Not Becoming a Whistleblower (Part 1)

Not Becoming a Whistleblower (Part 1)

According to accepted wisdom – at least among whistleblowers and our supporters – whistleblowing is important to society.  We are vital to the public interest.  We deserve respect.  We are encouraged to brave the consequences and disclose wrongdoing.  But what if all that is just wrong?  How would we respond to misdeeds?

Whistleblowing is a relatively new phenomenon.  Before the 1970s, little was written about it.  The number of research papers mentioning the topic since 1920:

The percentage of books that mention it from 1920-2008 also took off after about 1975 (per Google Ngram):

Early on, whistleblowers were limited to current or past members of the wrongdoing organization who lack authority to correct the wrong[1].  This internal status distinguished them from muckraking journalists, like Ralph Nader, and other outsiders, like Daniel Ellsberg.

As insiders who rat on their employers and colleagues, whistleblowers have long been exposed to criticism for being disloyal.  Theorists devised moral rules for whistleblowing.  Professor Sissela Bok demanded that ethically correct disclosure must be in the public interest, expose a significant danger, and be likely to lead to a better situation[2].

Whistleblowing grew with the attention.  More people reported wrongdoing: increasing from 8 per 1,000 employees in 2004 to 14 per 1,000 in 2017, according to NAVEX Global, a large provider of corporate hotlines.  Qui tam suits under the False Claims Act increased from 30 in 1987 to 675 in 2017.  In California, whistleblower complaints filed with the State increased from 88 in 2005 to 2,022 in 2017.

Seeing a social benefit in all this, legislators passed laws to protect whistleblowers.  The Whistleblower Protection Act of 1988 initiated protection for federal employees.  After the Enron and WorldCom scandals, Congress enacted the Sarbanes-Oxley Act of 2002 to address corporate fraud.  Eventually all states offered some form of legal protection for whistleblowers.

Organizations formed to support the whistleblowing enterprise.  The Government Accountability Project started in 1977.  The National Whistleblower Center began in 1988.

Whistleblowers became iconic.  Films about them won awards: On the Waterfront (1954), Serpico (1973), All the President’s Men (1976), Silkwood (1983), The Insider (1999), Erin Brockovich (2000), The Informant (2009), and Snowden (2016).

Then over the past twenty years, our understanding of what leads to ethical and unethical behavior shifted.  Philosopher George Sher (2001) argued that our moral decisions were the result of our background and experiences[3].  Whether we are courageous whistleblowers or misbehaving organizational managers depends on the luck of our draw.  We can even flip between the roles as we go through life.

Social scientists, including Dan Ariely (2012), Max Bazerman (2011), Jonathon Haidt (2001), Daniel Kahneman (2011), and Ann Tenbrunsel (2009), conducted research into moral decision-making.  They found that each person’s choices, whether organizational wrongdoer and noble whistleblower, are more often the results of emotions and their immediate situations than reasoned analysis.  Whistleblowers act like anyone else: they aim, consciously or not, to serve their own interests rather than the public’s.

While whistleblowing has continued to increase in some circles, in others it may be slowing.  False Claims Act qui tam lawsuits have been basically flat since 2011.  And in Santa Clara County (California) where I worked, complaints have declined 30% since 2011[4].

There may be good reason for whistleblowing to decline in the future, if not now.  For example, the lack of effective protection from retaliation can discourage some from speaking up. 

That protection comes from a patchwork of local, state and federal laws.  Each state employs its own mix of common law and laws specific to certain industries and sectors.  Burdens of proof, enforcement standards and remedies all vary, complicating anyone’s search for coverage.  Perfecting a claim can be dicey.  Some who make disclosures, like those in the intelligence community, receive no protection at all.

California promises protections in its robust Labor Code 1102.5, but over the past 10 years only 5% of retaliation complaints were found to have merit.  And it takes 2-3 years on average for complainants to get their sorry news[5].

Employees can also be discouraged when their disclosures don’t lead to the correction of bad behavior or reasonable punishment of bad actors.  Based on my investigations, I alleged several legal violations by HomeFirst Services of Santa Clara County.  One was particularly telling: HomeFirst overbilled Santa Clara County by about $133,000 in 2010-2012.  After I informed County officials informally in July 2013 about the accidental overbilling, they took no action.  I filed a whistleblower complaint with the County on February 12, 2014.  Follow-up communications with County and State officials led nowhere.  The County decided my complaint was “not sustained” on March 3, 2015.  Three years later the overpaid amount had not been recovered from HomeFirst, but the County said it still intended to get it back.

The treatment of my complaint, frustrating though it was, appears consistent with Santa Clara County practices.  From January 2013 through October 2016, the County resolved 256 whistleblower complaints.  Of those, just 14% were sustained wholly or partially.

Even when companies are caught, they seem to escape real punishment.  In settlements of FCA lawsuits, they seldom admit guilt[6].  Instead their fines become just another cost of doing business.  Or the real culprits manage to escape punishment, as in the case of Ben-Artzi v. Deutsche Bank.  After Wells Fargo Bank was caught repeatedly, it launched an ad campaign to tout its recommitment to the customers it cheated.  We can become cynical.

It’s painful to realize that after so many headaches we obviously achieved nothing.  Even the successes of famous whistleblowers can be debated.  Daniel Ellsberg released the Pentagon Papers only after years of public opposition to the war in Vietnam.  Still, the war continued for another three years.  By the time Sherron Watkins warned CEO Kenneth Lay about fraud at Enron in August 2001, the company’s stock had already dropped 30% from its March level[7] and its accounting frauds were multiplying to hide burgeoning debt.  It probably would have crashed even without her famous disclosures.

Despite the failures and injustices, whistleblowing maintains its idealized form: a hero up stands up to bad actors and her courage benefits all of us.  But the gap between this ideal and reality has widened[8].

­­­­­­­­­­­­­­­­­­­­­­

---

[1] Near, Janet P., and Marcia P. Miceli.  “Organizational Dissidence: The Case of Whistle-Blowing.”  Journal of Business Ethics 4 (1985): 1-16

[2] Bok, Sissela.  “Whistleblowing and Professional Responsibilities.” In Ethics Teaching in Higher Education. Daniel Callahan and Sissela Bok (eds.).  New York and London: Plenum Press. 1980. 277-295.  See also De George, Richard T.  Business Ethics.  6^th edition.  Upper Saddle River, NJ: Pearson Education.  2006.  307-313

[3] Cf. Very Bad Wizards, September 19, 2018

[4] See my summary of the County’s 2016 report here.

[5] In 2017, 39% of the determinations related to complaints filed in 2014 or earlier.  Two determinations related to 2010 complaints.  See also this.

[6] For example among recent cases, Health Management Associates (9/25/18), East Texas Medical Center Regional Health Services (8/27/18), Reliant Rehabilitation Holdings (8/23/18), Post Acute Medical (8/15/18), Royal Bank of Scotland (8/14/18), Richard A. Olsen (8/7/18), Grenada Lakes Medical Center (8/6/18), Prime Healthcare Services (8/3/18), William Beaumont Hospital (8/2/18), and Wells Fargo Bank (8/1/18)

[7] The S&P 500 was mostly unchanged over that period.

[8] Cf. Appiah, Kwame Anthony.  As If: Idealization and Ideals.  Cambridge, Mass.: Harvard University Press.  2017.