Whistleblowers have a rough row to hoe. George Green knows this better than anyone. A former architect for the Texas Dept. of Health and Human Services, he blew the whistle on shoddy building practices at DHHS some 25 years ago. DHHS fired him in 1989 for alleged sick leave issues. In 1991, the jury awarded him $13.7 million in total damages. But, because that amount was so high, he had to lobby the state leglslature to pass a bill appropriating that amount. Under state law, a state official cannot sign a check over a certain dollar amount. It was four years before the state legislature awarded this amount. He lobbied himself and hired others to help him lobby the state government. He received his check sometime in the early 90’s.
The jury awarded some $10 million in punitive damages. Apparently, Plaintiff Green reached an agreement with former Lt.-Gov. Bob Bullock that the state would not pay punitive damages. The whole concept of "punitive damages" is hard for defendants to accept. That agreement apparently caused him tax trouble with the IRS. See San Antonio Express News report. Punitive damages are, I am told, taxable income to the person receiving them. So, I presume Mr. Green did not pay all of his taxes. After all his trouble with the IRS and paying lawyers, Mr. Green emerged with only $300,000.
Mr. Green appealed the tax issues to the Fifth Circuit Court of Appeals in New Orleans and lost. The court found that Mr. Green’s damages were punitive damages, regardless of the agreement he reached with Bob Bullock. Mr. Green had tried to argue that the damages were actual damages based on his health issues. I have to say that does sound like risky strategy. Courts and the IRS would surely look at the actual jury award and jury charge to determine what the jury awarded. Any subsequent agreement would appear to be designed to avoid tax liability.
He also lost a lawsuit filed by a consultant. That cost him $600,000. He says he had some 200 attorneys, accountants and consultants working for him at various times. Now, he lives on his father’s monthly retirement check, trying to start a business growing grapes and tending bees.
But, it sounds like he would still today, after all these troubles, still have blown the whistle….