Simply put a whistleblower is a person “who discloses improper or criminal activity within an organization” (Business Dictionary, 2016). These employees decide, despite knowing that they could be ostracized by co-workers and superiors alike, to report any known illegal activities, essentially blowing the whistle on foul play. When an employee is privy to information that details the operations of the organization or that of a partner organization due to their position they have the legal right to bring to the forefront any misconduct utilized to procure a profit. Whistleblowing can occur on many levels and while public corporate organizations are mainly blamed for extreme misconduct, whistleblowers can report the delinquency of private, nonprofit, and even government divisions. The misconduct of an organization or individuals inside the organization can be reported internally to supervisors or to ethics hotlines that are usually provided to employees at hire. More popular though are those who choose to expose major errors publicly, exposing information in detail to the media or industry regulators. Research by Archambeault and Webber (2015) supports the statistic that 40% of all occupational fraud cases examined in a 2014 fraud study were detected by the tip of the company’s own employee (p. 65). This factor is relevant to both internal whistleblowers and external whistleblowers.
This was the notion of Dr. Alon J. Vainer and nurse Daniel D. Barbir, employees of DaVita, the one of the nation's most innovative healthcare communities. While working for the company, Vainer and Barbir took note that the company was billing Medicare and Medicaid for useable medications that they threw away after partially using them (Denver Post, 2015). If proven, this would be the exposure of how the company essentially defrauded the government’s program. Filed under the False Claims Act in civil court, Vainer and Barbir cited that the drugs Zemplar, or vitamin D, and Venofer, an iron supplement were the drugs used inefficiently to garner maximum profit for their use. The False Claims Act provides the toughest whistleblower protection in the nation as well as strong penalties, with fines up to 10,000 per claim (Denver Post, 2015). In this particular instance, Vainer and Barbir were had valid reasons to bring to light DaVita’s fraudulent use of medicine. Firstly Medicare is a government funded program, funded by American tax dollars. Essentially the company was stealing from working class Americans, unfairly recouping funds that did not belong to them through false reporting. Another reason alludes to the National Centers for Disease Control and Prevention rescinding its initial recommendation of not using multiple uses of one vial of medicine in 2002. Since the CDC revised policy related to single-vials, DaVita could have followed the outlined procedure allowing them to maximize usage of the medicine (Denver Post, 2015). Furthermore, the law allows those who choose to flag improper behavior by protecting them from retaliation from the accused organization. Considering that neither Vainer nor Barbir could be punished for revealing the fraud, they could exercise their moral obligation to report fraudulent information to the proper authorities.
Yet it goes without saying that those who do choose to blow the whistle on organizational damage may suffer damning consequences. Archambeault and Webber (2015) discusses the personal and professional risks that a whistleblower must weigh when determining if they will indeed blow the whistle. Loss of reputation, increased stress levels, a more than probable change in employment, either voluntarily or due to retaliation are just a few of the deliberations assessed by said persons (pg. 65). The sensitivity of information disclosure and the risks it brought to those ethical enough to speak out prompted the creation of legislature to protect them. 2002 marked the year that Congress approved provisions in the legislature that protected individuals who can testify to fiscal misconduct in publicly traded companies. The Sarbanes-Oxley or SOX law served as an exception to the employment-at-will excuse companies could previously use as personal retaliation to a whistleblower (ACP Law and Ethics in the Business Environment, pg. 50).
Quoted by The Economist (2015), the number of tips received by the “Whistleblower Office” of the SEC has risen steadily since it was opened in 2011, to nearly 4,000 a year. This could partially be the result of the rewards received by persons who choose to highlight corporate misconduct. In the DaVita case, the company was forced to settle, saying in a statement that, "Although we believe strongly in the merits of our case, we decided it was in our stakeholders' best interests to resolve it,"(Denver Post, 2015). The settlement instructed DaVita pay the government $450 million in addition to a $45 million fees charge. Of this settlement, the two whistleblowers would be awarded up to 30 percent of the funds. Moral obligation is provided protection and rewarded when a person or people choose to take advantage of the opportunity to do so.
References
Archambeault, D. S., & Webber, S. (2015). Whistleblowing 101. CPA Journal, 85(7), 60-
64.
Halbert, Ingulli. ACP Law and Ethics in the Business
Environment, 7th ed (CUSTOM), 7th Edition. [VitalSource
Bookshelf Online]. Retrieved from https://strayer.vitalsource.com/#/books/9781305822016/ The Age of the Whistleblower; Corporate Crime. (2015, December 5). 