Whistleblowers: Public heroes, corporate villains

Whistleblowers face retaliation, ostracization, chronic stress and even being blacklisted from their industry. The author examines why these courageous truth tellers choose to speak out, backlash they face from their employers, legal protections afforded to them and considerations they should weigh before coming forward.

Editor's note: This story includes discussion of suicide. If you or someone you know needs help, the national suicide and crisis lifeline in the U.S. is available by calling or texting 988. There is also an online chat at 988lifeline.org.

As director of physician services specializing in medical compliance at Halifax Health Medical Center of Daytona Beach, Florida, whistleblower Elin Baklid-Kunz discovered that the hospital fraudulently overbilled Medicare, the U.S. government’s health insurance program for older adults; engaged in fraudulent medical coding; paid kickbacks to doctors and wrongfully admitted patients for unnecessary inpatient procedures. One hospital employee who was aware of the fraudulent practices stated that referring patients to Halifax Hospital was like “sending lambs to slaughter, because they were almost invariably operated on.” Baklid-Kunz, however, wasn’t willing to ignore the impact the hospital’s practices had on patients, saying “When defenseless people are getting hurt, you can’t turn your back.”

Baklid-Kunz noticed irregularities, such as doctors being paid bonuses based on how much profit the hospital made — a practice she believed to be illegal but was reassured by her supervisor, George Rousis, was legal. She subsequently learned from an attorney, however, that such a practice violated the U.S. Stark Law, which prohibits doctors from referring Medicare patients to hospitals in which they have a financial stake. Such arrangements create a conflict of interest and can induce doctors to recommend testing, surgery or other medical procedures that earn them money but may not be in the patient’s best interest.

When she spoke to Rousis about her concerns again, he indicated that government knowledge of the hospital’s arrangement with doctors would create a “firestorm.” An attorney for Halifax Hospital wrote a memo stating that the hospital’s practices violated the Stark Law and recommended self-reporting the misconduct to the government. But senior management chose to follow the guidance of outside counsel who stated the hospital’s practices didn’t violate any law. Senior management declined to report the misconduct to the government as required, nor did they change their contractual arrangements with their doctors.

In Medicare compliance, self-reporting refers to a provider’s voluntary disclosure of potential violations, such as breaches of the Stark Law, to the Centers for Medicare and Medicaid Services. Through the self-referral disclosure protocol, organizations may admit noncompliance, outline corrective action and repay any overcharges. Self-reporting often leads to reduced penalties and demonstrates a commitment to transparency and ethical practices in patient care.

Baklid-Kunz observed one case of fraudulent billing in which a patient had been hospitalized for brain cancer and eventually died. The Medicare claim form showed that the neurosurgeon billed for critical care every day of the patient’s hospital stay, yet the patient’s medical record showed that the doctor provided no critical care. According to Baklid-Kunz, “We had billed the insurance company, Medicare, and the patient’s family for the co-pay, and we didn’t even perform the service.” Baklid-Kunz consulted the hospital’s general counsel, sharing with him her concerns, to which he said that it wasn’t necessary to worry because Halifax Hospital is a public institution and couldn’t be hurt by the False Claims Act. [See “Whistleblower protections in the False Claims Act” at the end of this article.]

The general counsel claimed that “he had friends high up in the U.S. Department of Justice and would know if there was any investigation going on.” Baklid-Kunz brought her concerns to other legal, management and compliance professionals at Halifax Hospital and in “one particular heated exchange, George Rousis told her that her loyalty was to the Halifax Hospital, not to the government, and that if she ever thought about becoming a whistleblower, she should leave right away.”

Whistleblowers who courageously come forward to report wrongdoing by their employers often face retaliation in the form of termination, demotion or denial of promotion, denial of benefits, intimidation or harassment, reassignment to undesirable roles, reduction in pay or hours, exclusion from meetings or training, mocking and false accusations of poor performance.

Baklid-Kunz was under tremendous stress and experienced frequent nausea, sleep problems and weight gain. But she was motivated to do the right thing because she was “scared for the patients” and felt confident that hospital executives knew they’d broken the law but did nothing about it. “I kept hoping that someone else would do it, but sometimes you have to be that someone.”

Baklid-Kunz’s experience wasn’t unique. Retaliation takes an emotional toll on whistleblowers. Fear of job loss or legal consequences can lead to chronic stress. Whistleblowers may be excluded from social interactions in the workplace. Being retaliated against by colleagues or leadership can erode trust in institutions. Some whistleblowers report depression, post-traumatic stress disorder or burnout due to prolonged retaliation. Retaliation has professional consequences for whistleblowers, as well. Employers may interfere with future job prospects by spreading negative information. They may also use poor performance reviews as a tactic to justify disciplinary actions or termination. Whistleblowers may be forced to resign due to intolerable working conditions. 

In a 2022 survey of 84 whistleblowers featured in the book "Fraud Examination and White-Collar Crime," 82% reported experiencing harassment after blowing the whistle, 60% said they were fired, 17% lost their homes and 10% attempted suicide.

Jackie Garrick, Ph.D., founder of Whistleblowers of America, an advocacy group supporting mental health for whistleblowers tells Fraud Magazine that data collected by her organization shows that whistleblowers “universally experience trauma, depression, anxiety, moral injury and, sometimes, suicidal ideation.” 

This article examines whistleblowers’ motivations for coming forward, why organizations vilify them, the ways in which coworkers and employers retaliate against whistleblowers, efforts to discredit them, and important considerations that whistleblowers should take before speaking out.

Whistleblower motivations

An inclusive definition of whistleblowing is the “disclosure by organization members, former or current, of illegal, immoral, or illegitimate practices under the control of their employers to persons or organizations that may be able to effect action.” The definition encompasses both internal disclosures of misconduct to, for example, upper management, and disclosures of misconduct to external parties such as regulatory agencies.

Whistleblowers often feel ethical, personal and professional responsibility when they choose to report fraud, waste, abuse or threats to public safety at their organizations. Their motivation may stem from a desire to hold wrongdoers accountable, especially when misconduct affects vulnerable populations or violates public trust. Some individuals report wrongdoing externally after their superiors ignore or dismiss their complaints. Blowing the whistle can be a last resort when they feel their concerns aren’t being taken seriously and further harm will continue. According to Garrick, whistleblowers often choose to come forward because of a “moral compass built through spirituality and developed through professional ethics.” For many, says Garrick, calling out wrongdoing is often influenced by previous trauma and not wanting to see others suffer. 

Regardless of their reasons for speaking out, whistleblowers do the essential job of exposing wrongdoing, protecting public safety and preserving the integrity of institutions. Their disclosures may lead to reforms, criminal prosecutions and the recovery of public funds.

The authors of “A Word to the Wise: How Managers and Policy-Makers Can Encourage Employees to Report Wrongdoing” state that employees who blow the whistle are encouraged and committed to report misconduct because they believe it will benefit their organization. As Baklid-Kunz stated, “I never wanted to become a whistleblower … I gave the information to so many people, in compliance, in legal, because I thought they’d have to do something with it once they knew. I never imagined people in their position could just walk away. I would have given anything to get them to listen but it was like we were speaking different languages. I spent a great deal of time thinking if I could walk away from this and not do anything. I wanted to do that so bad, to just get another job and forget that this happened.”

Vilified for loyalty to the truth

People often define themselves through the organizations they belong to, gaining a sense of identity from their workplace, especially since it serves as a central hub for daily social interaction. Corporate influence can shift workers’ loyalties, often leading them to prioritize the company over other professional relationships. Many whistleblowers define themselves by their commitment to the truth.

For some, the organization is a means to achieve personal goals such as status and financial success, and they reject anything that threatens those ambitions. When success is tied to conforming with organizational norms, employees tend to adopt those values and are less likely to challenge unethical behavior or poor leadership.

Corrupt activity can become routine within organizational culture, infiltrating the corporate decision-making process that enables otherwise law-abiding individuals to rationalize unethical acts. According to the 2013 study, “The Impact of Authority on Reporting Behavior, Rationalization and Affect,” circumstances have a greater influence on shaping behavior than self-perception. Character is revealed in how we respond to situations. People are willing to morally disengage when faced with sufficient inducement to behave unethically. Sufficient inducement may include the promise of a promotion or a pay raise, increasing the risk that someone would compromise their integrity and behave unethically. They do so by reconstructing the misconduct itself as ethical, by minimizing the consequences of the act or by shifting responsibility elsewhere.

Group dynamics can shape perceptions, often casting those who challenge group norms — even for ethical reasons — as disloyal. An organization’s informal culture — shaped by unspoken norms and peer influence — often guides employee behavior more than formal ethics programs. At Halifax Hospital, this culture prioritized profits over integrity.

Consider Association of Certified Fraud Examiners’ (ACFE) 2006 Sentinel Award winner, Bunatine Greenhouse, who rose to become the highest-ranking civilian at the U.S. Army Corps of Engineers. 

Greenhouse, in part, addressed an entrenched corrupt government contracting culture. She encountered opposition from those within the Corps and bidders, but she enjoyed her supervisor, Lieutenant General Joe Ballard’s, support, receiving the highest possible performance reviews. When Ballard retired, the new command awarded contracts based on relationships that commanders had with the industrial community.

The new commander initially lauded Greenhouse’s performance as exceptional, but future performance reviews reflected a failing rating. Eventually, Greenhouse was demoted without cause. Greenhouse told Fraud Magazine in 2006, “I was downgraded in performance and removed because I did my job too well. I voiced strong objections to the contract abuse I witnessed [and] … publicly testified about the contract abuse I witnessed. I thought of myself as just someone who was trying to do my job to the best of my ability, giving every fiber of my being to protect the public trust and making sure that at all times that the nation and our war fighters were getting the best value for the goods and services that would get them to the battlefield and provide them the facility to fight and to win. A whistleblower is one whose loyalty is to the truth.”

The ACFE’s 2023 Sentinel Award winner, Xavier Justo, spent 547 days in a Thai prison after exposing one of the world’s largest financial scandals totaling more than $4.5 billion stolen from Malaysia’s sovereign wealth fund, 1Malaysia Development Berhad (1MDB). Justo’s former colleagues at oil services firm PetroSaudi accused him of blackmail and extortion for exposing their role in embezzling more than $1 billion from the 1MDB fund. His colleagues at PetroSaudi had a joint venture with 1MDB that served to steal from the investment fund.

Justo, who’s celebrated in Malaysia for his part in bringing down the corrupt former prime minister Najib Razak, told Fraud Magazine in 2023, “Being seen as the whistleblower, as the good guy, as the hero, as the guy who went to prison and all these things, doesn’t help you to find a job. I can find a couple of consultancy jobs, but financially it is a nightmare. I know I can pay the rent at the end of this month, but I have to find the money for the next month, and I don’t have a fixed job.”

Justo often found himself in job interviews being told that “everyone likes him, but because of his past, he presents too much of a reputational risk to the firm.” His involvement in the 1MDB scandal forced him to leave Switzerland, where he could no longer secure employment or even find a place to live. Justo recalled “how one particular landlord said that her husband feared there would be car bombs in their parking lot if they rented to Justo’s family.” Justo learned a hard truth: In a foreign country with different laws and values, whistleblowers can’t rely on honesty alone. Corrupt systems often silence the truth. As Justo told Fraud Magazine, “I always thought I was quite smart, but sometimes you are not that smart. I was overconfident. I forgot that when you steal billions, there is no border.”

Tactics to undermine whistleblower resolve

Organizations often retaliate against whistleblowers during times of financial strain, especially when management caused the misconduct. This often involves undermining the whistleblower’s role to force termination or a demotion, aiming to push the whistleblower out of the industry. On occasion, employers isolate whistleblowers by physically locking them out, barring them from incriminating evidence. Employers might also hinder an employee’s access by occupying them with endless bureaucratic processes.

Similarly, revoking a whistleblower’s security clearance is a tactic for hiding damaging information from those workers who would otherwise have access to it. According to research published in Business Ethics Quarterly in 2015, management may retaliate by withholding essential job-related information, denying promotions, imposing unjustified suspensions, giving unfair performance evaluations, reassigning employees to distant locations, denying training opportunities, and using verbal abuse, harassment, intimidation or character attacks.

Nonfinancial disincentives to whistleblowing often involve psychological pressure. Rather than firing whistleblowers outright, organizations may demoralize and humiliate them, making the work environment so uncomfortable that they eventually leave voluntarily. Psychological pressure resembles what could be described as “silent social ostracism” — a form of social rejection with the intention of isolating one from others. This ostracism might take the form of excluding the person from social events or emails, giving “the silent treatment” (withholding communication), spreading false rumors, or physically isolating the person within the organization. As one psychologist stated in “Whistleblowers: Incentives, Disincentives, and Protection Strategies,” “no more fiendish punishment could be devised” than social ostracism.

For example, once coworkers learned of Baklid-Kunz’s whistleblowing lawsuit, they refused to sit next to her at meetings, and her performance reviews, which had been stellar, plummeted. One “longtime colleague stopped her at the entrance to the hospital and said loudly, in front of patients, ‘How dare you come back here? You should be ashamed of yourself.” When she reported this incident to the hospital’s legal department, the associate legal counsel dismissed it with a shrug, stating, “What else can you expect, after what you’ve done?”

Baklid-Kunz moved to a small unpainted room at the end of a hallway. Her computer-access credentials changed. Halifax Hospital hired a public relations firm to attack Baklid-Kunz’s credibility and her character, focusing on the financial payoff she’d receive, contending that her lawsuit was motivated by pure greed. During the investigation into Halifax Hospital’s practices, attorneys learned documents that referred to improper patient services were destroyed. Yet a retired accounts payable clerk called Baklid-Kunz’s behavior “beyond morally obscene.”

Baklid-Kunz had difficulty finding new employment. In one instance, a senior vice president of a health care firm invited Baklid-Kunz for an interview and promptly offered her a position. Subsequently, the vice president sent Baklid-Kunz an email stating that the firm’s board of directors and the general counsel objected to hiring a whistleblower stating, “I did all I could to make the argument for why it makes sense to hire you, the concern is how our large clients will handle knowing that we’re employing a whistleblower and that they could drop us as a client.”

Once Baklid-Kunz’s case was resolved, some compliance professionals appeared uncomfortable associating with her. For example, when attorney Marlan Wilbanks discussed Baklid-Kunz’s case at a major compliance conference, organizers refused to invite her or include her on the panel — even though whistleblower tips, both anonymous and not, are key tools prosecutors use to detect and build fraud cases. Baklid-Kunz attended the conference but noticed people avoided her. One of Baklid-Kunz’s friends who attended the conference stated, “A lot of people here are thinking, ‘What are you doing here? You got your money. Just move on.’”

Baklid-Kunz disagrees with this mindset, stating, “A lot of people look at whistleblowers like bounty hunters, they look at the reward as blood money. But people don’t understand that most whistleblowers are motivated to act by something more than money, because there’s really no guarantee of any reward at all. So many things could go wrong, and you can end up with nothing: no job, no future.”

Corrupt leadership and whistleblowing

Corrupt leadership conflates the whistleblower’s moral courage to disclose the truth as synonymous with disloyalty and causing harm, both financial and reputational, to the organization and coworkers. Authorities often discredit whistleblowers by framing their actions as driven by greed or revenge, while fostering a culture that isolates truth tellers and makes their personal lives so uncomfortable they eventually give up and leave voluntarily. However, whistleblowers may not realize that the misconduct originated with members of leadership, who will retaliate.

Enron whistleblower, senior executive Sherron Watkins, wrote a memorandum to then-CEO Kenneth Lay about the questionable financial transactions Enron engaged in. When convicted Enron Chief Financial Officer Andrew Fastow learned that Watkins talked to Lay about the fraud schemes, Fastow wanted her terminated and seized the computer from her desk. Despite Fastow’s wishes, Watkins remained but was removed from the executive suite, sent to a starkly furnished office at the bottom of the Enron building and assigned menial tasks. The environment was so tense that she even sought advice from Enron security personnel.

Important whistleblowing considerations

Whistleblowers divulge their concerns outside the organization for various reasons, including:

• They anticipate that reporting internally is futile.
• The organization shows no interest in resolving the misconduct by management’s unresponsiveness to the problem.
• The whistleblower wants support from regulators, such as the U.S. Securities and Exchange Commission.

According to the “The Corporate Whistleblowers Survival Guide: A Handbook for Committing the Truth,” to successfully engage an external regulatory agency, the whistleblower must find the appropriate agency and person within a maze of bureaucracy.

Potential whistleblowers should be prepared for direct questioning from outside agencies, as successful prosecutions require solid evidence and a clear violation of law or regulation.

Typically, successful U.S. prosecutions require a link between misconduct and a violation of some law. As one whistleblower stated in the 2015 book, “Ethics in Accounting: A Decision-Making Approach,” “Blowing the whistle isn’t about telling the truth, it’s about proving the truth.” Also, most whistleblowers are naive about the precautions they must take, the amount of evidence they must bring forth and the lack of support they’ll receive once the case begins.

In addition, prior to and during trials, attorneys for the organizations accused of wrongdoing often paint informants as disgruntled employees trying to get revenge on the organization for a variety of reasons, such as being passed over for a promotion. Standard protocol encourages reporting misconduct to a supervisor, but this becomes problematic if the supervisor is involved in the misconduct. Misconduct worth reporting typically causes harm, violates human rights, breaks laws or regulations, contradicts the organization’s mission, or is otherwise unethical — warranting escalation to higher authorities or government agencies.

Sarah Carver, CFE, and Jennifer Griffith, CFE, recipients of the 2024 ACFE Sentinel Award, faced retaliation after reporting misconduct to their supervisors at the U.S. Social Security Administration (SSA). The whistleblowers exposed a $550 million fraud scheme involving attorney Eric Conn and administrative law judge David Daugherty, who conspired to file fraudulent disability claims. After raising concerns, Carver and Griffith say management began isolating them. “We were ostracized,” Carver told Fraud Magazine in 2024. “They called us troublemakers or the dark side. New employees wouldn’t be seated near us, and they were told that if they wanted to get promoted, they shouldn’t socialize with the dark side.”

Griffith said it wasn’t until the discovery phase of their whistleblower lawsuit that they learned the full extent of how their managers worked to turn their coworkers against them. Both women said they experienced retaliation from their superiors in repeated attempts to get them to quit their jobs. They faced reprimands for typos and spelling mistakes in their reports, as well as being timed for bathroom breaks. “As Griffith would recount to Fraud Magazine, being timed for using the bathroom was especially egregious for her when she was pregnant.”

The “Whistleblower's Handbook: A Step-By-Step Guide To Doing What's Right And Protecting Yourself” recommends that potential whistleblowers consult with multiple attorneys who specialize in whistleblower cases until they find the right one to represent them. Finding an attorney who specializes in this area is paramount because reporting misconduct may have a statute of limitations on holding an entity responsible for misconduct. Whistleblowers could forfeit protections because of time-sensitive issues.

Counsel can advise a whistleblower of these time requirements and protect them from retaliation and ensure that they can collect compensation. In fact, many whistleblowers have lost their cases due to failure to follow the strict legal requirements of a state’s or country’s statute of limitations. People considering whether to blow the whistle should consult an attorney as soon as possible and consider the following questions:

• What does the attorney recommend? Is the client willing to listen to the advice?
• Has the whistleblower personally observed organizational misconduct?
• Is there a law or regulation that’s being violated by the misconduct?
• Has the whistleblower experienced any harm due to retaliation?
• How serious is the misconduct? Will it be reported internally or externally?
• Does the misconduct produce actual harm to others, including the organization?
• Does the whistleblower qualify for any legal protections for the disclosure?
• Are financial rewards available to give the whistleblower the incentive to report misconduct?
• Is the whistleblower willing to tolerate and adjust to coworker retaliation?
• Are the whistleblower and their family prepared for a long legal battle to prove misconduct and retaliation without guarantee of success?
• Does the whistleblower have verifiable, relevant and quality evidence, such as a paper and digital evidence trail, to prove misconduct occurred?
• Are there witnesses who can support the whistleblower’s claims that misconduct and retaliation took place? Without an evidence trail, it’s more difficult to prove a case because it becomes the whistleblower’s word against another.

A life of honor

Ironically, employers often punish whistleblowers even as the general public celebrates them, making them villains and heroes simultaneously. However, Greenhouse confidently told Fraud Magazine, “I am proud to be called a whistleblower and I am proud to have the courage to be loyal to the truth.” But we must be aware that in coming forward and exposing misconduct, a whistleblower won’t always be thanked for their courage from those within an organization. Whistleblowers can mitigate some of the unfortunate aspects of blowing the whistle by having a solid support system made up of colleagues, family and competent legal counsel to provide sound advice on how to proceed.

Frank S. Perri, J.D., CFE, CPA, is an attorney in Illinois. Contact him at frankperri@hotmail.com.

Whistleblower protections under the False Claims Act 

The U.S. False Claims Act is one of the most effective tools for uncovering fraud, particularly in health care, defense contracting and other federally funded programs. This federal law imposes liability on individuals or entities that knowingly submit false claims for payment to the federal government, use false records or statements to get fraudulent claims paid, conspire to commit such acts, and avoid paying money owed to the government. Violators may be liable for damages three times the amount of the government's loss plus civil penalties adjusted for inflation.

The Fase Claims Act also includes powerful provisions for whistleblowers. Chief among them is its unique qui tam provision, which allows private citizens (known as relators) to file lawsuits on behalf of the government if they have evidence of fraud. To file a qui tam action under the False Claims Act, the whistleblower must file the complaint under seal in federal court. The U.S. Department of Justice (DOJ) may choose to intervene and take over the case. If the case is successful, the whistleblower may receive 15% to 30% of the recovered funds.

In addition, the False Claims Act protects whistleblowers from retaliation. This includes protection against termination, demotion, harassment and any adverse employment action due to blowing the whistle. If retaliation occurs, whistleblowers may be entitled to reinstatement, double back pay and compensation for special damages, including litigation costs and attorney’s fees. In 2024, the DOJ recovered more than $2.9 billion from civil cases involving fraud and false claims, much of it stemming from whistleblower-initiated lawsuits.