May 1, 2011
Congress has beefed up laws to shield workers who expose corporate fraud, but government whistleblowers are still waiting.
In the waning hours of the 111th Congress in December 2010, as lawmakers pushed to finish up votes on a new START treaty and free health care for Sept. 11 first responders, a less prominent bill was sputtering toward yet another demise.
For more than a decade, House and Senate lawmakers, along with a contingent of determined watchdog groups, have worked to pass legislation that would significantly enhance protections for federal employees who blow the whistle on waste or misconduct at their agencies. Each year, they get closer. But in a manner reminiscent of Lucy pulling back the football just as Charlie Brown is about to kick it, the federal whistleblower bill always seems so near, yet it remains just out of reach.
In the most recent example, an anonymous senator placed a hold on the 2010 Whistleblower Protection Enhancement Act after it cleared the House by unanimous consent. When the clock ran out on the 111th legislative session, the bill died, leaving whistleblowers with limited protections from supervisory retaliation. Watchdogs argue existing safeguards for whistleblowers are inadequate because of judicial and legislative limitations.
At a time when the government is racking up record deficits and is pressed to ferret out wasteful spending, the move has left many confused and more than a bit angry. "We are in the Golden Age for corporate freedom of speech, and we are stuck in the legal Dark Ages for the legal free speech rights of government workers," says Tom Devine, legal director of the Government Accountability Project, a whistleblower protection group that was among the most vocal advocates for the bill. "It's a strange anomaly."
Private Sector Protection
On the heels of the banking crisis, shortfalls in food safety inspections and numerous contracting scandals, exposing corporate misconduct became a priority last year for Congress. While public sector whistleblower bills have stalled, Congress has shown no such reluctance to approve protections for private sector workers. The health care bill, which narrowly passed Congress in 2010, allows whistleblowers to seek protection under the False Claims Act. The act is considered among the most effective disclosure laws because claimants can receive a share of the funds that the government recovers in fraud cases. A provision in the Food Safety Modernization Act, signed into law in December, provides sweeping protections for corporate employees who report violations of Food and Drug Administration regulations.
"Quite clearly there is a strong appetite to protect consumers in the private sector. Unfortunately, Congress has similarly failed to protect federal workers. They continue to have second-class rights," says Angela Canterbury, director of public policy at the Project on Government Oversight.
"Whistleblowers have received Cadillac rights-federal courts, financial rewards and jury trials-for the private sector," adds Stephen M. Kohn, executive director of the National Whistleblowers Center. "And there is absolutely no reason why those same rights cannot be given to government workers. There is no distinction."
The Recovery Act, meanwhile, included protections for employees of private contractors and grant recipients to disclose waste and fraud without fear of reprisal. Those rights were temporary, but Sens. Claire McCaskill, D-Mo., and Jim Webb, D-Va., have introduced legislation to make them permanent, including a requirement that agency inspectors general investigate claims by contractor employees.
Arguably the broadest whistleblower protection measure was included in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The financial regulatory reform law, which restructures many aspects of the American financial system, provided anti-retaliation rights for industry employees. Even more significant, whistleblowers became eligible for awards of 10 percent to 30 percent of the amount that the Securities Exchange Commission recovers if the sanction imposed exceeds $1 million. Prior to Dodd-Frank, whistleblowers were capped at 10 percent and the law, which was almost never invoked, applied exclusively to insider trading cases.
"Already, since the passage of the act, we have seen a slight uptick in the number of tips and complaints received, and, more importantly, an uptick in the quality of complaints," SEC Chairwoman Mary Schapiro told the Senate Banking, Housing and Urban Affairs Committee in September. But media reports indicate the whistleblower program is off to a slow start, generating only 168 tips in its first six-plus months of existence-less than one tip per day.
The whistleblower provisions have attracted some industry critics. Kevin Wallace, a partner at the New York-based law firm Dewey & LeBoeuf, says the bill provides tipsters an incentive to skip over the internal compliance programs that corporations were required to develop, often at great time and expense, under the 2002 Sarbanes-Oxley Act.
Sarbanes-Oxley allows companies "to clean up their own operations, which is one of the goals of internal compliance," says Wallace, who represents businesses in whistleblower cases. "There is also a concern that a person is aware of wrongdoing, but would not act to stop it in a timely manner because the more it builds up over time, it could increase the size of the fine that the whistleblower could recover." SEC planned to release final regulations in late April for implementing the reforms. Industry has lobbied the commission to require individuals to bring complaints to the internal compliance boards first. In its proposed regulations, SEC wants to give whistleblowers the option of reporting allegations to the government or to the company, which then would have 90 days to complete an investigation. "Many issuers think this time frame is arbitrary," Wallace says. "Quite frankly, it's hard to get an investigation completed in that time."
One Step Forward
Federal employees technically have been shielded from agency retaliation since the passage of the 1989 Whistleblower Protection Act. In practice, however, those protections have produced mixed results. The law allows whistleblowers to file complaints with the Office of Special Counsel, the federal agency tasked with investigating alleged prohibited personnel practices. OSC first seeks voluntary corrective action from the agency involved. If the agency fails to remedy the complaint, then the employee can request a hearing with the Merit Systems Protection Board, a quasi-judicial agency that adjudicates whistleblower complaints. During the past decade, the board rarely ruled in favor of employees, but that appears to be changing.
After the appointment of MSPB Chairwoman Susan Grundmann in late 2009, whistleblower victories rose sharply. In 2010, the board sided with workers in four cases, compared with only three during the previous 10 years, according to figures from the Government Accountability Project. In one high-profile case, MSPB ruled that the Interior Department did not have enough evidence to dismiss former Park Police Chief Teresa Chambers after she publicly expressed concern about staffing and budget shortages. Chambers is now back in her old job.
According to Bruce Fong, chief of OSC's Oakland Field Office, the winds have begun to shift for whistleblowers. His office turned in favorable actions for complainants in 50 percent of prohibited personnel practices and whistleblower cases in the past two years, doubling the number from 2008. "I see improvements," Fong says. "There is a growing awareness of whistleblower rights among the agencies . . . It's a combination of a lot of factors, including pressure from members of Congress. There are a lot of different reasons why I am encouraged we are moving in the right direction from the so-called Dark Ages in the 1980s."
Others are more skeptical, however. Marsha Coleman-Adebayo was a senior policy analyst for the Environmental Protection Agency in 1996 when she filed complaints alleging that a U.S. firm was mining vanadium in South Africa and harming the environment and human health. When EPA subsequently did not promote Coleman-Adebayo, she successfully filed suit against the agency, alleging racial and gender discrimination. She helped secure passage of the 2002 No Fear Act, the first civil rights law of the 21st century, which discourages federal managers and supervisors from engaging in unlawful discrimination and retaliation.
But Coleman-Adebayo, who now runs the No FEAR Coalition, a group that works with current and former government whistleblowers, says these individuals are still treated as second-class citizens. "The message in the workplace is that if you are in a senior position and found liable nothing happens in the federal government," she says. "The machinery of government rolls on."
Statutory limits cap compensatory damages for federal employees at $300,000, which Coleman-Adebayo says is not enough to compel the government to radically change its policies. "We really need a sustained and organized group of federal workers who are committed in the long term to push through policies and pieces of legislation that can force structural changes within the federal government," she says.
Despite the groundswell of support, recent attempts to reform federal whistleblower laws have come up short. Versions of the Whistleblower Protection Enhancement Act have been proposed for more than a decade, only to be blocked by procedural hurdles from Senate Republicans, at least five of whom have placed holds on the bill.
The most recent measure, sponsored by Sen. Daniel Akaka, D-Hawaii, would have provided new or expanded rights to 40,000 Transportation Security Administration baggage screeners, federal scientists, government contractors and intelligence agency employees. Appellate reviews of MSPB cases involving the 1989 Whistleblower Protection Act no longer would be sent exclusively to the U.S. Federal Circuit Court of Appeals, which has ruled in favor of government whistleblowers in only three of 211 cases. The bill also would have closed a loophole that protects only the first person who discloses misconduct and would give OSC the authority to file friend of the court briefs to support employees appealing MSPB rulings. The board would be required to file annual reports on the outcomes of whistleblower cases and an experimental whistleblower ombudsman position would be created in offices of inspectors general to advise employees of their rights.
The bill appeared to be well on its way to passage, winning approval in the Senate in early December by unanimous consent. But the measure hit a speed bump when the House stripped out provisions that would have provided protection for whistleblowers at intelligence and national security agencies. Lawmakers said they were concerned the provision could lead to disclosures of classified information similar to those published on the WikiLeaks website.
A congressional Democratic source says the change actually was made to appease then-House Intelligence Committee Ranking Member Pete Hoekstra, R-Mich., who didn't want to share jurisdiction of federal intelligence employees with the House Oversight and Government Reform Committee. "WikiLeaks was just a cover because [House Majority Leader John] Boehner told them not to air their dirty laundry in public," the source says. "It was a turf fight."
When the stripped-down bill reached the Senate, an anonymous lawmaker placed a hold on it, likely on behalf of a House Republican who wanted to regain control of the process during the 112th Congress, the source says. "While the secret Scrooge was frustrating and we have not won yet, we are on the precipice of victory," says Devine at the Government Accountability Project. "I sure don't feel defeated, having only earned a 534-to-secret 1 mandate."
Oversight Committee Chairman Darrell Issa, R-Calif., has pledged to introduce a new version of the whistleblower bill by summer and has asked Rep. Todd Platts, R-Pa., to work with Rep. Chris Van Hollen, D-Md., on the measure. It is unclear whether the bill would include the national security language, although planned hearings on WikiLeaks could influence that decision. In April, Akaka reintroduced his measure in the Senate with the national security provisions.
"I support and intend to advance legislation through the Oversight Committee that enhances protections for federal employees who report waste, fraud and abuse," Issa said in February. "Ensuring safe channels for responsible reporting and improving the recourse to address alleged reprisals is clearly in the best interests of federal workers and taxpayers." The congressional source says compromises could be necessary to ensure the bill's passage. "We need to do something on this," the source says. "We may have to split the baby" and get rid of the national security provisions again.
Such action could draw opposition from some unlikely sources. At the National Whistleblowers Center, Kohn says a bill that fails to include national security provisions "is not worthy of becoming law. They need to go back to the drawing board because what came out at the end was a law that would not work."
The Senior Executives Association also has raised concerns, particularly with language that would provide whistleblowers enhanced rights to jury trials. "The legal and factual issues in whistleblower cases are complex, technical and often political and beyond the experience of most jurors. And the threat of a jury trial would serve as a deterrent to effective management," the group said in a statement. "SEA supports strengthening whistleblower protections, but will continue to ensure that any modifications do not unfairly target managers."
For whistleblowers who have risked their careers to speak out against government malfeasance, reforming the disclosure system is a simple matter of equity and basic fairness. "Whistleblowing is not for the faint-hearted," says OSC's Fong.
"They stick their necks out and do what's right. And when you try to change the status quo, the status quo tends to bite back."
May 1, 2011