by Stephen Kohn
Merit System Protection Board. This three-member Board is appointed and confirmed by the Senate to serve seven-year terms. The MSPB hears most federal employee whistleblower cases. Whistleblowers come before the MSPB if they object to the findings of the Office of Special Counsel or request a hearing on the merits of a retaliation case. Whistleblowers have a narrow right to appeal a final order of the MSPB to the Court of Appeals, but federal employees cannot have their cases directly heard in U.S. District Court and have no right to a jury trial. The MSPB acts as the trial court, creates the evidentiary record, and issues the final agency decision on behalf of the United States.
The composition of the Board is political. Two are from the President’s political party, and one position is set aside for the opposition party. In other words, the political party that holds the White House dominates the composition of the MSPB. Because the White House often has an interest in squashing exposure of wrongdoing within the agencies it controls, the composition of the MSPB has always been controversial and heavily weighted to benefit the President.
Office of the Inspector General. All federal agencies have an Inspector General, who acts as the internal watchdog for that agency. Inspectors General are traditionally more independent than the Special Counsel. The law permits them to receive confidential whistleblower disclosures and prohibits retaliation against whistleblowers who provide the IGs with information. The IGs often investigate cases of fraud against the government committed by contractors and consequently are involved with many False Claims Act cases. IGs are appointed by the president of the United States, and confirmed by the Senate.
Over time IGs have obtained a mixed reputation. Many IGs take their role as whistleblower protectors seriously. Favorable IG reports have resulted in the reinstatement or vindication of numerous whistleblowers. But other IGs have not acted in good faith. Some have been accused of retaliating against whistleblowers and have left office in disgrace. Others have used their offices to investigate whistleblowers at the request of agency officials intent on quashing dissent within their programs.
One notorious case of IG abuse occurred within the Environmental Protection Agency. Large multinational chemical corporations covertly worked with IG agents to destroy the reputation of an EPA scientist who regularly served as an expert witness against these companies in toxic tort cases. What better way to discredit your critics than to get the EPA to fire the star witness who testified on behalf of victims of toxic chemical exposures? The IG’s target was Dr. William Marcus, the EPA’s Senior Science Advisor and the only certified toxicologist employed by the agency. He was an expert on the adverse health effects of numerous deadly chemicals. The chemical companies wanted to silence him. They almost succeeded.
At the request of counsel for these companies, the EPA’s Office of Inspector General commenced a prolonged and secret investigation of Dr. Marcus. The evidence assembled by the IG was gathered almost exclusively by attorneys for the very companies Dr. Marcus had accused of selling unsafe products. The company attorneys spent countless hours poring over Dr. Marcus’s court testimony where he had provided scientific evidence demonstrating adverse health consequences caused by human exposure to various chemicals. They put packets of information together, fed the evidence to the IG agents, who ultimately used it as the basis for getting the EPA to fire him. Dr. Marcus faced the loss of his job and the complete destruction of his reputation as a world-renowned toxicologist.
Dr. Marcus used the environmental whistleblowers laws to fight back. During his hearing the misconduct of the IG, and its covert relationship with the chemical companies, was exposed. Among the facts confirmed was that the IG had unlawfully destroyed evidence. Dr. Marcus had filed discovery requests to obtain access to the notes of all of the communications between the chemical company attorneys and the Office of Inspector General. But the notes had been shredded. One IG agent testified that after Congress had made a request to obtain documents related to Dr. Marcus, and after a Freedom of Information request had been filed for these records, the agent systematically went into the case file and shredded all investigatory notes. Despite this misconduct, other evidence still confirmed that the chemical companies were the source of most of the information used to fire Dr. Marcus. Dr. Marcus won his case and was reinstated with back pay.
Department of Labor. Two appointed offices within the DOL have significant authority over whistleblowers. The first is the OSHA division. This division investigates numerous whistleblower cases, including those filed under the Occupational Safety and Health Act, the Sarbanes-Oxley Act, environmental and nuclear protection laws, transportation safety laws, auto safety laws, food safety laws, and consumer protection laws. In most cases the results of these investigations can be appealed and a hearing requested. Unfortunately, under the Occupational Health and Safety Act, if OSHA administratively denies the claim, the whistleblower has no right to a hearing and cannot file a case in federal court.
But under almost all other DOL-administered laws, whistleblowers can request a hearing (with full discovery) before an administrative law judge. These DOL ALJs have independence, and their positions are protected under law. The reputation of these judges can be gleaned from reading their decisions, which the DOL publishes online. ALJs issue a “recommended order,” which is reviewed by a five-member Administrative Review Board (ARB). The ARB has the authority to issue final enforceable orders.
Unlike the ALJs, the ARB is not independent. The Secretary of Labor has complete authority to appoint ARB members. There are no controls on who can be an ARB member. There is no confirmation process, and there is no requirement that the composition of the ARB be balanced, let alone have a track record of being fair to whistleblowers. In other words, the U.S. Chamber of Commerce can call the Secretary of Labor on the phone and ask the Secretary to fire a pro-whistleblower ARB member and appoint a business-friendly attorney to that position (although there is no evidence that this type of blatant interference has ever happened).
Needless to say, if a whistleblower has a case before the ARB, it is important to determine the reputation of the current ARB members.
Over the years, whistleblowers complained about extensive delays in OSHA investigations and the ARB’s decision-making process. Congress responded to these long-standing and well-documented concerns. Approximately 15 years ago Congress started permitting whistleblowers caught up in DOL proceedings to remove their cases to federal court and have a full trial on the merits before a federal jury. This removal process was de novo. If the whistleblower law you were suing under permitted removal, you could move your case to federal court, and your case would not be biased by any negative findings issued by OSHA or an ALJ. Instead, the federal courts were required to start your case from the beginning, allow you to engage in discovery, and permit a new trial on the merits. But in order to remove your case to federal court you still have to “exhaust” your administrative remedy at the DOL (usually waiting 210 days).
Removal to federal court is not permitted under several environmental whistleblower laws (Clean Air, Pipeline Safety, Clean Water, Toxic Substances, Superfund violations, Solid Waste Disposal, and Safe Drinking Water) and the airline safety law. But whistleblowers who file initial claims within the Department of Labor and exhaust their administrative proceedings can obtain de novo trials in federal court under the following laws:
• Affordable Care Act; access to federal court after waiting 210 days;
• Consumer Financial Protection; access to federal court after waiting 210 days;
• Consumer Product Safety; access to federal court after waiting 210 days;
• Energy Reorganization Act/Nuclear Safety (both private sector and federal); access to federal court after waiting one year;
• Food Safety Act; access to federal court after waiting 210 days;
• Railroad Safety Act; access to federal court after waiting 210 days;
• MAP-21 (auto safety); access to federal court after waiting
210 days;
• National Transit Systems Security Act; access to federal court after waiting 210 days;
• Sarbanes-Oxley Act (corporate fraud); access to federal court after waiting 180 days;
• Seaman’s Protection Act; access to federal court after waiting 210 days;
• Surface Transportation Act (truck driver safety); access to federal court after waiting 210 days;
There are three exceptions to the right of whistleblowers to remove their cases from the Department of Labor to federal court: First, if the whistle-blower intentionally delays the case in order to run out the clock. There are no reported cases in which a whistleblower has been found guilty of this violation, but it is important to follow procedures and meet all deadlines. Second, if the whistleblower fails to exhaust the DOL administrative procedures. For example, even though the whistleblower may eventually have the right to file a case in federal court, he or she must first file the claim with the DOL, cooperate with the OSHA investigation, and potentially request a hearing with an ALJ. You must continue to pursue the case within the DOL and meet all deadlines until your time limit expires. Third, you can file to remove your case anytime after the 210-day (or 180-day/1-year) requirement has expired. But if the DOL’s Administrative Review Board issues a final order before you remove your case, you may lose your right to have a federal court trial and instead be limited to appealing the final decision of the ARB to the U.S. Court of Appeals.
All of these deadlines are carefully set out in the published regulations of the Department of Labor, available online. Any decision to remove a case from the DOL to federal court should be carefully weighed, as is more fully explained in Rule 4.
Whistleblower Reward Laws
A number of federal agencies have responsibility for paying or facilitating the payment of whistleblower rewards. The amount of political pressure each of these offices is subjected to varies depending on the type of rewards law. These laws can be broken down into three categories:
False Claims Act. This is the best whistleblower law. First, its antiretaliation provision can be filed directly in federal court. There is no administrative procedure to exhaust, and the Department of Justice has no control whatsoever over a retaliation case.
Second, the False Claims Act’s reward provision has a qui tam process. Qui tam is a Latin phrase, roughly translated as “in the name of the king.” Consequently, if a whistleblower files a fraud case under the False Claims Act and the Department of Justice refuses to enforce the law (or prosecute the wrongdoer), the whistleblower can proceed with the lawsuit. The whistleblower can stand in for the United States and pursue the case on behalf of the United States. This is one of the most important citizen-empowerment laws enacted by Congress. It permits citizens to act as “private attorneys general” and hold corrupt government contractors accountable. Even if the Justice Department is not doing its job, or has been compromised by politics and lobbyists, a whistleblower can pursue his or her False Claims Act case in court without Justice Department intervention. If the whistleblower wins, the United States still collects the majority of the damages awarded against the contractor, but the whistleblower is entitled to a reward of 25 to 30 percent, and the corrupt contractor must pay the whistleblower’s attorney fees and costs.
If a whistleblower wants to pursue the case without the help of the Justice Department, all cases still must be first filed under “seal” and served on the Justice Department before they are served on a defendant. The government has the right to “intervene” in the case and become the lead prosecutor against the fraudster. But even in these circumstances, the False Claims Act permits the whistleblower to actively participate in the lawsuit and obtain a reward. Furthermore, if the government tries to deny or reduce a reward, the whistle-blower can object and ask a court to approve his or her compensation.
Non–Qui Tam Reward Laws. The second group of reward laws offers a hybrid approach. Once the whistleblower alerts the appropriate agency as to the suspected violation, the agency has the discretion whether to investigate or prosecute. Even if the agency prosecutes the wrongdoers, the agency has the sole right to settle the case and set the amount of damages paid to the government. Only after the government collects fines, penalties, or sanctions from the wrongdoer does the right of the whistleblower to collect a reward kick in. There is no qui tam provision. If the government fails to act, the whistleblower cannot independently sue the wrongdoer, as is permitted under the False Claims Act. Likewise, if the government does prosecute, but sets the damage levels at a very low level (thereby lowering the amount of any reward), the whistleblower cannot object. Under the False Claims Act the whistleblower can object to a settlement between the government and the wrongdoer.
On the bright side, these hybrid laws require that whistleblowers who meet the criteria for a reward obtain payment. Agencies that fail to pay the whistle-blower can be appealed to in federal court or Tax Court. Most of these laws also set a mandatory minimum percentage a whistleblower must be paid. For example, under the IRS reward law, if the IRS collects $1 million in sanctions as a result of a whistleblower disclosure, the whistleblower is entitled, as a matter of law, to a minimum 15 percent recovery ($150,000). If the IRS does not pay that reward, the whistleblower can sue the IRS in Tax Court and enforce his or her right to a payment. Tax Court decisions can be thereafter appealed to federal court.
Under these hybrid laws, the whistleblower has no right to force the government to investigate or prosecute, but once there is a recovery based on the whistleblower’s information, he or she can enforce that recovery in court. The impact of political appointees on the enforcement programs administered by these agencies will have a dramatic impact as to whether sanctions are obtained. But if a reward is wrongfully denied by a biased political appointee or bureaucrat, the whistleblower can appeal the ruling in court.
The main reward laws that follow the hybrid model are the Securities Exchange Act (minimum reward of 10 percent enforceable in court); Foreign Corrupt Practices Act (minimum reward of 10 percent enforceable in court); IRS tax whistleblowers (minimum reward of 15 percent enforceable in court); Commodity Exchange Act (minimum reward of 10 percent enforceable in court); and Auto Safety Act (no minimum set by regulation at this time, but rewards are enforceable in court).
The Act to Prevent Pollution from Ships grants federal courts the discretion to award up to 50 percent of any monies recovered as a result of a whistle-blower’s providing information to the United States that results in a successful prosecution of the APPS claim. There is no mandatory minimum award. Requests for a reward in APPS cases are filed directly with the Court at the time a plea agreement is entered or at sentencing. In most cases the Department of Justice asks the Court to pay the reward, but the statute does not require this.
In each of these cases, a federal agency is responsible for investigating and prosecuting the misconduct. However, once monies are collected from fines, penalties, or sanctions, the ability of the whistleblower to be paid is subject to judicial oversight or review.
Discretionary Reward Laws. Another class of reward laws that are more susceptible to political pressure are those that do not set a mandatory minimum for a reward and/or do not explicitly authorize judicial review. These laws grant administrative agencies the right to pay a reward, but they lack the punch necessary to keep federal agencies honest. One such law prohibits judicial review if a reward is denied, even if the denial is prejudicial.
These discretionary reward laws include the wildlife trafficking reward laws (Lacey Act), the Endangered Species Act, and the Fish and Wildlife Improvement Act. The worst of these reward laws is the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). This law not only caps the maximum amount of a reward but also explicitly prohibits whistleblowers from contesting the reward amount or the denial of a reward in federal court. Under FIRREA, if the Attorney General denies you a reward, or your reward is set at just one penny, you cannot challenge
that decision in court.
Other Independent Remedies
First Amendment/42 U.S.C. § 1983. The First Amendment to the Constitution is the quintessential whistleblower law. It protects freedom of speech (whistle-blower disclosures are “speech”) and the right to petition Congress. In 1871 Congress passed a Civil Rights Act permitting all persons to file tort lawsuits in federal court if their constitutional rights were violated by persons acting under “color of state law.” Over the years this old civil rights law, now known primarily by its federal code designation, “§ 1983,” permits whistleblowers to sue state, county, and municipal governments and supervisors who retaliate against them for making whistleblower disclosures on matters of “public concern.” These First Amendment lawsuits are filed directly in federal court and permit the whistleblower to have a jury trial, seek compensatory and punitive damages, and obtain injunctive relief and attorney fees paid by the retaliator. Because of the right to go directly to federal court, state and local government employees can avoid various political traps and have their whistleblower cases decided by a jury.
National Security and Intelligence Agency Protections
One area where Congress has failed to provide independent remedies for whistleblowers is national security. Since the Edward Snowden controversy, Congress enacted a law covering federal employees who work for the CIA, National Security Agency, and other intelligence agencies. This law fails to provide any independent remedy. Enforcement authority is delegated to the President of the United States or other executive officials.
National Security Agency, CIA, and other intelligence employees are subject to Presidential Policy Directive PPD/19. Signed by President Obama in 2012, it established in-house procedures for “protecting” national security whistleblowers within the “Intelligence Community.” PPD/19 lacked any enforceable substantive rights and left intelligence agency whistleblowers at the mercy of their employing agencies. To make matters perfectly clear to these intelligence community employees, the last paragraph of PPD/19 states: “This directive is not intended to, and does not create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States.” PPD/19 vested complete power over intelligence agency whistleblowers to political presidential appointees.