The head of the health watchdog, Dame Jo Williams, cast doubt about the mental stability of a high-profile whistleblower who she wanted the Health Secretary to remove from the board, The Independent can reveal.

Kay Sheldon, a non-executive director of the Care Quality Commission (CQC), was subject to ‘priority monitoring' and declared a ‘risk’ to the regulator after she had raised concerns that public safety was being compromised by poor leadership and performance.

Internal documents show the plan to unseat Mrs Sheldon began as soon as she spoke out at the public inquiry into the scandal at Mid Staffordshire hospital last November.

The same day as that testimony was delivered, Dame Jo Williams, the CQC chair, immediately wrote to Andrew Lansley recommending that Ms Sheldon be “immediately” suspended and “urgently” replaced.

The Independent can reveal that Dame Williams, the former chief executive of charity Mencap, then used taxpayer’s money to commission an external mental health assessment from an occupational health doctor, who is not a psychiatrist.

After a short telephone conversation and without ever meeting Mrs Sheldon, who has a 26-year history of depression and is an expert in advocacy and patients’ rights, the doctor described her as possibly suffering from “paranoid schizophrenia”. He also “strongly recommended” that Sheldon’s medical history be obtained “in confidence” and that she should be “assessed or else removed from her position”.

“If she is suffering from serious psychological illness this will affect her judgement at the moment and it is as important for her to get this under control as it is for her fellow Commissioners, who have to deal with her in her current state of mind,” the report concludes.

Dame Williams then told the board that she planned to share this medical opinion with Mr Lansley and expressed “serious concerns” about Ms Sheldon’s mental state to senior Department of Health officials.

The revelations will raise further questions about Dame Williams’ position as chair of the CQC, which itself is intended to be a safe contact point for NHS whistleblowers exposing substandard care or wrongdoing.

It also raises questions about the Mr Lansley’s personal understanding about how whistleblowers are protected in law.

It is the latest in a long line of revelations about failings at the regulator. The health select committee, public accounts committee and the Mid Staffs public inquiry have reported major problems at the CQC. Patient safety failures at Morecambe Bay, United Lincolnshire and Barking, Havering and Redbridge NHS trusts have been exposed under the regulator’s watch.

In February the CQC’s chief executive, Cynthia Bower, stood down after the government’s own review endorsed Sheldon’s concerns about poor governance, poor leadership and unclear accountability.

Mrs Sheldon, 49, only learned about the investigation into her mental health after receiving information held by the CQC under the Data Protection Act. She said the doctor hired by Dame Williams was briefed without her consent, and that no-one else in her professional or personal life raised any concerns about her mental health during the same period.

Speaking exclusively to The Independent, she said: “They were trying to discredit me as either mad or bad, as mentally ill or a troublemaker - it’s shocking the lengths they were willing to go to in order to get me out.

“The information I got was scary as it showed the degree of monitoring I was under and the way I was being portrayed as the problem.

“I know my mental health,” she added. “I was stressed and frustrated because I was trying to raise importance patient safety issues and these were being brushed under the carpet, but my mental health was fine. I saw my GP and a CQC occupational health nurse about the stress but did not need to see a doctor or psychiatrist. I was not ill; I was just trying to do my job.”

“I am very open about my mental health problems, but it feels like they tried to use it against me – this is a public body meant to be protecting people, it was completely outrageous.”

Mrs Sheldon was asked to apply for the CQC board in 2008 after a commended five years at the Mental Health Act Commission, one of three regulators subsumed into the CQC when it was formed. Her own experience using mental health services was considered an invaluable part of her expertise.

On 28 November 2011, she blew the whistle at the public inquiry into failings at the CQC after her concerns about poor leadership and governance, a lack of accountability and an unsafe inspections regime, as well as low staff morale and bullying, were ignored internally and by the Department of Health.

Dame Williams immediately asked Lansley to remove Sheldon, who commissioned a former civil servant, Gill Rider, to assess the adequacy the CQC’s response to Sheldon’s concerns. Williams also began focussing on Mrs Sheldon’s mental health.

The Rider report, which was released in March 2012, concluded that Sheldon should be removed because “the public airing of concerns” caused a “fundamental breakdown of trusting relationships” between her and the other board members. Sheldon claims that she was only given one hour to make her case, and the final report focussed on the impact of her whistleblowing rather than whether her concerns were justified.

It is a criminal offence to punish a witness as a result of their evidence at a public inquiry.

Ms Sheldon started legal action after Mr Lansley wrote to her saying he was “considering removing” her from the board.

Her lawyers argued that the Rider report was unlawful as it breached legislation protecting whistleblowers and her human rights, as well as the government’s own well publicised whistleblowing policy.

Margaret Hodge, chair of the Public Accounts Committee, wrote to Mr Lansley in support of Ms Sheldon stating that the issues she’d raised about the CQC and Mid Staffs were “substantially true”.

After a meeting between lawyers representing Ms Sheldon and the DH, Mr Lansley last month agreed that Ms Sheldon should be allowed to remain on the board as a “fully engaged and active” member.

A CQC spokesman said Dame Williams was trying to re-establish effective working relationships within the board.

He added “The CQC has a duty to its staff, including board members. If there are concerns about an individual’s health or wellbeing, CQC may refer staff to its occupational health services.”

A DH spokeswoman said: “The Secretary of State was always clear that Kay Sheldon would suffer no detriment from giving evidence to the Mid Staffordshire Public Inquiry.

”This Government has done more to protect whistleblowers in the NHS than any other.“

Ms Sheldon said that the saga “has really opened my eyes to what whistleblowers face, when you hear what happens to people it seems unbelievable but it’s absolutely true.”

“When Jo Williams wrote to Andrew Lansley I think she expected that would be the end of her problem. This is what happened at Mid Staffs, people were scapegoated, and it’s totally unacceptable, so I decided to keep going.

I don’t have any regrets but it has been tough. I hope that the CQC becomes stronger and that the new chief executive will attract more good people to the organisation. I want to become a full participating board member and champion the perspectives of people who use health services as I was appointed to do.”

Recent scandals at Mid Staffordshire, Winterbourne View and Royal Sussex Hospital have made the department of health and Care Quality Commission stress the importance of whistleblowers in raising standards of patient care, emphasising the legal protection in place for all those who raise their heads above the parapet.

Yet the long and inglorious history of NHS whistleblowers suffering serious detriment as a result of their determination not to turn a blind eye as patients or the taxpayer suffers has continued at a pace since Steve Boslin’s NHS career was destroyed as a result of exposing the Bristol babies’ scandal in 1995.

NHS staff who raise concerns about patient safety or financial wrongdoing or bullying can still face unsubstantiated accusations of incompetence, harassment and mental illness. As Kay Sheldon’s case shows, no-one is considered too big to oust.

The Independent newspapers have reported story after story of nurses, doctors, radiologists, and chief executives losing their jobs after refusing to stay quiet.

Two recent examples illustrate the enormity of the problem - that is the gap between what was intended by the Public Interest Disclosures Act and promises under the NHS Constitution, and the reality on the ground.

Gary Walker was bought in as the chief executive of United Lincolnshire Hospitals NHS Trust in 2006 with a 17 year unblemished NHS career behind him. The trust had been through nine CEOs in the preceding six years and had serious problems with overspend, top-down bullying and gaming of waiting time targets.

Mr Walker and the new chairman David Bowles tried to instil a culture of safety first. During their first two years, hospital acquired infections and waiting times were cut by half, and the Trust started to meet national targets for the first time. It cleared its historic debts and even made a small surplus.

Things went wrong for Walker after he refused to keep meeting non-urgent government targets because the hospitals were dangerously full with emergency patients; senior doctors and nurses were telling the Board that patient safety was in danger. Internal strategic health authority (SHA) documents show that the risks to healthcare associated infections from overcrowding were known.

But the SHA refused to budge, and began pressuring ULHT to meet the targets “regardless of demand”. Mr Walker made several prima facie 'protected disclosures' to the board and NHS chief executive, stating that he was being bullied into putting targets before patient safety.

He was suspended while off-sick - accused of bullying and harassment. He was eventually sacked for allegedly swearing during staff meetings.

His employment tribunal claim was settled on the first day of the scheduled hearing last October with a 15 page gagging clause attached. Gagging clauses that try to stop issues of public interest being exposed are “void”. Despite this, the six-figure severance payment and compromise agreement passed through the Department of Health and Treasury.

In April 2010, Mr Walker wrote to the CQC after six ULHT employees came to him with evidence of patients being harmed as a result of targets being put first.

They conducted a spot check two months later and reported no serious concern after meeting with staff and patients. They found minor breaches which did not present any “immediate safety risks.”

However the inspectors did not speak to any of the clinicians or board members who had evidence of the clinical incidents. They did not approach Walker for further information.

Mr Walker wrote to Andrew Lansley and the Prime Minister to alert them to what he feared could become the next big scandal, but felt fobbed off.

Yet less than a year later, the CQC launched a full investigation into the Trust and threatened service closures and even prosecution if urgent improvements were not made to improve patient safety. It continues to monitor the trust.

Walker doesn’t think he will ever be employed again in the NHS.

Two paediatric surgeons at Alder Hey Children’s hospital have raised concerns about a systematic failure to learn lessons from deaths and near misses for several years. The concerns were repeatedly raised internally before the doctors went to the department of health and regulator, which accepted reassurances from the trust.

The Independent on Sunday published an investigation in January 2010 detailing patient safety concerns and bullying within the department – again the Trust rejected all the allegations. The subsequent review by Royal College of Surgeons found serious problems and said Alder Hey’s surgical department was no longer “world class”.

It was only then that the CQC appeared to take notice. A CQC inspection in March 2012 and found the trust to be compliant.

One of the surgeons, Shiban Ahmed, was suspended twice, once for a whole year, and accused of being mentally unwell and suicidal. No concerns were ever raised about his clinical skills. He is currently off sick with stress.

The second recently won a High Court battle to stop the Trust holding a meeting where he could have been dismissed – because of a breakdown in relations with his colleagues. Dr Edwin Jesudason is fighting to stay employed.