Protecting Yourself Archives

Fired Compliance Officer Strikes Back – Is Awarded $51 Million for Doing So

Published on March 15th, 2016 by Alan L. Sklover

“In a room where people unanimously maintain a conspiracy of silence,”
one word of truth sounds like a pistol shot.”

– Czeslaw Milosz

ACTUAL CASE HISTORY: John Slowik, the former Chief Compliance Officer of Olympus America, Inc., the largest distributor of endoscopes in the U.S., discovered that his employer was paying bribes to win new sales. When he reported this to his employer, he learned the meaning of the old saying, “Tell your boss the truth, and the truth shall set you free.” Simply put, first he was retaliated against and, soon after, he was fired.

Slowik had discovered that Olympus was obtaining sales by giving away free medical equipment, paying for luxury vacations for physicians and their families, making hundreds of thousands of dollars in cash payments to physicians masqueraded as educational grants, lavishly wining and dining physicians, and paying exorbitant consulting and speaker fees to physicians. And, just as you might imagine, many of these payments were paid by you and me by means of higher prices paid by Medicare and other publicly funded insurers.

Slowik retained legal counsel experienced in employment law, who understood the gravity of what Slowik had reported. Slowik then sued Olympus based on allegations that the company had violated a federal law known as the “False Claims Act,” and a second federal law known as the “Foreign Corrupt Practices Act.”

Slowik had worked for Olympus for 18 years, starting as a finance manager, and through a series of promotions, in February, 2009 was appointed Olympus’s first-ever Chief Compliance Officer. He had no healthcare compliance background, and had only one employee, who also had no compliance background.

After Slowik sought to eliminate these systematic illegal practices, (i) his complaints fell on deaf ears, (ii) he was told to back off and instead “work around the rules,” (iii) his duties were diminished, (iv) his reporting line was lowered to the Head of the Ethics Department, (v) his compensation was frozen, (vi) he was increasingly isolated from others, and (vii) he was evaluated as a poor performer. Finally, (vii) he was terminated for poor performance.

To resolve Slowik’s lawsuit against Olympus, which even resulted in federal criminal charges against the company, Olympus agreed to pay fines and penalties to the U.S. government of $646 million, out of which Slowik was awarded $51 million.

In addition to the required payments, in order to avoid criminal prosecution, Olympus also agreed to:

  • Hire an experienced Chief Compliance Officer, who will be a member of senior management, and report directly to the Board of Directors;
  • Make the Chief Compliance Officer position not subordinate in function or authority to the General Counsel;
  • Expand the Compliance Department from one full-time position to 19, and fund it appropriately;
  • Engage independent third parties to conduct risk assessment targeted to compliance risks;
  • Implement an anonymous reporting hotline, and
  • Begin compliance training for all employees.

What happened to Slowik was a truly classic example of the treatment afforded so many Compliance Officers who raise sensitive issues of non-compliance with rules, regulations and laws. Often, there is just too much concern in the minds and hearts of management for the financial consequences of “playing by the rules.” How ironic it is that Slowik was fired for poor performance; in the end, he did quite a good job improving Olympus’s compliance organization.

Slowik’s whistleblower complaint did a great service for Olympus. But did it have to be so expensive for Olympus and so damaging to its relations and reputation?

LESSON TO LEARN: What happened to Slowik vividly illustrates an important point for all Compliance Officers, and for all other employees, as well: there are more ways than are commonly thought of to achieve true compliance in the workplace. In addition to “internal efforts,” the many state and federal so-called “whistleblower” laws stand ready to assist.

Can a fired Compliance Officer make use of the many whistleblower laws? Sure. Can a Compliance Officer do so if he or she is still employed? That is a great question, from both legal and ethical perspectives. I believe the answer is surely “Yes,” because in the end, the shareholders’ interests are aligned with the corrective purpose of whistleblower laws, and surely out of alignment with those who act – supposedly on shareholders’ behalf – in violation of applicable laws and regulations. And, too, the larger societal interests are best served by enactment of rules, and the observance of those rules.

Do we need all these rules and regulations? Do we need all these whistleblower laws? Considering Olympus’s and John Slowik’s experiences, apparently we do. Surely, the Olympus story offers a cautionary tale to other endoscope manufacturers, and others, as well, who might be tempted to “throw a party” for physicians at the public expense.

WHAT YOU CAN DO: Keep in mind that efforts to gain company compliance with applicable laws and regulations are not limited to working internally. The many whistleblower laws and programs that exist do “have your back.” Here are seven thoughts to bear in mind:
Read the rest of this blog post »

“Will submitting a Performance Review rebuttal backfire?”

Published on November 6th, 2014 by Alan L. Sklover

Question: Dear Alan: I am considering writing a rebuttal to Human Resources to a vague, unfair comment made in my last performance review. I feel it was used to keep me from getting a raise.

When I asked my manager to explain the comment he could not do so, or even supply details. But, at the same time, he also said he would not change the comment.

What are the possible and most likely outcomes to writing a rebuttal? Will it damage my relationship with my manager? Will l look bad to future employers. Thanks in advance!

Concerned
Detroit, Michigan

Answer: Dear Concerned: To one degree or another, your question is undoubtedly on the minds of every employee who considers standing up for himself or herself at work. It is a threshold issue, and it needs to be addressed, one way or the other. Read the rest of this blog post »

“The Foreign Corrupt Practices Act – A Primer for Employees”

Published on April 9th, 2013 by Alan L Sklover

 “Few are guilty,  
but all are responsible.”

 -       Rabbi Abraham Joshua Heschel

ACTUAL “CASE HISTORIES”: Manny and Lorenz were our firm’s first two clients residing in Iraq. Working as Field Operations Managers for a large U.S.-based defense contractor headquartered in Dallas, Texas, they were assigned to road building projects on the outskirts of the oil drilling area outside the northern Iraqi city of Irkuk. They each had done two tours of U.S. military duty stationed in Iraq, so they were both comfortable with the overall environment, and even knew the local dialect.

Manny and Lorenz were responsible for ensuring that necessary supplies for local road building projects were always on hand, or at least readily available. Without supplies on the ready, salaried construction crews and leased construction equipment could sit idle along the roadway for weeks at a time. And the longer workers and equipment stood idle, both tended to simply “disappear,” never to be seen again.

Sourcing, ordering and storing necessary road building supplies were not difficult tasks. The hard part of the job was gaining necessary “permits,” “approvals” and “paperwork” from local officials, all of whom had minimal salaries but all of whom drove new Mercedes Benzes and had palatial homes. You see, gaining necessary “permits,” “approvals” and “paperwork” required paying “gifts” to local officials, almost always in the form of duffle bags full of U.S. currency. In fact, nearly each shipment of supplies arriving from the U.S. included a shipment of currency, Defense contractors really had no choice but to give “gifts” in this way; local custom and culture made it an absolutely necessary practice in order to get things done. 

The only difference between road building supplies and “currency supplies” was that, while road building supplies were always carefully tracked and inventoried, supplies of currency were a different matter. Manny and Lorenz were under the strictest of orders not to keep any records whatsoever of cash “gifts” for “legal reasons.”   

As often happens everywhere in the world among local politicians vying for control of what each considers to be their own “territory,” a dispute arose among two of the local political chieftains, only this one elevated into armed conflict. As a result, Manny and Lorenz were instructed to return temporarily to the company’s central location in Baghdad. 

It was in Baghdad, that Manny and Lorenz were instructed to meet with the company’s attorneys who had flown in from Dallas to “conduct local interviews.” After an hour of rather vague discussions, Manny and Lorenz had their company ID’s taken, their company cell phones and laptops taken, and were told they were fired for “major theft.” It turns out that one of the disputing local “dignitaries” had run low on weapons, and demanded help from the local U.S. military commander, claiming that they had been promised money and weapons by Manny and Lorenz, which was 100% untrue. Nonetheless, the company attorney sheepishly told them, “corporate needs cover.” 

With little money, no jobs, demands they “return the stolen $250,000,” and facing the real likelihood of a terrible time getting new jobs, they found our firm on the internet. Fortunately, as is almost always the case, their corporate employer had a significant office in New York, was listed on a New York-based stock exchange, and so was subject to New York Courts. Although, as is common in resolution of these disputes, only negotiation – and not litigation – was necessary. 

Fortunately for Manny and Lorenz, we were very familiar with the Foreign Corrupt Practices Act, a U.S. federal law that strictly prohibits the bribing of government and other officials outside the U.S. to gain local business advantage. Fortunately for Manny and Lorenz, we were familiar with the fact that the U.S. Justice Department and SEC have both made the Foreign Corrupt Practices Act a priority in their prosecutions, not only imposing significant fines and penalties sometimes in the hundreds of millions of dollars, but also at times bringing criminal prosecutions against corporate Officers and Directors, alike.  

Most fortunately for Manny and Lorenz, their personal cell phones had both emails from company officials discussing the currency “gifts,” and a tape recording of the large law firm attorney admitting that “corporate” was fully aware of, and complicit with, the “currency gifts.”   

Through aggressive and entirely legal negotiating with their employer’s corporate attorneys, we were able to free both of our clients from claims against them, the looming career and reputational damage they faced, the scapegoating plans taking shape, and the loss of their contractual rights to continuing salary and benefits, as well as severance.   

End result? Manny and Lorenz both received (a) first class airfare tickets back to the U.S., (b) payment for their full contract salaries and benefits, which were scheduled to run another 14 months, and even (c) substantial severance packages, which each used to go into their own businesses. 

LESSON TO LEARN: The Foreign Corrupt Practices Act (15 U.S.C. § 78dd-1) is a U.S. federal law that every employee who works for an employer doing business outside the U.S. really needs to know about, and be aware of. 

The first reason is simple: if you do any business outside the U.S., you need to understand that U.S. laws may still govern what you do, and how you do it. Those include U.S. laws, even if you are engaged in business outside the U.S. They might even make what your employer does either illegal, or criminal, in the U.S.    

The second reason is a bit ominous: because many companies feel that they must bribe local officials in order to compete for business in certain countries outside the U.S., they also often feel a need to find someone to blame – that is, to be a scapegoat – if the U.S. Justice Department or Securities and Exchange Commission (“SEC”) investigate, litigate or even prosecute them. Sad as it may be, “scapegoating” has been a survival technique for those who manage large groups – in order to avoid personal accountability – for many, perhaps even thousands, of years. 

The third reason is the most important reason: without your doing anything out of the ordinary – such as providing customers with free airline tickets or travel accommodations – it could get you fired, fined, or even jailed. 

I told you it was important. 

WHAT YOU CAN DO: Here are the Eleven Essential Points you need to know about the Foreign Corrupt Practices Act (sometimes called the “FCPA”) if you, your employer, any of its subsidiaries or affiliates do business outside the U.S.:  Read the rest of this blog post »

“How can I prevent being blamed for misconduct by former colleagues?”

Published on April 24th, 2012 by Alan L Sklover

Question: Left a job recently due to poor behavior of the company directors. They were sending to me our competitor’s confidential information that they surely had no right to have or use because they were trade secrets. 

How can I protect myself in case there is ever an investigation? I do not want to be blamed or included as a wrongdoer. Perhaps I am just paranoid?

Bob
Milwaukee, Wisconsin

Answer: Dear Bob: No, I do not think you are paranoid, and I do think you are fully justified in being concerned.      

1. Paranoid? What you describe is punishable in Wisconsin by imprisonment for up to 3 years and 6 months, plus a fine of $10,000. Paranoid? This is what Wisconsin State Laws Chapter 943.205 says:

“Whoever with intent to deprive or withhold from the owner thereof the control of a trade secret, or with intent to appropriate a trade secret to his or her own use or the use of another not the owner, and without authority of the owner . . . is guilty of a Class 1 Felony.” Wisconsin State Laws Chapter 939.50 provides that conviction of a Class 1 Felony may entail imprisonment of up to 3 years and 6 months plus a fine of up to $10,000.

Paranoid? Heck no. Or if you are, then I am, too.

2. Making matters even riskier, it is my experience that, if wrongdoing is discovered in the workplace, those who have left the company are often the ones who are scapegoated. “Something is wrong? Oh, it was the idea of the guy who left last month” is, unfortunately, a common response to the discovery of misconduct. And this is twice as common when the person who has left is not an “insider” in the company, but one who would not “go along” with questionable practices. I think it is wise to consider what you can do to prevent being blamed for something you didn’t do, or at least something that was not your idea.

3. First consideration: How might the company’s misconduct – if discovered – affect you? Bob, your first thoughts should be focused on how you might be affected if the company’s misconduct came to light. Did you use the trade secrets to your benefit? Do you have a license – such as a law license, a stockbroker’s license, an insurance agent’s license or other license – the rules and regulations of which might have required you to report this misconduct to the relevant licensing authorities? Have you already replaced your job, or are you still looking? Any chance you could be required to repay bonuses or commissions? The answers to these questions, and others like them, need to be factored into your decision about whether (1) you should do anything at all, (2) what you should do, (3) when you should do it, and (4) how you should do it.

While I feel strongly that wrongdoing should not be tolerated, I must be frank with you that I believe your obligations and commitments to your family and loved ones might be more important in determining what should be your best course of action. Obviously, I do not know you or your circumstances, so I cannot suggest which course of action is best. But I can tell you that you should stop and think, and perhaps even take counsel with people who know you, so that you do not act without sufficient forethought.

4. Bear in mind: there are risks in going forward, and there are risks in not going forward, too. Bob, something inside you prompted you to write to me. That “something” is probably a nagging concern that maybe a problem will arise, and if it does arise, it will be serious. Clearly there is mistrust there. In situations like these, there is surely a kind of “fork in the road” ahead of us, that is, a decision that needs to be made, one way or the other: stay quiet, or take a step forward to protect yourself. It is often a hard decision to make, and requires that you take into account many different considerations. No one can make that decision for you. Let me share with you what I often say to my own clients: “Give it time. The decision will come to you.” And, it almost always does.    

5. Regardless of your decision (or indecision), it is probably wise to assemble, or at least list, what (a) documents, (b) emails, (c) potential witnesses, and (d) circumstances, might be available to you to support your “defense” if accused. As the saying goes, “Hope for the best, but prepare for the worst.” Just as it is wise to buckle your seat belt before driving, it is always wise to assemble or at least list, what resources are available to you if you need them. Over time, you will probably forget the names, times and incidents that might exonerate you if you were accused of being involved in any wrongdoing. If you are at the least concerned, I would suggest you act now to preserve for the future your evidence of non-complicity. You might include a written statement of your own thoughts, which will fade over time. At a minimum, having these available to you should calm your fears.  

6. Your essential step – if you decide to take it – is to bring your concerns (and the evidence that supports your non-involvement) – to the company’s Board of Directors, in writing. My experience of over 30 years doing this kind of work on behalf of employees leads me to suggest to people in your circumstances that you address the situation before it “addresses you.” That is, get ahead of the issue before it comes to you. It is an active approach, and not a passive one. Of course, your letter or report to the Board Members should be in writing, and sent by email, so that there is a permanent and clear record of what you reported, when you did so, and the precise language of your report. (If you do decide to take this path, it might be a good idea to have a consultation with an experienced employment attorney before doing so.)

If you would like to obtain a list of five or more experienced employee-side employment attorneys in your city, just [click here.]

Bob, I hope this is helpful, and that whatever you should decide, you do it carefully, in good faith, and guided by the simple notion of “what is right.” 

My Very Best,
Al Sklover

    

Repairing the World –
One Empowered and Productive Employee at a Time ™   

© 2012 Alan L. Sklover, All Rights Reserved.

“Does the Sarbanes-Oxley Act, or other laws, protect lower-level employees of not-for-profits?”

Published on October 12th, 2011 by Alan L Sklover

Question: I have a question: Does the Sarbanes-Oxley Act in reality protect little people, meaning low-rung employees? Or are we out of luck?

In my case, this means a bedside nurse at a large private not-for-profit hospital. I am wondering about cases such as mine that do not represent much money, but a real injustice exists, nonetheless.

I blew the whistle (at the Department of Health) on my employer’s intention to put patients willfully at risk through a very unusual plan in order to save money. The plan was scuttled. I now have the worst Performance Improvement Plan of my nursing career – in fact, the only negative performance review in my 35 years.

To whom could I turn for help? It appears no attorney wants to take my case, or even be paid to assist me to know what my next steps ought to be.

J.G., R.N.
(City Not Specified)

Answer: Dear J.G.: Let me offer you a little background on the federal Sarbanes Oxley law, and then I can answer your questions about (a) whistleblowing, (b) retaliation and (c) fraudulent Performance Improvement Plans.

1. The federal Sarbanes-Oxley Act is a sweeping law enacted in 2002 that targeted primarily publicly-owned, for-profit companies. Sarbanes-Oxley was passed in response to the public uproar over the great corporate scandals based in fraudulent accounting at several large public companies including WorldCom, Tyco and Enron. The law mandated several new reforms intended to prevent any more large corporate collapses due to malfeasance. The reforms focused primarily on oversight of financial transactions, record-keeping, and auditing procedures, and made senior-most executives liable for failures to do so.  

Every level of employee – from the highest-paid executives to clerical workers paid minimum wage – is protected by Sarbanes-Oxley.

2. However, two provisions of the Sarbanes-Oxley Act do apply to not-for-profit companies: (a) anti-shredding, and (b) anti-retaliation. (a) Section 802 of the law prohibits knowingly altering, mutilating or destroying accounting records which are under review by the U.S. Government. (b) Section 1107 prohibits retaliating against a whistleblower, and provides for criminal penalties for anyone who engages in such retaliatory conduct.

From your brief note, I cannot tell if the activity you blew the whistle about is covered by the Sarbanes-Oxley Act; from your description of the activity your reported, it does not sound like false accounting or illegal shredding.

3. Depending on your state, other state laws may apply to (a) both protection of “whistle-blowers,” especially when it involves public health or safety, and (b) what seems to be outright retaliation in the workplace.  Even though Sarbanes-Oxley may not apply to your whistleblowing activity regarding your employer’s improper activity, the state in which you work may well have other “whistleblower” laws to protect those who report wrongdoing from retaliation.

Additionally, in more and more states, if it is the case that your employer has an anti-retaliation policy that forbids retaliation against those who in good faith report apparent wrongdoing, Courts are holding employers accountable on “breach of contract” theories. 

You did not indicate in your note in what state you work. You might try to contact the Labor Department of your state to make inquiry if any such law, or court precedents, exist under the laws of your home state.

If you believe you’ve been retaliated against, you might use our “Model Memo Objecting to Retaliation on the Job” to stop it and have it reversed. “What to Say, and How to Say It,™ just [ click here. ] Delivered by Email – Instantly!

4. Your difficulty in obtaining legal advice and representation is probably due to the legal community’s relative ignorance about Performance Improvement Plans. In my opinion, 99% of lawyers mistakenly view Performance Improvement Plans (“PIP”), as “not anything legal.”  It’s quite often the case that employers retaliate against employees by using fraudulent Performance Improvement Plans to rid themselves of employees who, for whatever reason, they want to fire. Sadly, almost all lawyers think PIP’s are “not a legal thing,” that is, “nothing they taught us about in law school,” and so turn away people facing the problem you are facing. 

5. It is for this reason that our blogsite offers videos, articles and model letters to help you help yourself in this dilemma.  We believe that people should try to help themselves, to the extent they can, whenever facing problems at work.

First, if you would like to review the many articles I’ve written on Performance Improvement Plans (“PIP’s”), just [click here].  

Second, if you’d like to view our video entitled “Performance Improvement Plans – How to Respond,” simply [click here].

Third, we offer a Model Letter for Pushing Back at a False Performance Improvement Plan. If you would like to obtain a copy, you may do so if you [click here].

6. Lastly, we offer consultations that offer advice and counsel on how to “navigate and negotiate” (a) whistleblowing at work, (b) retaliation for whistleblowing, and  (c) fraudulent Performance Improvement Plans. If you are interested in obtaining help in identifying what path to follow, and what steps to take, just [click here].

J.G., what you did was courageous, and is to be commended. In turn, what your employer has apparently done is disgusting, and should be condemned.  I hope you will not permit yourself to be a victim, and will stand up for yourself the same way you have stood up for others.                                                       

Best, 
Al Sklover

Help Yourself With
These Unique PERFORMANCE IMPROVEMENT PLAN (PIP) Materials

PIP 1: Model Response to Receiving a PIP
PIP 2: Model Second Response if Your First Response Does Not Work
PIP 3: 152- Point Step-by-Step Guide and Checklist for a PIP
PIP 4: 3 Memos Seeking Feedback of Clients, Customers, Colleagues for Use in PIP Pushback
PIP 5: Final Memo to Delay PIP Conclusion to Continue Job Search
PIP 6: After Successful PIP Pushback, Suggesting Positive Next Steps

[ Click Here ] and Go to Section "H"


 
 © 2011 Alan L. Sklover, All Rights Reserved.


Alan L. Sklover

Alan L. Sklover

Employment Attorney
and Career Strategist
for over 35 years

Job Security and Career Success now depend on knowing how to navigate and negotiate to gain the most for your skills, time and efforts. Learn the trade secrets and 'uncommon common sense' of Attorney Alan L. Sklover, the leading authority on "Negotiating for Yourself at Work™".

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