THE BLOG
11/19/2010 12:01 pm ET | Updated May 25, 2011

Whistleblowers: Cynical Idealists or Idealistic Cynics?

A group of elite whistleblowers met in Washington, D.C., recently without making a sound. There was no media coverage of these men and women whose exploits have commandeered front-page headlines, been heralded on 60 Minutes and Dateline, and, not incidentally, helped enrich the U.S. Treasury by more than $16 billion since 1986.

This particular group known as SWAT (Successful Whistleblowers Advocating Against Tax Payer Fraud) met to share and celebrate their stories of exposing fraudulent health-care companies, dishonest manufacturers and nefarious pharmaceuticals. And yes, by blowing the whistle, they have made themselves and their attorneys very rich. "We know how to win and how lonely a job it is," said James F. Alderson, a certified public accountant from Whitefish, Montana, whose lawsuit against Hospital Corporation of America, Inc. yielded the biggest single cash recovery ever for the U.S. government -- more than $1.7 billion.

After 12 years of litigation Alderson received an award in excess of 20 million; the average whistleblower award is $100,000. Only one percent receives life-changing awards like the SWAT team I met. Yet these whistleblowers are not happy-go-lucky moguls, reveling in the wealth they earned by taking principled stands against fraud, abuse and corruption. "Most of us gave up years of our lives in litigation, and lost all we had to tell the truth," said Bruce Boise, a former Ohio sales representative for Cephalon, Inc. who made $250,000 a year before he was fired. He lost his job when he refused to follow the company's orders to convince doctors to prescribe the company's drugs for unapproved or "off-label" uses. He reported the company to the FDA and launched a massive government investigation. Cephalon paid $425 million to settle the suit and Boise received a handsome percentage. But despite the multimillion-dollar award he still feels ostracized from society.

"All of us do. We're looked on with disfavor and disgust by people who think we're crazy or, even worse, greedy. There's a stigma for telling the truth in a go-along-to-get along world," he said.

"They call us 'ratas' [Spanish for rats]," said John W. Schilling, who with Alderson, filed suit under the False Claims Act against HCA, Inc., the nation's largest for-profit healthcare provider, and developed the case that yielded the largest single cash recovery ever for the U.S. government. Despite their multimillion-dollar awards, neither Schilling nor Alderson feels totally victorious.

"How can you when there's still so much fraud out there?" asked Alderson. "The only way to stop corporate corruption is to change the statute to make CEO's go to jail for fraud. Right now they are immune."

Explaining the basic mentality of corporate malfeasance, he said: "If companies can commit fraud for $100 and know they will only be fined $40, they still make a $60 profit... The corporate integrity funds set aside to pay fines are part of their business plan." His point is documented by the public record of Pfizer, whose total revenue from 2004-2008 was $245 billion. During the same period Pfizer paid $2.75 billion in fines.

The SWAT conference in Washington was organized by Alderson, and I accepted his invitation to address the whistleblowers over lunch. I felt honored to be among these individuals, who are either the most idealistic cynics I've ever met or the most cynical idealists. (The cynicism kicked in when someone mentioned one attendee who had canceled at the last minute. "He got rear-ended," said Alderson, "three weeks after his settlement." All eyes looked up to the ceiling as everyone let out a long collective groan. "Yeah, well... let's just hope it was an accident.")

Most of the whistleblowers I met hailed from small towns with strong values. "I'm a devout Catholic," said Schilling. "I was brought up by the nuns."

"I'm a preacher's kid," said Walter W. Gauger, a former pharmacist who joined with George B. Hunt to sue Medco for prescription fraud. After seven-and-a-half years of litigation, Medco settled for $155 million, the largest pharmaceutical fraud in the country.

There are two kinds of whistleblowers: Those "inside" are government employees. Those "outside" are non-government employees with knowledge of fraud or misbehavior of interest to the government (U.S. tax evasion, Medicare fraud, SEC violations, etc.) There are laws in 37 states to protect whistleblowers in the public and/or private sector, but most attorneys acknowledge these laws are full of loopholes, poorly enforced and ineffective. There is no one comprehensive law that protects whistleblowers from suffering intense repercussions for telling the truth, even though their claims may be valid and their disclosures spare the public a great deal of pain and expense. The retaliation against whistleblowers, especially in the private sector, is severe. They are usually fired, losing all benefits while being blackballed in their industry. Company workers, once considered close friends, avoid them as do neighbors, even relatives. Their children are bullied at school and shunned by classmates. The isolation causes severe distress within the family, often leading to divorce, depression, distrust, and decline in physical health.

"I gained 70 pounds, developed diabetes and my husband left me," said Janet Chandler, who sued Cook County Hospital in Chicago for forging data and failing to comply with federal human research regulations in a federally funded drug abuse study. As a young attorney Barack Obama worked on her case, which went to the U.S. Supreme Court. "I won a 9-0 victory but got less than $1,000,000," she said. "I spent the last three years co-founding a mentoring program for whistleblowers and getting my health back, and I continue to work in public service as an advocate for women and children ."

Members of Congress on both sides of the aisle want to give federal whistleblowers better safeguards against retaliation when they report waste, fraud and corruption. Bills languishing in the House and the Senate would give them the right to a jury trial on retaliation claims -- something they don't get now. In addition, the legislation would lift the gag rules imposed by some national-security agencies and strengthen rules against penalizing those who report wrongdoing to Congress.

Earlier this month the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) proposed implementing the whistleblower section of the Dodd-Frank Wall Street Reform Bill and not a minute too soon. We need to encourage these men and women, who perform a valuable public service by shining their lights in dark places.

As I left the SWAT luncheon, held a few blocks from the White House, I thought of the movie, It's a Wonderful Life and the bells that ring every time angels gets their wings. I fantasized about hearing whistles blowing every time someone stands up against fraud and corruption. A few hours after the luncheon the San Francisco Giants won the World Series, and the team received a call from the president inviting them to visit the White House. Sadly, the whistleblowers left Washington, virtually ignored.