S.C. Senators to Introduce Whistleblower Bill

May 2, 2011

Investigative Reports

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The NerveState and local government employees in South Carolina who report waste or wrongdoing involving tax dollars would receive greater protection – and rewards – under a bill expected to be introduced Tuesday by two S.C. senators.

“The current whistleblower statute is extremely weak,” John Crangle, director of the nonprofit, nonpartisan government watchdog organization Common Cause of South Carolina, told The Nerve last week.

Sens. Jake Knotts, R-Lexington, and Vincent Sheheen, D-Kershaw, plan to hold a press conference Tuesday at noon at the State House to discuss their bill, Crangle said. Common Cause is organizing the event, he said, adding that the S.C. Association of Taxpayers also will be represented.

Crangle said he believes that strengthening the current law not only would have the “benefit of exposing wrongdoing,” but it also would have a “very strong deterrent effect.”

“You’re going to be very apprehensive about doing anything wrong if you know one of your employees could blow the whistle on you,” he said.

A tougher whistleblower law also would help Gov. Nikki Haley’s goal of reducing waste, fraud and abuse in state government with the recent creation of an inspector general’s position in her administration, Crangle said.

He contends that the inspector general won’t be able to do his job as effectively without public employees supplying him with information.

“If Nikki Haley is going to be serious about getting rid of waste, fraud and abuse, then you have to do the things that are necessary to accomplish that task,” Crangle said. “Basically, the appointment of an inspector general is just getting to first base. You need to get information back to the inspector general.”

Under the current law, rewards for successful whistleblowers are capped at $2,000, as determined by the S.C. Budget and Control Board, even if millions of stolen or misused tax dollars are recovered. If reporting employees are fired or demoted in retaliation, they can get their old jobs back, but actual damages are limited to $15,000, no matter what their salary was; and awards of attorney fees can’t exceed $10,000 for a trial or $5,000 for an appeal.

Under the bill by Knotts and Sheheen, those amounts would be increased as follows, according to Crangle:

  • Rewards – 10 percent of any recovered tax dollars;
  • Actual damages, such as lost wages – No limits; and
  • Awards of attorney fees – “Reasonable,” as determined by a judge, based on current legal standards.

The bill also would extend the deadline for whistleblowers to file lawsuits from one year to three years, said Crangle, an attorney. He added that fired employees also could sue if they had exhausted administrative remedies.

Knotts prefiled a bill (S. 318) in December that would have eliminated the one-year deadline, though it didn’t address the damage caps. That bill hasn’t moved out of the Senate Judiciary Committee since January.

The current law was enacted in 1988 and amended in 1993. Under the 1988 version, there were no caps on actual damages or attorney fees – other than the attorney fees had to be “reasonable” – though there was a $2,000 reward limit. The caps on actual damages and attorney fees were put into the amended version, which also limited plaintiffs to trials by a judge instead of a judge or jury.

Longtime Columbia attorney Lewis Cromer says he knows why the current law was watered down.

“You’re referring to the Cromer Amendment,” he told The Nerve when contacted last week.

Cromer said lawmakers changed the law in 1993 because certain state agencies didn’t like the fact that he and some other lawyers were winning big whistleblower cases.

“We settled a whole lot of big ones that you never read about,” Cromer said. “I can think of five or six cases that we settled for six figures.”

One of Cromer’s publicized cases involved Helen McGill, who lost her job at the University of South Carolina in 1989 after reporting mishandling of hazardous waste by the university.

A jury awarded McGill $350,000, though a judge reduced the amount to $250,000 – then the limit under the state’s Tort Claims Act. But the S.C. Supreme Court in 1992 reinstated the jury’s verdict, ruling that the $250,000 cap didn’t apply to whistleblowers. The justices also awarded McGill legal fees and costs.

“The Whistleblower Statute was enacted as a protection to public employees who report or testify to public wrongdoing,” the high court said in a unanimous opinion. “Had the Legislature intended to limit the amount of damages to be recovered, it could have done so.”

That’s exactly what the General Assembly did the following year.

Cromer said the practical effect of the watered-down version of the law was that it drove away many lawyers who previously accepted whistleblower cases. He said he continued to take those cases but was forced to seek remedies under different legal theories.

Cromer said he doesn’t have hard evidence that the number of whistleblower cases has declined after the law was amended, though he suspects that’s the case.

“People are hesitant to report them (wrongdoings) if they fear being stripped of all protection to report them,” he said.

Whistleblowers are important in protecting the public, Cromer said, pointing out that “if it weren’t for Helen McGill, we could have had a huge chemical explosion right around Williams-Brice Stadium, and it could have been devastating – especially during a football game.”

Crangle said he has no illusions that the Knotts-Sheheen bill will pass this year, acknowledging that bills filed after a May 1 “crossover” date face a much steeper climb to pass this session because of procedural rules.

But he said he hopes that public hearings on the bill will be held this summer or fall so that it will face quicker action in next year’s legislative session.

“I really don’t know if you want to push it this year because the budget has been so overwhelming,” Crangle said. “I think next year will be more favorable.”

Reach Brundrett at (803) 254-4411 or rick@thenerve.org