Filing Whistleblower Complaints Under The Sarbanes – Oxley Act

July 26th, 2010

Employees who work for publicly traded companies or companies that are required to file certain reports with the Securities and Exchange Commission (SEC) are protected from retaliation for reporting alleged violations of mail, wire, bank or securities fraud; violations of rules or regulations of SEC; or federal laws relating to fraud against shareholders.

 

A company is covered by Section 806 of the Sarbanes-Oxley Act of 2002 if it has a class of securities registered under Section 12 of the Securities Exchange Act, or is required to file reports under Section 15(d) of the Act.  Its contractors, subcontractors, or agents may also be covered.

 

If an employer is covered under the Act, it may not discharge or in any manner retaliate against an employee because he or she:

 

  • provided information
  • caused information to be provided, or
  • assisted in an investigation by
    1. a federal regulatory or law enforcement agency
    2. a member or committee of Congress, or
    3. an internal investigation by the company relating to an alleged violation of mail fraud, wire fraud, bank fraud, securities fraud, or violating SEC rules or regulations or federal laws relating to fraud against shareholders.

In addition, an employer may not discharge or in any manner retaliate against an employee because he or she filed, caused to be filed, participated in or assisted in a proceeding under one of these laws or regulations.

 

If an employer takes retaliatory action against an employee because he or she engaged in any of these protected activities, the employee can file a complaint with OSHA.

 

Your employer may be found to have violated one of these statutes if your protected activity was a motivating factor in its decision to take an unfavorable personnel action against you, such as:

 

  • Firing or laying off
  • Blacklisting
  • Demoting
  • Denying overtime or promotion
  • Disciplining
  • Denying benefits
  • Failing to hire or rehire
  • Intimidation
  • Reassignment affecting promotion prospects
  • Reducing pay or hours

Complaints must be filed in writing within 90 days after an alleged violation of the Act occurs (that is, when the complainant becomes aware of the retaliatory action) and must include the following information:

 

  • The name, address and phone number(s) of the person filing the complaint, or on whose behalf the complaint is being filed, must be included.
  • The names and addresses of the company(s) and person(s) who are alleged to have violated the Act (who the complaint is being filed against).
  • Sufficient detail to allege the four elements of a prima facie violation:
    • The employee engaged in a protected activity or conduct;
    • The employer or named person knew or suspected, actually or constructively, that the employee engaged in the protected activity;
    • The employee suffered an unfavorable personnel action; and
    • The circumstances were sufficient to raise the inference that the protected activity was a contributing factor in the unfavorable action.

The Environmental Whistleblower

July 23rd, 2010

Environmental employees may file a complaint if their employer retaliates against them with unfavorable personnel action because they report environmental violations.  The following is a list of statutes that protect environmental whistleblowers.

The Asbestos Hazard Emergency Response Act (AHERA) provides protections for individuals who report potential violations of environmental laws relating to asbestos in elementary and secondary schools.

The Clean Air Act (CAA) provides protection for employees who report potential violations regarding air emissions from area, stationary and mobile sources into the air.

The Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) provides protections for employees who report potential violations regarding clean-up of uncontrolled or abandoned hazardous waste sites as well as accidents, spills, and other emergency releases of pollutants and contaminants into the environment.

The Federal Water Pollution Control Act (FWPCA) provides protections for employees who report potential violations regarding discharges of pollutants into the waters of the United States.

The Safe Drinking Water Act (SDWA) provides protection for employees who report potential violations regarding all waters actually and potentially designed for drinking use, whether from above ground or underground sources.

The Solid Waste Disposal Act (SWDA) provides protections for employees who report potential violations regarding the disposal of solid and hazardous waste at active and future facilities.

The Toxic Substances Control Act (TSCA) provides protections for employees who report potential violations regarding industrial chemicals currently produced or imported into the United States.

If your employer is covered under one of these statutes, it may not discharge or in any manner retaliate against you because you reported potential violations of environmental laws and regulations.  Your employer may not discharge or in any manner retaliate against you because you filed, caused to be filed, participated in or assisted in a proceeding under one of these laws or regulations.

Your employer may be found to have violated one of these statutes if your protected activity was a motivating factor in its decision to take an unfavorable personnel action against you, such as:

•  Firing or laying off
•  Blacklisting
•  Demoting
•  Denying overtime or promotion
•  Disciplining
•  Denying benefits
•  Failing to hire or rehire
•  Intimidation
•  Reassignment affecting promotion prospects
•  Reducing pay or hours

Depending on the statute, complaints must be filed within 30 days under CAA, CERCLA, FWPCA, SDWA, SWDA, TSCA or 90 days for AHERA after the alleged unfavorable personnel action occurs.

The Whistleblower – Pharmaceutical Fraud

October 19th, 2009

In September of 2007, Bristol-Myers Squibb Company and its wholly owned subsidiary, Apothecon, Inc. agreed to pay over $515 million to resolve a broad array of civil allegations involving their drug marketing and pricing practices.  In December 2007 the Corporate Crime Reporter reported Merick to pay $670 million to settle federal and state charges that it violated the False Claims Act by engaging in nominal pricing fraud.  In 1986, more than $20 billion was paid out in fraud lawsuits brought by whistleblowers.

 

Pharmaceutical fraud cases represent the largest percentage of False Claims Act recoveries by the United, and qui tam relator whistleblower lawsuits.  The False Claims Act Is a federal whistleblower law which has its roots in the civil war era and allows private citizens to file actions against federal contractors and corporations who conduct fraud against the government and the public.  It is the United States’ most powerful tool for rooting out fraudulent government contracts.  With the advent of the Medicare prescription plan, even more federal tax dollars will flow into the pockets of large ruling companies illegally and in violation of current law.  In an industry with great power and profitability, there are lots of pressures upon companies to ignore federal laws designed to prevent fraud and curb costs.

 

Pharmaceutical fraud can take a variety of forms and involve complex issues.  The following are some example:

 

  • Charging the government for drugs not used and returned to pharmacy providers;
  • Marketing, promoting, and selling drugs for use other than those approved by the FDA;
  • Paying kickbacks and inducements to physicians, hospitals and pharmacists to prescribe or otherwise favor a drug;
  • Engaging in off-label marketing; and
  • Providing false data to the FDA or withholding negative data from FDA about the efficacy of a pharmaceutical drug or medical device in clinical research trials to get approval to sell and market the pharmaceutical drug or medical device.

Currently, the United States Government, along with the governments of 15 states and the District of Columbia, have joined with two whistleblowers who allege that drug manufacturer Wyeth defrauded U.S. taxpayers out of hundreds of millions of dollars.  According to the Wall Street Journal, Wyeth is accused of overcharging Medicare and Medicaid programs nationwide for purchases of it’s acid-reflux drug Protonix.  Under federal law, drug companies are required to offer prescriptions to federal aid programs at the lowest possible price.  The Wyeth suit alleges that Wyeth was offering Protonix at a 90% discount to a private hospital, while charging the federal government much higher rates.

 

Other drug companies that have settled qui tam lawsuits include Pfizer, TAP Pharmaceuticals, Bayer, and Schering-Plough Corp.  A federal official recently said the government has approximately 150 pharmaceutical fraud cases pending involving over 500 different drugs.

 

Pharmacy benefits management companies have also come under increasing scrutiny as a result of the False Claims Act.  In one of the most prominent whistleblower cases reported, Phillips & Cohen represented two whistleblowers whose qui tam lawsuits resulted in a settlement of $875 million to settle the lawsuits and related criminal charges.

 

If you believe you have discovered fraud, you should try to assess the magnitude of the fraud and gather whatever documentary or electronic evidence is lawfully available.  Be sure you do not violate the law or the terms of your employment agreement.  Write down the details of any meetings or events where fraud was discussed, who was present and what documents may exist that memorialize the event.  This documentation should be given to your attorney.

 

Keep in mind, you cannot recover in a qui tam action if another whistleblower has already filed an action based on the same documentation and information.

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