Safeguarding a Whistleblower’s Identity

Everyone knows that the Sarbanes-Oxley Act prohibits retaliation against whistleblowers. It may be less obvious, however, that merely disclosing a whistleblower’s identity can constitute prohibited retaliation. Nevertheless, the Fifth Circuit Court of Appeals recently held exactly that in Halliburton, Inc. v. Administrative Review Board, United States Department of Labor.

In Halliburton, an employee submitted a complaint about the company’s accounting practices through its internal procedures and to the SEC. When the SEC notified Halliburton of its decision to investigate that complaint, the company was able to determine the whistleblower’s identity. An internal email related to the investigation revealed the whistleblower’s identity, after which he was ostracized socially and professionally by his colleagues.

The Administrative Review Board determined that Halliburton was liable to the whistleblower for retaliation. After Halliburton challenged that conclusion, the Court of Appeals upheld the Board’s determination, saying that the “undesirable consequences” of being revealed to one’s colleagues of having accused them of fraud were “obvious.”

The court also rejected Halliburton’s contention that there be a “wrongfully-motivated causal connection” between the whistleblower’s protected conduct and the company’s adverse action. Rather, it is sufficient that the employee prove that his or her protected conduct was a “contributing factor” to the company’s adverse action.

The takeaway…

It’s fair to say that most companies would not intentionally retaliate against a whistleblower, particularly in light of Sarbanes-Oxley’s widely known prohibition. It seems quite plausible, however, that a company might inadvertently or innocently reveal the whistleblower’s identity without being aware that such an action could be deemed to be retaliation.

Therefore,

  • Any company personnel who might be involved in an internal whistleblower investigation should be informed about this potential pitfall, and
  • Consider modifying your whistleblower policy and procedures to specifically prohibit such actions in order to heighten awareness and minimize inadvertent violations.

 


Doug Harmon heads Parker Poe’s Securities & Corporate Governance Group. With more than 30 years of experience, he represents domestic and international public and private entities in a full array of securities and corporate governance matters.

Doug Harmon

Doug Harmon

Doug Harmon heads the firm’s Securities & Corporate Governance Group. With more than 30 years of experience, he represents domestic and international public and private entities in a full array of securities and corporate governance matters. Mr. Harmon’s practice also includes executive compensation, risk management, mergers and acquisitions and general corporate matters. He has worked with clients from a wide range of industries, including energy, financial services, manufacturing, retail, sports and entertainment and technology.

More Posts - Website

Share This Article Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Email this to someonePrint this page

Governor’s Council recommending mandatory use of SCRIPTS program

Prescription drug abuse is epidemic across the nation, and South Carolina has not been immune.  According to a 2013 report from the State’s Inspector General, South Carolina ranked 23rd per  in per capita opioid painkiller prescriptions and overdose deaths in 2011.  To address this epidemic, the South Carolina legislature passed legislation in 2006 creating a controlled substance databank that prescribers can voluntarily use.  In the coming year the use of this databank may very well become mandatory based on recent recommendations of the Governor’s Prescription Drug Prevention Council.

The South Carolina Prescription Monitoring Act of 2006 requires dispensers to submit information related to prescriptions for controlled substances to a data bank, operated by DHEC’s Bureau of Drug Control, referred to as SCRIPTS (South Carolina Reporting & Identification Prescription Tracking System).

SCRIPTS provides information about a patient’s history of controlled substance prescriptions, including the date a prescription was dispensed, whether the prescription is new or was a refill, the quantity of the drug dispensed, and the estimated number of days supplied.  Dispensers are required to provide this information for any prescription filled for Schedule II through Schedule IV controlled substances, which would include some of the most frequently abused prescription drugs (e.g., OxyContin, Vicodin, and Xanax).  Thus, the SCRIPTS data bank is a great resource for tracking prescription drug use and fighting drug abuse.

SCRIPTS allows physicians to access information regarding a patient’s use of controlled substances.  Under current law, physicians are not required to access the databank, and according to the Governor’s Prescription Drug Abuse Prevention Council’s findings, only about 20% percent of physicians currently use it.  That could change if the Council has its way.

The Council, comprised of representatives from various state agencies and members of the Board of Medical Examiners, Board of Nursing, and Board of Dentistry, was established by the Governor in March of 2014 and tasked with developing a comprehensive state plan to address prescription drug abuse.  In response to this crisis, the Governor’s Council is recommending that the Prescription Monitoring Act be amended to require all practitioners prescribing controlled substances to use the SCRIPTS program.

Based on the Council’s findings, voluntary use of the SCRIPTS program has not been sufficient and required participation is necessary for it work.  The Council’s recommendation seems to be a cost-effective, relatively simple step toward decreasing prescription drug abuse in the State.  Whether the legislature will act on this recommendation remains to be seen.

Prescribers and medical practice managers should follow this proposal carefully so that they are prepared  to implement a compliance and training program if the proposal is accepted.

Julie Cude

Julie Cude

Julie Cude represents hospitals, nursing homes, imaging centers and physicians in state and federal regulatory and legislative matters affecting the health care industry. She also assists health care providers with operational and governance issues, including risk management, organizational policies and procedures and general contract issues.

More Posts - Website

Share This Article Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Email this to someonePrint this page

Should Employers Drop Domestic Partner Dependent Coverage?

Over the past decade, many employers extended dependent coverage under their group medical insurance plans to employees’ domestic partners. For many employers, this change was made in order to allow gay employees to add their partners to the plan. Given that same-sex marriage was illegal in most states, this addition was the only practical way to allow such employees to add their domestic partners to the plan. In some situations, this was the only way that these domestic partners could obtain medical insurance coverage. Employers typically extended such coverage to same and opposite-sex partners.

Given the Supreme Court’s Windsor decision and subsequent judicial overturning of gay marriage bans in most states, employers may be rethinking whether their group plans should include coverage for unmarried domestic partners. In addition to the legalization of same-sex marriage, the Affordable Care Act provides coverage options for domestic partners to obtain health insurance outside of the employer’s plan.

Extending dependent coverage to domestic partners entails certain burdens. For employers, coverage is usually conditional upon the receipt and review of affidavits certifying the couples’ domestic partner status. For the employees, such coverage can involve complicated tax issues.

Employers whose original intent was not to provide coverage to all unmarried partners, but only as a necessary means to allow gay employees to add their partners to the plan, may want to reconsider this plan option. A more “traditional” plan that requires that dependents, whether same or opposite sex, be married spouses, may result in a return to a more simplified plan structure.

Jonathan Crotty

Jonathan Crotty

Jonathan Crotty has been a successful counselor and problem solver for large and small employers in the Carolinas and beyond for over 20 years. He heads Parker Poe’s Employment and Benefits practice group and represents employers in all aspects of the employment relationship, from hiring to discharge. Mr. Crotty provides guidance to employers as they navigate the complex array of laws and regulations applicable to the employment relationship, including employment discrimination laws, OSHA compliance, FMLA, and wage and hour matters. If employers face legal or administrative claims resulting from their employees and employment practices, he defends and resolves those disputes in line with the client’s goals and expectations.

More Posts - Website

Share This Article Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Email this to someonePrint this page

Potential Changes in the South Carolina Certificate of Need Application and Review Process

After Governor Haley vetoed funding for the Certificate of Need (CON) program, the Department of Health and Environmental Control stopped administering the program, resulting in months of confusion in the regulated community.  In April of this year, the S.C. Supreme Court ruled that the Department is statutorily obligated to administer the program regardless of the Governor’s veto, and now the CON program is back up and running.

Efforts at CON reform continue in the S.C. House of Representatives, and on November 13, 2014, the Department presented proposed revisions to the CON regulations to the Department Board.  In addition to reducing the length of the regulations by removing language duplicated from the CON statutes, the revisions potentially would limit the scope and effectiveness of the CON program itself.  Several changes of significance have some providers questioning whether the Department is attempting to accomplish through regulation what could not be accomplished through eliminating the program’s funding.

For example, the revisions significantly raise the monetary threshold for projects to trigger the requirement to obtain a CON to $50 million for a capital expenditure and to $10 million for medical equipment.  These much higher limits mean that very few, if any, capital projects that are not services referenced in the State Health Plan and equipment projects would require  CONs.  Certain providers would welcome these changes, while others, especially rural facilities that rely on ancillary service reimbursements to fund operations, will not.  The new regulations would also create an online CON application.

On November 14, the day after the Board meeting, the Department issued an emergency regulation to create the online application process.  The new, online application is different from the previous application and requires less information about proposed projects.  For example, in the previous application format, an applicant would have to demonstrate that the project was needed, that it improved accessibility, and that it did not unnecessarily duplicate existing services or facilities.  In the new application format, an applicant need only affirm that its project meets these, and other, criteria.  This new approach raises the question of how the Department will be able to conduct an analysis of proposed projects to determine if they meet the necessary criteria and standards, in addition to how the Department will evaluate competing applications.  The online application conforms to the existing regulations as to applicability and does not incorporate the proposed revisions.

At the November 13 Board meeting, the Board granted initial approval to publish the proposed revisions in the State Register and provide for a period of public comment.

Amber Carter

Amber Carter

Amber Carter practices in the areas of health care and administrative law. Prior to joining Parker Poe, Ms. Carter had the honor of serving for two years as a law clerk to Chief Justice Jean H. Toal of the South Carolina Supreme Court. While in law school, Ms. Carter was an articles editor for the ABA Real Property, Trust and Estate Law Journal and held several positions within the Student Bar Association.

More Posts - Website

Share This Article Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Email this to someonePrint this page