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Who Blows the Whistle and What Happens After?
Whistleblowers in False Claims Act cases come from all walks of life. They can include employees, contractors, customers, suppliers, and competitors. The Department of Justice does not compile statistics that would shed light on the "average" whistleblower. Often this information is kept confidential or behind a legal seal, particularly in cases with confidential settlements. In 2021, a pair of researchers from Harvard conducted a study focusing on complaints filed in 1,926 False Claims Act cases from 1994 to 2012 (see https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3837308 for the study). These cases involved a total of 2,318 individual whistleblowers. The researchers’ analysis aimed to investigate how “cash-for-information” programs impacted court filings and the behavior of whistleblowers, however, their study provided insight on who whistleblowers are and what happens after they blow the whistle.
The majority of False Claims Act cases, about 70%, are filed by employees. However, there are also some reports from customers (4.5%), contractors (2.2%), suppliers (0.5%), and competitors (0.4%).
Among employee whistleblowers, roughly 59% are rank-and-file line workers, while around 27% are in middle management positions. Only 4% of whistleblowers hold upper management roles.
More than half of employee whistleblowers, approximately 53.8%, initially report misconduct internally before turning to a regulatory agency or pursuing a False Claims Act case. Those who do choose internal reporting most often confide in top management (37.5%) or their immediate supervisor (34.4%). Reporting to legal compliance and human resources is less common, at 9.6% and 3.9%, respectively.
In response to these reports, companies usually opt to disregard them, with over 60% of reports being ignored, and only about 6% resulting in an internal investigation. In 10% of cases, the companies actively cover-up the fraud. Of employees who report internally, 70% face various forms of retaliation, including termination (33%), harassment (16%), threats (10%), and demotion (6%). Less than half of employee whistleblowers (45%) remain employed by the same company one year after filing suit.