What Happens if a Whistleblower Is Wrong?

Whistleblowing is an important part of keeping systems running effectively and preventing fraud and waste. People who believe they may have evidence of wrongdoing should generally not be worried about being “wrong” and facing consequences. However, a whistleblower can be “wrong” in a few ways:

• Mistaken but honest: A claim that is ultimately unsubstantiated but was filed in good faith.
• Factually incorrect: The information shared was inaccurate, but the whistleblower believed it was true.
• Fraudulent or malicious: Allegations made with knowledge of their falsity or intent to harm

Mistaken and factually incorrect allegations are a protected activity under the reasonableness standard of the Whistleblower Protection Act (WPA) and the False Claims Act (FCA). However, fraudulent or malicious allegations are not.

A whistleblower doesn’t violate the False Claims Act by submitting false allegations. They violate the act if they bring a frivolous or vexatious action, or if they do so primarily for purposes of harassment.

Whistleblower protection laws prevent whistleblowers from being fired if they are wrong. Federal laws like the False Claims Act and Whistleblower Protection Act prohibit retaliation for good faith reports. Protection often hinges on whether the whistleblower believed their claim was valid.

A good faith claim is based on an honest and reasonable belief that wrongdoing may have occurred. This means the whistleblower believed the information was accurate, even if it was later debunked. It can also mean that the whistleblower relied on a misunderstanding of the facts. A bad faith claim is made with “reckless disregard for or willful ignorance of facts that would disprove the report.”

Some whistleblower protections apply only to certain types of employers (federal contractors, public companies, etc.). For example, the WPA protects most federal executive branch employees, former employees and applicants from retaliation, like wrongful termination.

Whistleblowers who knowingly file fraudulent or malicious reports or lawsuits may face both civil penalties and criminal consequences.

Civil penalties and legal consequences

Civil penalties and legal consequences for different types of whistleblowers who make bad faith allegations vary depending on the relevant law and the method of blowing the whistle.

• False Claims Act penalties: Whistleblowers who file lawsuits that are clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment may face financial liability, such as an order that they pay the defendant’s attorneys’ fees and expenses.
• Employer counterclaims: Some whistleblowers may face defamation or libel suits if they knew the reports they filed were not true.
• Loss of whistleblower protections: Whistleblowers who deliberately make false reports may not be eligible for protections against employer retaliation.
• Risk of disqualification: Filing a false claim can make a whistleblower ineligible for rewards under programs like those run by the SEC or IRS.

Criminal charges

It’s possible for the government to file criminal charges against whistleblowers who make bad faith allegations. If a whistleblower knowingly lies under oath or in government proceedings, fabricates a story or makes exaggerated or misleading assertions or intentionally provides false information, they could face criminal charges for perjury, a serious felony. A perjury conviction can result in fines, probation and jail time, depending on jurisdiction.

Whistleblowers who make good faith allegations that are unsubstantiated may still be protected, as long as they reasonably believed that wrongdoing occurred and they reported it to an authorized person or entity.

Courts often assess if a reasonable person in the whistleblower’s position would believe a violation occurred. Retaliation is still forbidden, and firing or demoting someone for reporting potential fraud (even incorrectly) may still be illegal. Maintaining evidence of efforts made to report concerns in good faith can help protect whistleblowers.

Motley Rice’s whistleblower attorneys have represented hundreds of individuals who strive to hold companies and individuals accountable for their unethical and illegal activity.

Our attorneys have worked on behalf of a variety of whistleblowers. We’ve represented individuals who have blown the whistle on organizations such as:

• Banks and other financial services companies
• Companies that receive government grants, loans or financing
• Defense contractors and other government contractors
• Healthcare providers
• Major pharmaceutical companies
• Securities and commodities issuers and broker-dealers
• Tobacco companies

If you believe that you have information or evidence of fraudulent or illegal activity within an organization, talk with one of our whistleblower lawyers as soon as possible to discuss your options.

Read more about our whistleblower litigation experience.