning when facilities need to be licensed under State law. I could have been wrong, or the violation could
have been, as things turned out, easily fixed, as was the food
handler card violation. What I thought
might be illegal bid
collusion turned out not to break federal law, but whether State law was
violated remains uncertain. Whether HomeFirst’s payroll
tax and minimum wage stance toward homeless workers constituted violations
of law is not determined conclusively although evidence so far points to
HomeFirst’s innocence, at least with respect to State and local laws.
In her recent New Yorker article, “Why
Facts Don’t Change Our Minds,” Elizabeth Kolbert discusses our tendency to
attend most closely to information that supports our beliefs. As a result of this confirmation bias,
our own theories are resistant to change, and we are adept at finding flaws in
opposing theories. Our objective, some
researchers conclude, is not a search for truth, but winning the argument. Moreover, our brains are designed so that it feels
good to stand up for what we believe, even if we are wrong.
In whistleblowing cases, both the accused wrongdoer and his
accuser are susceptible to the influences that Kolbert describes. HomeFirst CEO Niklaus was confident that the government agencies' failure to demand immediate repayment of misused
funds meant they approved of the situation and that my technical arguments
about the alleged violations carried no weight against the good intentions of
the company.
For me and most whistleblowers, I suspect, official indifference
to our complaints is evidence of greater sympathy with the wrongdoers or incomplete
investigations. Maybe so, or maybe not
so much.
The inclination on both sides to continue fighting for our
causes, despite growing evidence that we will lose, can lead to absurd
results. For example, whistleblower Robert
Purcell fought for 18 years against pump manufacturer MWI, and after his
final defeat he still believed that a great injustice had been done.
An accused-side absurdity: Sanford
Wadler was general counsel of Bio Rad Laboratories, a position he held for 25
years, when he observed what he believed were violations of the Foreign Corrupt
Practices Act. After a couple of years
of his questions and investigations, Bio Rad fired him. Wadler sued under federal and State laws and
won; Bio-Rad appealed; the case went on for three and a half years after his
termination. Although the company may appeal again, so far
its loss is $14.5 million, including $3.5 million for Wadler’s legal costs. That is in addition to the $14.35
million that it agreed to pay the Department of Justice to settle
allegations of its violations of the FCPA.
Kolbert is not optimistic about the prospects for escaping
our apparently inbred need to win these fights.
There appears to be small incentive for companies to change their ways –
Bio-Rad’s stock price has increased more than 70% since it fired Wadler; if HomeFirst
is ever called to pay anything to me, the amount will likely come from the insurance
policies it held three years ago.
Whistleblowers, too, stick to their current approach. Despite warnings from Alford,
Devine
and others, more whistleblowers step forward each year, perhaps in response to
more bad activities, ever-increasing rewards[3],
or occasional
news about whistleblower protections.
If we can move away from crazy situations – like whistleblower
cases that stretch routinely for 4-plus years (and up to 18 years) or that can result
in a $14 million whistleblower settlement – it will be the result of honestly discussing
our errors and the things we don’t really know[4],
not by devoting our energies to destroying the other side.
[1] One
of the wives quickly resigned when news got out, and one of the attorneys fell
under investigation for a number of possible violations.
[2] Marder
still denies the allegations (the DoJ concluded that all of Marder’s
medical physicist service billings since 2011 were false) and plans to sue
Schiff for defamation and libel.
[4]
Cf. Tavris, Carol and Elliot Aronson. Mistakes
Were made (but not by me): Why We Justify Foolish Beliefs, Bad Decisions, and
Hurtful Acts. New York: Harcourt, Inc. 2007.
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