Workplace Fairness

Menu

Skip to main content

  • print
  • decrease text sizeincrease text size
    text

Dodd-Frank Bill Provides Robust Whistleblower Protections

Share this post

jason zuckermanRecognizing that robust whistleblower protection is critical to preventing another financial crisis, Congress included in the Dodd-Frank financial services reform bill (H.R. 4173) numerous provisions designed to encourage whistleblowing and to provide robust protection from retaliation.  These provisions create monetary awards for whistleblowers who provide original information to the SEC or CFTC, strengthen the whistleblower protection provisions of the Sarbanes-Oxley Act and the False Claims Act, and create additional whistleblower retaliation causes of action.

Reward for Whistleblowing to the SEC and Prohibition Against Retaliation (Section 922). Under Section 922, the SEC will be required to pay a reward to individuals who provide original information to the SEC which results in monetary sanctions exceeding $1 million.  The award will range from 10 to 30 percent of the amount recouped and the amount of the award shall be at the discretion of the SEC.   Factors to be considered in determining the amount of the award include the significance of the information provided by the whistleblower, the degree of assistance provided by the whistleblower, the programmatic interest of the SEC in deterring violations of the securities laws by making awards to whistleblowers, and other factors that the SEC may establish by rule or regulation.  If the amount awarded is less than 10 percent or more than 30 percent of the amount recouped, a whistleblower may appeal the SEC’s determination by filing an appeal in the appropriate federal court of appeals within 30 days of the determination.

Section 922 prohibits the SEC from providing an award to a whistleblower who is convicted of a criminal violation related to the judicial or administrative action for which the whistleblower provided information; who gains the information by auditing financial statements as required under the securities laws; who fails to submit information to the SEC as required by an SEC rule; or who is an employee of the DOJ or an appropriate regulatory agency, an SRO, the PCAOB or a law enforcement organization.

Section 922 creates a new private right of action for employees who have suffered retaliation “because of any lawful act done by the whistleblower– ‘(i) in providing information to the Commission in accordance with [the whistleblower incentive section]; (ii) in initiating, testifying in, or assisting in any investigation or judicial or administrative action of the Commission based upon or related to such information; or (iii) in making disclosures that are required or protected under the Sarbanes-Oxley Act of 2002,’” the Securities Exchange Act of 1934, and “‘any other law, rule, or regulation subject to the jurisdiction of the [SEC].’”  The action may be brought in federal court and remedies include reinstatement, double back pay with interest, as well as litigation costs, expert witness fees, and reasonable attorney’s fees.

New Whistleblower Protection for Financial Services Employees (Section 1057). Section 1057 creates a robust private right of action for employees in the financial services industry who suffer retaliation for disclosing information about fraudulent or unlawful conduct related to the offering or provision of a consumer financial product or service.  The scope of coverage is quite broad in that Section 1057 applies to organizations that extend credit or service or broker loans; provide real estate settlement services or perform property appraisals; provide financial advisory services to consumers relating to proprietary financial products, including credit counseling; or collect, analyze, maintain, or provide consumer report information or other account information in connection with any decision regarding the offering or provision of a consumer financial product or service.

Section 1057 prohibits retaliation against an employee who has engaged in any of the following protected acts:

• Provided, caused to be provided, or is about to provide or cause to be provided, to an employer, the newly created Bureau of Consumer Financial Protection (Bureau), or any other government authority or law enforcement agency, information that the employee reasonably believes relates to any violation of any provision of Title X of the bill, which establishes new consumer financial protections, or any rule, order, standard or prohibition prescribed or enforced by the Bureau;

• Testified or will testify in a proceeding resulting from the administration or enforcement of any provision of Title X;

• Filed, instituted, or caused to be filed or instituted any proceeding under any federal consumer financial law; or

• Objected to, or refused to participate in any activity, practice, or assigned task that the employee reasonably believes to be a violation of any law, rule, standard, or prohibition subject to the jurisdiction of, or enforceable, by the Bureau.

Remedies include reinstatement, backpay, compensatory damages, and attorney’s fees and litigation costs, including expert witness fees.  Where reinstatement is unavailable or impractical, front pay may be awarded.

Section 1057 employs a burden-shifting framework that is favorable to employees.  A complainant can prevail merely by showing by a preponderance of the evidence that her protected activity was a contributing factor in the unfavorable action. A contributing factor is any factor which, alone or in connection with other factors, tends to affect in any way the outcome of the decision.  Once a complainant meets her burden by a preponderance of the evidence, the employer can avoid liability only if it proves by clear and convincing evidence that it would have taken the same action in the absence of the employee’s protected conduct.

The procedures governing Section 1057 claims are substantially similar to those governing retaliation claims brought under the Consumer Product Safety Improvement Act of 2008, 15 U.S.C. § 2087.  The statute of limitations is 180 days and the claim must be filed initially with the Occupational Safety Health Administration (OSHA), which will investigate the complaint and can order preliminary reinstatement.  Once OSHA issues its findings, either party can request a hearing before a Department of Labor (DOL) administrative law judge.  If the DOL has not issued a final order within 210 days of the filing of the complaint, the complainant has the option to remove the claim to federal court and either party can request a trial by jury.  Section 1057 claims are exempt from mandatory arbitration agreements.

Reward for Whistleblowing to the CFTC (Section 748). Section 748 amends the Commodity Exchange Act, 7 U.S.C. § 1 et seq., to create a whistleblower incentive program and whistleblower protections similar to those in section 922, including a new private right of action.  One notable difference between sections 748 and 922 is the ability of a commodity whistleblower to appeal any determination regarding an award made by the Commodity Futures Trading Commission (CFTC) within 30 days.  Protected conduct under section 748 includes providing information to the CFTC in accordance with the whistleblower incentive provision and “assisting in any investigation or judicial or administrative action of the [CFTC] based upon or related to such information.”

Strengthening Sarbanes-Oxley’s Whistleblower Protection Provision (Sections 922 and 922A). Sections 922 and 929A contain important amendments to the Sarbanes-Oxley act (SOX) that broaden the scope of coverage, increase the statute of limitations, exempt SOX whistleblower claims from mandatory arbitration, and clarify that SOX claims removed to federal court can be tried before a jury.

Section 929A clarifies that the whistleblower protection provision of the Sarbanes-Oxley Act (SOX), 18 U.S.C. § 1514A, applies to employees of subsidiaries of publicly-traded companies “whose financial information is included in the consolidated financial statements of [a publicly] traded company.”  This amendment eliminates a significant loophole that some courts have read into SOX that has substantially narrowed the scope of SOX coverage.  Elevating form over substance, some judges have permitted publicly-traded companies to avoid liability under SOX merely because the parent company that files reports with the SEC has few, if any, direct employees, and instead employs most of its workforce through non-publicly traded subsidiaries.

As Judge Levin pointed in Morefield v. Exelon Servs., Inc., ALJ No. 2004-SOX-002 (ALJ Jan. 28, 2004), this loophole is contrary to the purpose of SOX in that “[a] publicly traded corporation is, for Sarbanes-Oxley purposes, the sum of its constituent units; and Congress insisted upon accuracy and integrity in financial reporting at all levels of the corporate structure, including the non-publicly traded subsidiaries . . . [Congress] imposed reforms upon the publicly traded company, and through it, to its entire corporate organization.”  Section 922(b) further expands the coverage of section 806 of SOX to include employees of nationally recognized statistical ratings organizations (NRSROs), including A.M. Best Company, Inc., Moody’s Investors Service, Inc., and Standard & Poor’s Ratings Service.

Section 922(c) increases the statute of limitations for SOX whistleblower claims from 90 to 180 days and clarifies that SOX retaliation plaintiffs can elect to try their cases in federal court before a jury.  In addition, section 922(c) declares void any “agreement, policy form, or condition of employment, including a predispute arbitration agreement” which waives the rights and remedies afforded to SOX whistleblowers.

Strengthening the False Claims Act’s Whistleblower Protection Provision (Section 1079B). Section 1079B amends the anti-retaliation provision of the False Claims Act, 31 U.S.C. § 3730(h), by expanding the definition of protected conduct to include “lawful acts done by the employee, contractor, or agent or associated others in furtherance of an action under this section or other efforts to stop 1 or more violations of [the False Claims Act],” thereby protecting against associational discrimination and covering a broad range of activities that could further a potential qui tam action or could stop a violation of the FCA.  Section 1079B clarifies that the statute of limitations for actions brought under section 3730(h) is three years, which brings much-needed clarity in the wake of the Supreme Court’s decision in Graham County Soil & Water Conservation Dist. v. U.S. ex rel. Wilson, 545 U.S. 409 (2005) holding that the most closely analogous state statute of limitations applies to FCA retaliation claims.

“This article was originally posted on http://employmentlawgroupblog.com/”


Share this post

Big Pharma Whistleblower Gets $51 Million

Share this post

(The following post is part of our Taking Back Labor Day blog series. Many people view Labor Day as just another day off from work, the end of summer, or a fine day for a barbecue. We think that it’s a holiday with a rich history, and an excellent occasion to examine what workers, and workers rights activism, means to this country. Our Taking Back Labor Day posts in September will do that, from a variety of perspectives, and we hope you’ll tune in and join the discussion!)

*****

It’s an amazing story and one worth talking about.  Gulf War veteran and former Pfizer sales representative John Kopchinski is getting $51 million dollars as a result of his whistleblowing lawsuit against Pfizer – the world’s biggest drug maker — and that’s big news.

Pfizer to Pay $2.3 Billion for Fraudulent Marketing 

According to a statement from the Justice Department,   Pfizer’s illegal practices in connection with its promotion of an anti-inflammatory drug called  Bextra is what got it into big trouble.

Under the Food, Drug and Cosmetic Act, a company must specify the intended uses of a product in its new drug application to FDA. Once approved, the drug may not be marketed or promoted for so-called “off-label” uses.

It turns out that Pfizer promoted the sale of Bextra for several uses and dosages that the FDA specifically declined to approve because of its safety concerns.

As a result of that conduct, (as well as violations involving other drugs) the company will pay a criminal fine of $1.195 billion, the largest criminal fine ever imposed in the United States for any matter.

Pharmacia & Upjohn (Pfizer subsidiaries) will also forfeit $105 million, for a total criminal resolution of $1.3 billion.

All in all, Pfizer settled the case( which included civil and criminal penalties) for a whopping $2.3 billion dollars.

False Claims Act Liability

Pfizer also agreed to pay $1 billion to resolve allegations under the civil False Claims Act (also know as Qui Tam).

Under the Act, it is illegal to knowingly present a false or fraudulent claim for payment to the federal government or use a false or fraudulent record to get paid. The way it works is:

  • individuals and entities with evidence of fraud involving the United States or its programs or contracts can sue the wrongdoer on behalf of the government
  • the government has the right to intervene and join the action
  • if the government declines, the private plaintiff may proceed on his or her own behalf

Those who violate the Act are liable for three times the dollar amount of the fraud and additional civil penalties. As far as the whistleblower goes, the Whistelblowers Protection Blog explains it this way:

A qui tam plaintiff can receive between 15 and 30 percent of the total recovery from the defendant, whether through a favorable judgment or settlement. To be eligible to recover money under the Act, you must file a qui tam lawsuit. Merely informing the government about the violation is not enough. You only receive an award if, and after, the government recovers money from the defendant as a result of your suit.

 In this case, Kopchinski (and others) claimed that Pfizer:

  • illegally promoted four drugs  (Bextra an anti-inflammatory; Geodon, an anti-psychotic drug; Zyvox, an antibiotic; and Lyrica, an anti-epileptic drug),
  • for uses that were not medically accepted, and
  • caused false claims to be submitted to government health care programs.

As a part of the resolution of the case,  six whistleblowers will receive payments totaling more than $102 million from the federal share of the civil recovery.

Kopchinski, whose reporting instigated the government investigation, will get $51.5 million.

Great Result For This Whistleblower

It’s a fantastic result for Kopchinski and the end of a long road. Most whistleblowers go through an enormous ordeal and so did Kopchinski,

First they struggle with the difficulty of reporting the illegal and/or dangerous practices to the corporate hierarchy and the pressure that goes with it.

What happens next —  when they are ignored as they often are — is that they are labeled as troublemakers and then fired because of trumped up charges of misconduct.

Once they report the wrongdoing to a government agency, they are blackballed in their industry and can’t get work. The stress, anxiety, guilt, and financial distress is overwhelming for most.

Kopchinski had this to say in a statement he released:

In the Army I was expected to protect people at all costs, 

At Pfizer I was expected to increase profits at all costs, even when sales meant endangering lives. 

I couldn’t do that.

That’s why Kopchinski got fired. At the time (2003) he had a baby and his wife was pregnant with twins. He went from earning $125,000 a year, to depleting his 401(k), to finally getting a $40,000 a year insurance job.

We appreciate Mr. Kopchinski’s courage and conviction and congratulate him (as well as his legal team and the Justice Department ) for a superb result.

It doesn’t often turn out this way — and it’s sure great to see it when it does. It’s a wonderful Labor Day story.

Image: images.huffingtonpost.com

About the Author: Ellen Simon is recognized as one of the foremost employment and civil rights lawyers in the United States. She has been listed in the National Law Journal as one of the nation’s leading litigators. Ms. Simon has been quoted often in local and national news media and is a regular guest on television and radio, including appearances on Court TV. Ellen has been listed as one of The Best Lawyers in America for her landmark work representing individuals in precedent-setting cases. She also received regional and national attention for winning a record $30.7 million verdict in an age-discrimination case; the largest of its kind in U.S. history. Ellen has served as an adjunct professor of employment law and is an experienced and popular orator. Ellen is Past-Chair of the Employment Rights Section of the Association of Trial Lawyers of America and is honored to be a fellow of the International Society of Barristers and American Board of Trial Advocates. In additional to work as a legal analyst, she currently acts as co-counsel on individual employment cases, is available as an expert witness on employment matters and offers consulting services on sound employment practices, discrimination awareness and prevention, complaint investigation and resolution, and litigation management. Ms. Simon is the owner of the Simon Law Firm, L.P.A., and Of Counsel to McCarthy, Lebit, Crystal & Liffman, a Cleveland, Ohio based law firm. She is also the author of the legal blog, the Employee Rights Post, and her website is www.ellensimon.net. Ellen has two children and lives with her husband in Sedona, Arizona.

buy hoodia wholesale; Hoodia Product Comparison hoodia stories;
phentermine 37.5 overnight phentramine hoodia Hoodia Contraindications pure health hoodia
fat pill hoodia? Oprah And Hoodia Products “hoodia patch retailers”
pure hoodia tincture; Slim Hoodia 17 consumer reports hoodia
clinical study hoodia Hoodia Gordonii 20 1 hoodia liquid extract
Hoodia weight treatment hoodia weight watchers 663. Hoodia Blood Pressure organic hoodia
slimciti hoodia 90s Pure Hoodia 500 hoodia slim,
oprah winfry and hoodia Hoodia Cut hoodia research
Hoodia cheap hoodia chews discount 404. Hoodia Results hoodia chews discount?
hoodia diet sit Mega T With Hoodia hoodia dex l10
walmart hoodia Hoodia Supplement “mega t with hoodia”
nv south african hoodia Oprah On Hoodia hoodia real plant
lowest price on hoodia hoodia Slim Quick Hoodia natural weight loss appetite hoodia!
dex-l10 hoodia Hoodia Diet Pills “hoodia gordonii blood presure”
diet pills with hoodia 100 Real Hoodia hoodia species
hoodia herb Pure Hoodia Powder Bulk making a product with hoodia
import and export of hoodia Purchase Hoodia Prime Hoodia gordina hoodia gordini 423.
cortisol hoodia Nv South African Hoodia hoodia and heart problems
hoodia slimming pills Hoodia Case Studies hoodia gordoni
oprah show hoodia Effexor And Hoodia hoodia hypertension
Oprah winfrey and hoodia oprah winfrey hoodia 364. Hoodia Diet Patches google hoodia
weight loss hoodia cbs november! Diet Pills With Hoodia “hoodia gordonii bbb”
hoodia gnc Hoodia And Antidepressants hoodia 24
hoodia gordonii plus sellers Hoodia Specimen does hoodia dex-l10 work
hoodia chaser Hoodia X57 Scam 100 pure hoodia gordonii
10-day hoodia diet Hoodia Gall Bladder hoodia gordonii energy
hoodia for diet Hoodia Uk bulk hoodia?
hoodia pro and cons Hoodia 90 hoodia and diet
hoodia medicinal Where Can You Buy Hoodia power pops with hoodia
lowest price on hoodia hoodia African Hoodia Gordonii perfect hoodia!
slimquick hoodia; How Does Hoodia Work hoodia afordable
hoodia glucomann blend 60 Minutes Hoodia hoodia balance
hoodia safety Oprah Magazine Article On Hoodia hoodia gordonii cactus plant
hoodia xpf, Hoodia Alstonii hoodia weight loss product
hoodia walgreens How To Take Hoodia hoodia gordonii purist
100 hoodia patch Hoodia Gordonii Seeds what is hoodia x57!
google hoodia Hoodia Con high fiber hoodia


Share this post

Follow this Blog

Subscribe via RSS Subscribe via RSS

Or, enter your address to follow via email:

Recent Posts

Forbes Best of the Web, Summer 2004
A Forbes "Best of the Web" Blog

Archives

  • Tracking image for JustAnswer widget
  • Find an Employment Lawyer

  • Support Workplace Fairness

 
 

Find an Employment Attorney

The Workplace Fairness Attorney Directory features lawyers from across the United States who primarily represent workers in employment cases. Please note that Workplace Fairness does not operate a lawyer referral service and does not provide legal advice, and that Workplace Fairness is not responsible for any advice that you receive from anyone, attorney or non-attorney, you may contact from this site.