2015—The Year of the Whistleblower?

2014 saw a number of decisions upholding the rights of corporate and government whistleblowers to be free from workplace retaliation for blowing the whistle on illegal, harmful, or fraudulent activity, including an important decision in mid-December from the Eighth Circuit recognizing the broad scope of protection under the federal False Claims Act. Now, less than a month in, 2015 already boasts another important decision from the United States Supreme Court similarly upholding broad whistleblower protections under the federal Whistleblower Protection Act. Will 2015 be known as the year of the whistleblower? Only time will tell, but the trend appears to be moving in the right direction.

Blowing the Whistle on Government (in)Activity that Threatens Public Safety: Dep’t of Homeland Security v. McLean, No. 13-894, 574 U.S. ___ (Jan. 21, 2015).

In 2003, less than two years after the devastating September 11, 2001 terrorist attacks, federal air marshal Robert J. MacLean was briefed on current al Qaeda plans to hijack additional long-distance passenger flights in continued terror attacks on the United States.

A few days later, MacLean was informed that his employer, the Transportation Security Administration (“TSA”), was cancelling certain long-distance overnight missions as a cost-saving measure to avoid incurring the expense of overnight hotel stays. MacLean believed that TSA’s plans to cancel these missions during an elevated hijacking alert was both dangerous and contrary to a federal law that required an air marshal on board any flight presenting high security risks. MacLean expressed his concerns to his supervisor and to the Department of Homeland Security Inspector General, both of whom summarily rebuffed his concerns.

Unsatisfied with these responses, MacLean contacted a reporter from MSNBC, who published a story on the subject that led to congressional scrutiny of TSA’s actions and a quick reversal of TSA’s decision to cancel the missions in question.

After later learning that MacLean was the source for the MSNBC story, TSA fired MacLean, asserting that he had disclosed sensitive security information without authorization. MacLean challenged his termination, asserting that his disclosure of information was protected by the federal Whistleblower Protection Act (the “WPA”), which protects federal employees who blow the whistle on “any violation of any law, rule, or regulation” or a “substantial and specific danger to the public health or safety,” unless such disclosure is “specifically prohibited by law.” 5 U.S.C. §2302(b)(8)(A).

Before the Supreme Court, TSA did not dispute that MacLean believed in good faith that his disclosures to MSNBC related to matters that involved potential violations of law by TSA and presented a substantial danger to public safety. Instead, TSA asserted that MacLean’s disclosures were not protected under the WPA because his disclosures were prohibited by federal regulations and therefore fell under the WPA’s exception for disclosures that are “specifically prohibited by law.” The Supreme Court disagreed, holding that federal regulations do not qualify as “law” under the WPA. As the Court explained, if agency regulations were considered “law” under the WPA, “then an agency could insulate itself from the scope of [the WPA] merely by promulgating a regulation that ‘specifically prohibited’ whistleblowing.”

Blowing the Whistle on the Fraudulent Conduct of a Customer: Townsend v. Bayer Corp., No. 13-1468, --- F.3d ---- (8th Cir. Dec. 17, 2014).

Mike Townsend worked as a pharmaceutical sales rep for Bayer. In January 2008, one of Townsend’s customers, a physician, bragged to Townsend that he had been able to import a non-FDA approved version of one of Bayer’s products from a “gray market” source in Canada at a significant discount, yet was billing Medicaid for the full price of the FDA-approved version at a substantial profit. Townsend reported this to his supervisor and others at Bayer, who responded by telling him that he should not get involved.

Rather than heed Bayer’s admonition, Townsend reported his concerns to the authorities. A subsequent investigation substantiated Townsend’s complaints, and the offending physician was ultimately convicted of submitting false claims to the government. Shortly after, Townsend was fired by Bayer for alleged problems with his company-issued credit card.

Townsend sued Bayer, alleging that his termination violated the whistleblower anti-retaliation provision of the federal False Claims Act (the “FCA”), 31 U.S.C. § 3730(h). After the jury awarded Townsend a substantial verdict, Bayer appealed to the Eighth Circuit. One of the more interesting arguments made by Bayer was the contention that the FCA’s whistleblower protections do not apply to situations like the one presented, where the whistleblower discloses fraudulent activity of a customer, rather than the employer.

The Eighth Circuit rejected Bayer’s argument. It began by noting that the FCA’s anti-retaliation provision “broadly protects any lawful acts done by an employee to stop violations of the FCA.” The court further reasoned that an employer “clearly has motive to retaliate against” an employee who reports an important customer’s fraudulent activity to the government, potentially causing the employer to lose the customer’s business. Based on the plain language of the statute, the court held that such retaliation is a clear violation of the FCA’s whistleblower protections.