Source: https://www.fraudwhistleblowersblog.com/category/federal-false-claims-act/
Timestamp: 2019-04-22 14:45:50+00:00

Document:
On April 3, 2019, in U.S. v. EMD Serono, Inc., CV 16-5594, 2019 WL 1468934 (E.D. Pa. Apr. 3, 2019), District Judge Timothy J. Savage of the Eastern District of Pennsylvania addressed a matter of first impression within the Third Circuit: what standard (if any) governs the government’s ability to dismiss a qui tam case over the objection of relators.
The underlying case involved allegations that Pfizer and related healthcare companies had engaged in so-called “white coat marketing” and provide free educational and support services to boost prescriptions for a multiple sclerosis drug from physicians who availed themselves of such services. Id. Relators claimed that this amounted to illegal remuneration in violation of the Anti-Kickback Statute. Id. The government spent over 18 months investigating the case but declined to intervene finding that the alleged remuneration provided to physicians was not illegal remuneration under the AKS but legitimate (and legal) educational services. Id. Not only that, the government moved to dismiss the case, pursuant to 31 U.S.C. § 3730(c)(2)(A), on the basis that monitoring the non-intervened case would be, in effect, a waste of government resources. Id. Relators opposed the government, claiming that the case had merit and the potential to yield a sizeable recovery. Id. at *4.
The government claimed that its discretion to seek dismissal of a qui tam action is unfettered, which the District of Columbia Circuit had found to be the case in Swift v. U.S., 318 F.3d 250, 252 (D.C. Cir. 2003). However, Judge Savage recognize that a circuit split existed with the Ninth and Tenth Circuits holding that the government must show that a rational relationship exists between the decision to seek dismissal and a legitimate government interest. U.S. ex rel., Sequoia Orange Co. v. Baird-Neece Packing Corp., 151 F.3d 1139(9th Cir. 1998); Ridenour v. Kaiser-Hill Co., L.L.C., 397 F.3d 925 (10th Cir. 2005). If the government meets that burden then the relator must show “that [the] dismissal is fraudulent, arbitrary and capricious, or illegal.” Sequoia, at 1145.
Judge Savage sided with the Ninth and Tenth Circuits recognizing, inter alia, that the False Claims Act provides for a hearing when the government seeks dismissal over a relator’s objection and that, if the government’s discretion were unfettered, then the hearing would be a “nullity.” Id., at *3. If a hearing is to take place with the judge playing a role, then there must be some standard for the judge to apply. Judge Savage found that the rational basis standard was apt and “strikes a balance among the branches of government. It does not give unlimited power to the Executive to dismiss a legitimate action the Legislature created. Nor does it give the Judicial Branch unrestrained power to stop the Executive from acting to dismiss an action in the government’s interest.” Id. at *4. In essence, the rational basis test “acts as a check against the Executive from absolving a fraudster on a whim or for some illegitimate reason. It prevents the Executive from abusing power.” Id.
The Court then moved to the facts at hand. The Court found that the government’s interest in not expending resources on a case that it found lacked merit was rationally related to the government’s interest in conserving litigation resources and effectuating policy goals (i.e., supporting bona fide pharmaceutical education programs). Id. The Relators, on the other hand, failed to meet their burden. Relators argued that the case had merit, the potential for a significant recovery, the government had not performed a sufficient investigation, and that the government was (they claimed) irrationally opposed to one of the relators (an investment-backed LLC, as opposed to an individual whistleblower). Id.at *4-5. Judge Savage found the Relators’ arguments unavailing, noting that the government had diligently investigated the matter, showed no animus toward the LLC Relator, and that the dispute essentially came down to one of conflicting judgments between the Relators and the government over the merits of the underling case. Id. at *5.
While EMD Serono provides relators facing a governmental dismissal motion with some judicial recourse and a check against abuses of executive power, the rational basis standard is an easy one to meet. Absent some truly arbitrary action or one that is otherwise likely to shock the court’s conscience, relators will continue to face an uphill battle in contesting dismissal motions under § 3730(c)(2)(A).
As discussed in a previous posting, the Ontario Securities Commission (OSC) implemented its whistleblowing program in July 2016 and became the first Canadian Province to include a controversial monetary award for whistleblowers. On February 27, 2019, the OSC made history yet again when it announced its first whistleblower award of $7.5 million. Outside of the United States few countries have adopted monetary awards for whistleblowers. While the OSC has said that protecting whistleblowers is of the utmost importance to the OSC, little information has been revealed regarding this unprecedented award. The only information that has been confirmed is that the $7.5 million award is to be split among three whistleblowers for three separate matters regarding Ontario Securities violations. The names of the whistleblowers and the companies remain confidential.
On July 15, 2014, Ireland’s Protected Disclosures Act (PDA) came into effect. The PDA established whistleblower protections for both the public and private sectors for the first time in modern Irish legislative history.
The Republic of Ireland has less than 5 million people. It is roughly the size of West Virginia. It is a beautiful country with miles of rolling emerald green pastures, sheep, and cattle. Conversely, due to favorable tax treatment, it is home to some of the largest American companies in the world. Johnson & Johnson, Roche, Pfizer, Novartis, Merck Sharp & Dohme, Amgen, Sanofi Waterford, AbbVie, GlaxoSmithKline, Bayer, Eli Lilly and Company, Gilead Sciences, Bristol-Myers Squibb, Allergan, AstraZeneca, Abbott Laboratories, Novo Nordisk, Biogen, Shire Pharmaceuticals, Stryker Corporation, Regeneron Pharmaceuticals, Teva Pharmaceuticals, Baxter International, and Alexion Pharmaceuticals all call the Republic of Ireland home.
Over the past decade, American companies have been flocking to Ireland to take advantage of Ireland’s extremely favorable tax laws. This brings Ireland in contact with behemoth American companies and large American work forces. However, all is not idyllic in the Irish countryside for businesses that may not be compliant with the law. Accordingly, employees of companies based in Ireland have the option to blow the whistle under the United States’ False Claims Act (FCA) or Ireland’s Protected Disclosures Act (PDA). Few countries have this option.
Who Can Be A Whistleblower In the Republic of Ireland?
Under the PDA, a whistleblower is defined as a worker who makes a protected disclosure in the public interest to the appropriate party. A worker may be a present or former employee, trainee, or independent contractor. A disclosure is considered protected if it concerns a criminal offense, breach of a legal obligation, miscarriage of justice, misuse of public funds or mismanaged acts by a public body, danger to public health and safety, damage to the environment, or the concealment of information regarding any of the previous actions. The worker must reasonably believe that their employer is committing a wrongdoing to be afforded protection under the PDA.
What Protections Can A Whistleblower Receive?
The whistleblower receives the protection of anonymity as well as the protection against adverse employment actions and unfair dismissal under the PDA. The worker may commence a civil action for suffering a detriment or unfair dismissal under the Unfair Dismissals Act of 1977. The whistleblower also receives immunity from civil liability for blowing the whistle, except for defamation actions under the Defamation Act of 2009. The worker may be liable for the unlawful disclosure of a trade secret pursuant to the European Union’s Protection of Trade Secrets Regulations unless the worker can prove that the disclosure was made to protect the general public’s interest. Of note, the PDA does not set forth a monetary award or compensation of attorney fees for blowing the whistle. The American Federal False Claims Act has all these protections and many more.
Under the PDA, a disclosure will only be considered protected if it is made to the whistleblower’s employer, a prescribed person set forth in the PDA, or a legal adviser. Of note, if the disclosure is made to a party other than the worker’s employer, the whistleblower must believe that the allegation of wrongdoing contained in the disclosure is substantially true or suffer the consequences.
With the enormous presence of companies in the Republic of Ireland, it is surprising that Ireland didn’t model its whistleblower program after the American False Claims Act (FCA). The FCA does not require a disclosure be in the public interest, nor does it require the whistleblower to disclose the wrongdoing to its employer before filing a claim with the Department of Justice. Further, all FCA complaints are initially filed ex parte and under seal. This ensues the utmost protection for the whistleblower. If a whistleblower can prove that he has been retaliated against for blowing the whistle, the FCA provides that person with strong protections which are not available under the PDA. These protections include reinstatement of the whistleblower’s employment position, two times the amount of pack pay plus interest, and damages the whistleblower incurred as a result of the retaliation.
Most importantly, the FCA offers a financial award of 15 to 25% of the amount recovered by the government in cases where the government decides to intervene, and 25 to 30% in cases where the government declines to intervene. A successful whistleblower is also entitled to be paid legal fees and expenses by the opposing party.
Since the FCA does not require the whistleblower to live or work in the United States, it will be interesting to observe the number of employees from companies located in Ireland that bring claims under the FCA versus the PDA.
The Fourth Circuit Court of Appeals recently ruled on a Relator’s appeal in United States ex rel. Grant v. United Airlines, Inc. and adopted the objective reasonableness standard for retaliation claims brought under 31 U.S.C. §3730(h). The Fourth Circuit joins the Seventh, Eighth, and Ninth Circuits in applying this standard to 3730(h) retaliation claims.
In the underlying case, Relator David Grant brought a qui tam action against his former employer, United Airlines, which was contracted to perform service and maintenance on the Boeing C-17 Globemaster military transport planes. Relator alleged that from 2008 to 2014, he observed that United would certify repairs that were not actually completed, that were done with improper tools, and that were done by technicians who were not properly trained.
The district court dismissed the Relator’s False Claims Act (FCA) claims for failure to state a claim under Rule 12(b)(6) and Rule 9(b) because the Complaint failed to sufficiently alleged that United ever presented, or caused to be presented a false claim for payment to the government. Additionally, the lower court also dismissed the Relator’s 3730(h) retaliation claim on the basis that the Complaint did not allege that Grant engaged in the type of activity protected by the FCA.
Of interest, the Fourth Circuit Court of Appeals affirmed the dismissal of the FCA claims and reasoned that the Complaint did not plead Relator’s claims with the requisite particularity, specifically that he failed to show that the scheme necessarily led to the presentment of a claim to the government for payment. Notably, however, the appellate court found that the district court erred in dismissing Grant’s retaliation claim. The Court held that the Plaintiff sufficiently pleaded retaliation under section 3730(h).
Prior to 2009, “protected activity” was defined as measures taken in furtherance of an action under the FCA, but the statute has since been expanded. 31 U.S.C. §3730(h) was amended in 2010 to include a second, broader category of protected activity. Accordingly, 31 U.S.C. §3730(h) now defines two types of protected activity: (1) Acts in furtherance of an FCA action or (2) other efforts to stop one or more FCA violations. The type of activity at issue in this case was the latter. Specifically, the appellate court found that the “distinct possibility” standard (which is used to evaluate protected activity in furtherance of an FCA action) does not apply when evaluating the second type of protected activity. Instead, the court adopted the “objective reasonableness” standard for evaluating other efforts to stop FCA violations.
Under the objective reasonableness standard, an act constitutes protected activity where it is motivated by an objectively reasonable belief that the employer is violating, or soon will violate, the FCA. A belief is objectively reasonable when the plaintiff/relator alleges facts sufficient to show that he believed his employer was violating the FCA, that this belief was reasonable, that he took action based on that belief, and that his actions were designed to stop one or more violations of the FCA. The court noted that the plaintiff’s actions do not need to lead to a viable FCA action to establish protected activity.
In this case, the court found that it was (1) objectively reasonable for Grant to believe that United committed fraud and (2) his numerous verbal and written complaints, which were direct and specific in alleging the fraud, demonstrated action designed to stop one or more FCA violations. Accordingly, the court found that under the objective reasonableness standard, plaintiff sufficiently alleged that he was engaged in protected activity, United knew about the protected activity, and United terminated plaintiff because he engaged in the protected activity.
In adopting the objective reasonableness standard, the Fourth Circuit Court of Appeals made abundantly clear that retaliation claims can succeed with or without a viable FCA action intact.
In July 2016, Germany amended the German Act on Financial Services Supervision (Finanzdienstleistungsaufsichtsgesetz – “FinDAG”) and created whistleblower protections for employees of all companies subject to the supervision of the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – “BaFin”). BaFin, when formed in 2002, was one of the largest financial supervisory agencies in Europe. BaFin was created to supervise the banking, securities, and insurance sectors in Germany and ensures the stability of a European financial market. After major responsibility for banking oversight shifted to the European Central Bank in 2014, BaFin became more focused on its enforcement provisions. In 2016, it opened a new office dedicated to corporate whistleblowers in order to encourage business insiders to expose wrongdoing prohibited by the BaFin regulations and relevant European Union (“EU”) ordinances and directions.
Prior to the amended FinDAG, there was no German legislation expressly dedicated to whistleblower protection. Individuals had to piece together portions of other laws (the German Data Protection Act, the German Labor Protection Act, the German General Equal Treatment Act, and the German Works Constitution Act (“Four Acts”)) in an attempt to gain any protection under existing legislation. In theory, the Four Acts provided protection against unfair dismissal and discriminatory treatment. In reality, the Four Acts often left whistleblowers exposed to liability under labor and criminal laws.
The enactment of the German whistleblower protection law appears to be largely reactionary. In 2011, the European Court of Human Rights convicted Germany for restricting whistleblowers’ freedom of expression. This conviction, coupled with a rise in corruption and fraud, prompted the BaFin to reform its approach to whistleblowing. Recognizing the importance of whistleblowers, in 2016, BaFin implemented explicit whistleblowing protections for the first time in modern German history.
Who Can Be A Whistleblower Under Current German Law?
Under Section 4 of the FinDAG, a whistleblower is defined as an employed individual or contractor with specific knowledge of a company’s internal matters who reports potential or actual misconduct by a company that is under the supervision of the BaFin. Companies that fall under the supervision of the BaFin include, but are not limited to: banks; financial services institutions; capital management companies; insurance companies; and stock listed companies subject to the German Securities Trading Act.
What Protections Can A Whistleblower Receive under German Law?
Prior to the amended FinDAG, whistleblowers could be prosecuted for breaching the duty of loyalty to their employers or damaging their employers’ reputation. The amended FinDAG shields whistleblowers from all liability as long as they did not intentionally or negligently submit an untrue report. Whistleblowers are also afforded confidentiality. BaFin can reveal a whistleblower’s identity if the whistleblower consents to the disclosure. BaFin can also disclose the whistleblower’s identity if it is necessary to conduct further investigations or proceedings.
Whistleblowers may report misconduct internally, pursuant to their employers’ internal reporting mechanisms, or directly to the BaFin. In July 2016, BaFin established a central point of contact for whistleblowers to report supervisory violations. Whistleblowers can submit their reports of misconduct to BaFin by mail, e-mail telephone, or in person. As of January 2017, whistleblowers may also submit their report anonymously through an electronic reporting platform.
The amendment of the FinDAG to include whistleblower protections was considered by many to be revolutionary, given that previously, whistleblowers faced criminal liability or civil liability under labor laws for blowing the whistle. As of 2016, whistleblowers may report misconduct under the protective umbrella of freedom from liability and the added measure of confidentiality similar to American whistleblower statutes. Unlike the United States, however, German whistleblowers do not receive a financial reward for reporting alleged wrongdoing. Also, the FinDAG whistleblowing protections apply only to those who blow the whistle on activities that fall under the BaFin’s supervision or similar ordinances of the EU. Persons with knowledge of misconduct by German companies registered with the United States Securities and Exchange Commission (“SEC”) have the option of filing a report with the SEC. While many Germans are pushing for broad whistleblowing reform, it seems unlikely to happen in the near future. It raises the question, does Germany truly believe reform is unnecessary, or is financial wrongdoing the only fraud the country is interested in exposing through whistleblowing at this time?
On July 14, 2016, the Ontario Securities Commission adopted OSC Policy 15-601 which is a Whistleblower Program that included financial rewards for whistleblowers for the first time in Canadian history.
Before the enactment of OSC Policy 15-601 Whistleblower Program, Ontario did not have specific whistleblower laws. Courts had to piece together portions of the Canadian Criminal Code, Public Servants Disclosure Protection Act, and the Securities Act in order to determine the outcome of whistleblower cases. Many perceived this system to be inconsistent and unreliable. This inspired the Ontario Securities Commission to enact legislation aimed at protecting and incentivizing whistleblowers.
After observing the success of the United States Dodd–Frank Wall Street Reform and Consumer Protection Act, the Ontario Securities Commission (OSC) became convinced that the key to a successful whistleblower program was an award. This motivated the OSC to implement OSC Policy 15-601 Whistleblower Program (Program) which contained a whistleblower award for the first time in Canadian history.
Who Can Be A Whistleblower In Ontario?
The Program defines a whistleblower as an individual who voluntarily provides original information regarding a violation of Ontario securities law in accordance with specified reporting procedures. A whistleblower does not necessarily have to be an employee. A supplier, contractor, or client can qualify as a whistleblower as long as they voluntarily report new information to the OSC. This information must be based upon the individual’s independent knowledge and must not be public. An individual can still be considered a whistleblower even if they are found to have participated in the misconduct. Of note, a company or organization cannot be a whistleblower.
Under the Program, a whistleblower is granted protection of confidentiality as well as protection against reprisal. The OSC must make all reasonable efforts to protect the whistleblower’s identity. However, this information may be revealed in order to permit the accused to respond to the report of misconduct. The Program also protects the whistleblower against any action taken against them that negatively affects their employment. If a reprisal occurs, the OSC may take action against the employer. A whistleblower may also file a civil suit against the employer for remedies. Potential remedies could be reinstatement or damages for double the amount of lost earnings the whistleblower suffered.
What Awards Can A Whistleblower Receive?
In Ontario, a whistleblower may receive an award if their report of misconduct results in an enforcement action of over $1 million. However, the whistleblower’s report must contain original information that meaningfully assists the OSC in order to receive an award. A whistleblower award ranges from 5% to 15% of the total judgment. However, the award is capped at $5 million. The OSC considers the timeliness and importance of the report, as well as the whistleblower’s cooperation when determining the award amount. Of note, a whistleblower who participated in the reported misconduct may still be entitled to an award. Their award can also be decreased based upon their degree of participation.
While the Program encourages the whistleblower to report misconduct through their employer’s internal reporting procedures, it is not required. Of note, a whistleblower who reports internally to their employer must also report to the OSC within 120 days to be eligible for an award. The whistleblower, or the whistleblower’s attorney, must mail or email a Whistleblower Submission Form to the OSC’s Office of the Whistleblower.
According to the Ontario Securities Commission, the Whistleblower Program has already been extremely effective in producing whistleblower tips. Since its enactment in 2016, over 200 tips have been reported to the OSC. Even though many consider the Program to be groundbreaking due to the whistleblower award, some have argued that the award is not enough. By capping the award at $5 million, some fear that high level executives will not be incentivized to blow the whistle. Interestingly, the United States Securities and Exchange Commission is currently considering implementing a cap being on whistleblower awards as well. Opponents of this change assert the same argument as the one made in Canada.
On November 19, 2018, the Alberta Securities Commission, the regulatory agency responsible for administering Alberta’s securities laws, implemented its first whistleblower program through the enactment of ASC Policy 15-602 Whistleblower Program and corresponding amendments to the Alberta Securities Act.
Before the enactment of ASC Policy 15-602 Whistleblower Program, Alberta did not possess protection for a whistleblower who reported a breach of securities legislation. The only laws that a whistleblower could potentially seek protection under were certain provisions of the Canadian Criminal Code, Public Servants Disclosure Protection Act, and the Securities Act. This patchwork of provisions did not provide much protection under the law. Many considered it an ineffective whistleblower program.
After the 2008 financial crisis many Albertans were left struggling. Out of this need for extra income, more individuals were falling for Ponzi-like schemes and losing substantial amounts of money. Whistleblowers could have come forward and stopped this from happening; however, no one was willing to take that risk without any protections or incentives in place. This motivated the Alberta Securities Commission (ASC) to enact ASC Policy 15-602 Whistleblower Program, thereby amending the Alberta Securities Act (the Act) and creating the Office of the Whistleblower.
Who Can Be A Whistleblower In Alberta?
Under the Alberta Securities Act, a whistleblower is defined as an employee of a person or company who voluntarily reports a breach of Alberta securities laws by the person or company to the ASC. The term “employee” is widely interpreted. It includes a full-time or part-time employee, an independent contractor, an employee or director of an independent contractor working for a person or company, as well as an employee or director of an affiliate of a person or company. Of note, a person will not be considered a whistleblower if the reported breach is misleading or untrue.
Under the Act, a whistleblower’s identity, and any information that might disclose a whistleblower’s identity, is confidential. This information will remain confidential and will not be revealed unless it is necessary to prove that the accused did not commit the alleged breach. The whistleblower is also protected against reprisal. The term “reprisal” is broadly interpreted and includes any conduct committed by a colleague or employer that adversely and materially affects the employment or working conditions of the whistleblower or the whistleblower’s family. If a whistleblower believes a reprisal has been made, the whistleblower must submit a Reprisal Reporting Form, found on ASC’s website, to the Office of the Whistleblower. If the ASC finds that a reprisal has been made it may impose sanctions.
The Act also created a civil right of action for the whistleblower to claim damages against the colleague or employer that committed the reprisal. These protections apply to all whistleblowers who report misconduct in good faith, regardless of whether or not the report results in an enforcement action.
The Program encourages the whistleblower to report misconduct to their employer before submitting it to the ASC however, it is not mandatory. Reports can be made to the ASC by phone, email, and regular mail. If submitting a report of misconduct by mail or email, the whistleblower must complete the Whistleblower Submission Form found on the ASC’s website. The whistleblower must mail the completed Form, as well as any supporting material, to the Office of the Whistleblower. Supporting material should include a description of the material, how the material was obtained, and whether the material might reveal the whistleblower’s identity. An attorney may submit a report of misconduct on behalf of their whistleblowing client. In this instance, the attorney must complete and submit the Whistleblower Counsel Submission Form, found on the ASC’s website, on behalf of their client.
Following the approach taken by Quebec in its Autorité des marchés financiers, the Alberta Securities Commission declined to include a financial reward in its Whistleblower Program. Alberta determined there was not sufficient evidence to prove financial rewards produced more whistleblower tips. The two Canadian provinces believe confidentiality and protection against reprisals are all that is needed to incentivize whistleblowers into coming forward. Of note, the Ontario Securities Commission came to the opposite conclusion, and included a whistleblower reward of up to $5 million for tips that lead to an enforcement action. Coincidentally, the three Canadian provinces established whistleblower programs within the past several years.
On November 30, 2018, the United States Government Accountability Office (GAO) issued a noteworthy report that the implementation of new rates for laboratory testing may lead to billions of dollars in overpayments to labs. The GAO concluded that while CMS’s new clinical lab fee schedule was supposed to save hundreds of millions of dollars, changes in the way Medicare pays for panels of tests could end up costing the program approximately $11 billion dollars.
The GAO is an independent, nonpartisan agency that works for Congress. Often called the “congressional watchdog,” the GAO examines how taxpayer dollars are spent and provides Congress and federal agencies with objective, reliable information to help the government save money and work more efficiently. As required under the Protecting Access to Medicare Act of 2014 (PAMA), the GAO conducted a study to review CMS’s implementation of new payment rates for laboratory tests. To revise the rates, CMS collected data on private-payer rates from approximately 2,000 laboratories and calculated median payment rates, weighted by volume. CMS did not, however, receive data from all laboratories required to report. As a result, the GAO criticized CMA for using incomplete data in its calculations and recommended that CMS collect complete private-payer data. HHS agreed with this recommendation.
The GAO’s independent study found that the new payment rates could lead Medicare to pay billions of dollars more than is necessary and result in Clinical Laboratory Fee Schedule (CLFS) expenditures increasing from what Medicare paid prior to 2018 for primary two reasons.
First, the change in the fee schedule enables labs to significantly “up-charge” for panel tests. Prior to 2018, Medicare always paid a bundled rate for panel tests (groups of laboratory tests generally performed together) regardless of how labs submitted their claims. In the new schedule, labs can bill for each component test individually if they submit claims that way. According to the GAO report, “…if a laboratory submitted a claim individually for the 14 component tests that comprise a comprehensive metabolic panel it would receive a payment of $81.91, a 528% increase from the 2018 bundled payment rate of $13.04 for this panel test.” As a result of the study, CMS is reviewing whether it still retains the authority to bundle payments rates.
Second, in order to change the fee schedule, CMS used the maximum Medicare payment rates in 2017 as a baseline to start the phase in of payment-rate reductions instead of using actual Medicare payment rates from 2017. This resulted in excess payments for some laboratory tests and, in some cases, higher payment rates than those Medicare previously paid, on average. Accordingly, the GAO recommended that CMS phase in payment-rate reductions that start from the actual payment rates rather than the maximum payment rates.
Given the large amount of Medicare payments at stake, large laboratory testing companies are certainly watching these developments closely.
In 1998, the United Kingdom became one of the first jurisdictions in the European Union to implement its own set of whistleblower protections with the Public Interest Disclosure Act (PIDA). Under the PIDA, a whistleblower had to make a qualified and protected disclosure in good faith to be considered a whistleblower and therefore receive protection under the Act. A disclosure is considered qualified when it concerns one of the following subject matters: a criminal offense, breach of legal obligation, miscarriage of justice, danger to any individual’s health or safety, damage to the environment, or a deliberate concealment of any of the aforementioned matters. A disclosure is considered protected when it is made to the appropriate party. However, as more disclosures were made, Parliament realized the PIDA contained a loophole that enabled individuals to bring claims of a private nature under the Act.
Who Can Be A Whistleblower Under the British Law?
In the United Kingdom, whistleblower protection extends to trainees, temporary employees, employees, consultants, and suppliers. However, a whistleblower who is not an employee is not afforded the same protection as a whistleblower who is an employee. A whistleblowing employee is protected from unfair dismissal and detrimental treatment, whereas a whistleblowing nonemployee is only protected from detrimental treatment.
A whistleblowing employee is presumed to be unfairly dismissed if their disclosure was the cause of their dismissal. When hearing a complaint of unfair dismissal, an employment tribunal can order reinstatement or compensation of the whistleblowing employee. In addition, an unfair dismissal claim for a whistleblowing employee is not subject to the statutory cap that normally applies to damages in a standard unfair dismissal claim. Further, an employment tribunal can also offer interim relief to a whistleblowing employee if the tribunal finds that the whistleblowing employee is likely to win the unfair dismissal case.
A whistleblower must disclose misconduct in the correct manner and to the correct party in order to be considered a whistleblower and receive whistleblower protection. A whistleblower may disclose misconduct to their employer, in accordance with their employer’s whistleblowing procedures, or to a prescribed person. A prescribed person is an outside party, set by the Secretary of State, and named in the PIDA. In certain instances, the PIDA does permit a whistleblower to disclose misconduct to other parties such as the media. However, the disclosure will only be eligible for protection if an employment tribunal determines that the disclosure was reasonable at the time it was made.
When comparing American whistleblowing laws to those in the United Kingdom, the countries’ differentiating perceptions of whistleblowers are instantly discernable. The United States focuses on the protections and the rewards whistleblowers are entitled to receive for the risks they take when coming forward. The United Kingdom focuses on the elements whistleblowers must establish in order to be considered a whistleblower and receive protection under the law. The United Kingdom further distinguishes itself from the United States by not offering a financial reward to whistleblowers out of the fear that it would corrupt the whistleblowing process with greed. Similar to France and Italy, the United Kingdom seems to automatically distrust whistleblowers and be more concerned with their motive than with pursuing their concerns of misconduct.
On November 30, 2017, the Italian Government enacted Law 179: “Provisions for the protection of whistleblowers who report offences or irregularities which have come to their attention in the context of a public or private employment relationship.” This Law established the first set of whistleblower protections in the private sector in all of Italian legislative history.
Before the enactment of Law 179, Italian anti-corruption law was mainly governed by Legislative Decree 231, enacted on June 8, 2001, and Law 190, enacted on November 6, 2012. Legislative Decree 231 concerning the “administrative liability rules for legal persons, companies and associations, including those without legal personality.” This Decree established direct liability of legal entities for crimes committed by their agents while acting on behalf of the entity for the purpose of benefiting the entity for the first time in Italian history. Even though Decree 231 was groundbreaking in and of itself, this Decree did not contain any protections for whistleblowers. Eleven years later, the Italian Government enacted Law 190 concerning “measures for the prevention and repression of corruption and illegality in the Public Administration.” This Law established the first set of whistleblower rules in Italian history; however, the rules only applied to public entities. Although both of the aforementioned laws were revolutionary and the first of their kind in Italy, they were not enough to effectuate real change.
Historically, Italy has been regarded by some as one of the more corrupt countries in the European Union. Even though Decree 231 established direct liability of legal entities for certain crimes committed by their representatives, and Law 190 established regulations for whistleblowing against public entities corruption was still widespread. The Organization for Economic Co-operation and Development’s 2014 Foreign Bribery Report concluded that less than 2 % of the foreign bribery cases were detected through whistleblowing. This motivated the Italian Government to enact Law 179 which amended portions of Decree 231 and Law 190 to provide whistleblowers greater protection and extend those same protections for whistleblowers in private entities.
Who Can Be A Whistleblower Under Italian Law?
In the public sector, whistleblower protections apply to public employees, employees of publically owned private companies, economic public entities, and employees or collaborators of private companies supplying goods or services while carrying out works for public entities that report or denounce misconduct discovered while performing their services under Law 190 and Law 179. In the private sector, whistleblower protections apply to private employees who report or denounce misconduct pursuant to Legislative Decree 231that they witnessed in carrying out of their functions under Law 179. In both the public and private sector, whistleblower protection does not apply to reports that are slanderous, defamatory, or those that either maliciously or negligently turn out to be unfounded.
In both the public and private sector, entities are prohibited from imposing conditions that directly or indirectly affect whistleblowers in a negative way including, but not limited to, imposing disciplinary measures, sanctions, demotions, or dismissals of whistleblowers. If entities are found to have implemented any of the aforementioned measures, those measures are to be considered null and void. In the event that whistleblowers are discriminated or retailed against, they can report the event to the Anticorruption Authority (ANAC) in the public sector, and the Italian Labor Authorities and relevant trade unions in the private sector. Those authorities are supposed to determine if discrimination or retaliation has occurred, and if so, impose sanctions.
In the public sector, public entities are required to adopt internal whistleblower protection measures to preserve the whistleblower’s identity, and establish procedures for managing whistleblower reports under Law 190 and Law 179. If the public entity fails to establish adequate procedures sanctions may be imposed. In the private sector, Law 179 only imposes reporting requirements on private entities that had already enacted a reporting system under Decree 231. Private entities must create one or more channels that allow employees to internally report misconduct, at least one alternative reporting channel to guarantee the confidentiality of the whistleblower’s identity, and appropriate measures to protect the whistleblower’s identity and to maintain the confidentiality of information. If a private entity interferes with any of the reporting requirements sanctions are to be imposed.
The Italian Government is taking steps to combat corruption; however, it is likely not enough. Law 179 fails to include any financial incentives. It is interesting that even though monetary rewards have proven to be an effective tool in whistleblower cases, European countries have not been including them in their whistleblower laws. It raises the question if these countries are actually trying to root out corruption, or if they are just trying to convince the electorate that they are doing so.

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