Risks Of Tuning Out Company Whistleblowers: Ignorance Is Not Bliss
June 16, 2022 | The Insider: White Collar Defense and Securities Enforcement
The recent shutdown of the Abbott Nutrition plant in Sturgis, Michigan highlights an all too familiar problem that companies and their counsel need to address: the consequences of ignoring internal whistleblowers. An Abbott Nutrition employee alleges that he repeatedly voiced his concerns about quality control failures and food safety violations directly to company management “over an extended period” of time with no response. The company maintains that no complaints were filed with the company while the employee was at Abbott. After the employee left Abbott in 2020, however, the employee sent a report to the FDA in October 2021 – but this letter went ignored. The FDA is now the target of public criticism, as is Abbott Nutrition, and at least two class action lawsuits have been brought against the company by parents, alleging their children have become ill as a result of contaminated infant formula products. The ultimate outcome of the Abbott Nutrition matter remains to be seen. As experience has demonstrated, however, deliberately ignoring whistleblowers can have serious financial ramifications in the form of shareholder suits and increased financial penalties from regulators, the Department of Justice, and the courts.