For Compliance Officers Who Blow the Whistle, Legal Protection Varies

September 17, 2013 by · Leave a Comment
Filed under: Compliance, Ethics, New Jersey 

kathleen m. boozangAs trainers of compliance officers, Seton Hall Law faculty emphasize repeatedly the importance of not retaliating against whistleblowers, explaining the various legal risks attendant to punishing the employee who steps forward in good faith to address internal wrong-doing.  But rarely do we talk about who’s got the compliance officer’s back – specifically, whether the law protects the compliance officer from retaliation by her employer for simply doing her job.  Compliance officers who identify serious problems, particularly with product safety, can not only interfere with the company’s potential revenue, but also cost the company millions of dollars if, for example, the company has to self-report to a government agency and pay significant fines or recall a product.  Compliance officers arguably are the most vulnerable targets of retaliation, as their jobs might be characterized as full-time internal whistleblowers.  Both New Jersey and New York have recently answered the question of what legal protection exists for compliance officers, reaching different conclusions in the process.  While a New Jersey appellate decision decided earlier this month found compliance officers to be within the statutory protection afforded to whistleblowers, a 2012 New York case declined such protection.

Like most other workers, most compliance officers are employees at will – that is, they do not have contracts that limit the circumstances under which they may be terminated.  Thus, the question is whether whistleblowers merit an exception from the employment at will doctrine that allows employees to be fired for any or no reason at all.  The New Jersey Conscientious Employee Protection Act (CEPA) is an overarching statute that protects almost all whistleblowers from retaliation; New York has no comparable general statutory protection but does have a series of industry-focused laws that provide some kinds of protection.  Even in states with statutes such as New Jersey’s, however, the question is whether they apply to compliance officers, whose entire job involves being the company “watch dog.”  While states have disagreed about this question, a September 4 decision by the Appellate Division in New Jersey in Lippman v. Ethicon extends New Jersey’s CEPA to compliance officers.

Joel Lippman, M.D. was Ethicon’s Vice President of Clinical Operations and Health Economics and Reimbursement – a new title resulting from what Lippman claims was a retaliatory reorganization designed to reduce his responsibilities – when he was terminated for having a consensual romantic relationship with an employee in a department that reported to him (the employee was not a direct-report).  J&J (Ethicon is a Johnson& Johnson company) has no policy prohibiting such relationships, and the person who terminated Lippman was unable to recall another employee being terminated or disciplined for having such a relationship.

Lippman claimed that he was actually terminated due to accumulated frustration with his consistent advocacy of recalling dangerously defective products.  He alleged that his superiors deemed him “needlessly conservative or naively insensitive to Ethicon’s business and corporate interests.”   When Lippman sued under CEPA, Ethicon argued that CEPA does not apply to an individual whose whistleblowing activities fall within the scope of his job responsibilities.  Rejecting that argument,  the Appellate Division  held that “’[w]atchdog’ employees, like plaintiff, are the most vulnerable to retaliation because they are uniquely positioned to know where the problem areas are and to speak out when corporate profits are put ahead of consumer safety.”  The court defined the term “watchdog employee” to encompass those whose job duties put them in the best position to:

(1)    Know the relevant standard of care; and

(2)    Know when an employer’s proposed plan or course of action would violate or materially deviate from that standard of care.

Unless the case settles, Lippman will have to return to court to establish that he reasonably believed his employer was engaged in activity violating the law or public policy; that he either refused to participate or exhausted all internal means of securing compliance; and that his compliance activities were the cause of his termination.

Compliance officers in New York did not fare as well when the New York Court of Appeals issued its 2012 decision in Sullivan v. Hanisch.  There was no applicable state statute, and, consistent with its general refusal to recognize a cause of action for being fired for opposing conduct in violation of public policy,  the Court rejected an exception to the employment at will doctrine for a hedge fund compliance officer who was fired after confronting a colleague for engaging in “front-running,”  improper trading conduct benefitting his own as well as family accounts ahead of firm clients.  Sullivan unsuccessfully argued that “the legal and ethical duties of a securities firm and its compliance officer justify recognizing a cause of action for damages when the compliance officer is fired for objecting to misconduct.” 

The outcome of Sullivan’s case was in one way predictable and in another surprising.  The Court of Appeals had rejected any public policy tort for decades but Sullivan relied on a 1992 holding in Wieder v. Skala, in which New York had carved out an exception to the employee at will doctrine for a lawyer fired by his law firm following his insistence that the firm adhere to the disciplinary rules requiring it to report professional misconduct by another firm employee.  The Wieder holding rested on the implied understanding that the firm would adhere to the profession’s ethical standards and self-regulate.  While the Sullivan Court left open the possibility of other employment relationships falling within this narrow exception, it decided that a compliance officer at a securities firm is not one of them.

Invoking language from the Wieder case, the Sullivan Court determined that it could not be said that “his regulatory and ethical obligations and duties as an employee ‘were so closely linked as to be incapable of separation.’”  Also, fatal was that Sullivan was not associated in a firm of compliance officers charged with a duty of self-regulation; further, according to the Court, regulatory compliance was not even the “only purpose” or “very core” of Sullivan’s employment – it comprised only a percentage of his responsibilities.  Finally, the court rejected the notion that Sullivan was a whistleblower because he addressed the issue only internally – he did not contact the SEC.  If these elements are indeed essential to qualifying for the whistleblower exception created by the Wieder case, compliance officers have little hope for protection against retaliation under New York law. 

The state of New York law raises the question of whether compliance professionals employed by New York companies should seek adoption of corporate policies protecting them from termination for performing their jobs.  Perhaps even more effective, compliance professionals, at least in senior positions, might demand protective contracts that remove them from employee at will status.  The granting and scope of such protections might be considered by government enforcers when they are called upon to consider just how serious a firm’s compliance efforts are.


WWJD? Health Care Reform and Catholic Social Thought

April 26, 2011 by · Leave a Comment
Filed under: Ethics, Health Reform 
Christ Among the Doctors, Followers of Hieronymous Bosch (1550-1600)

Christ Among the Doctors, Followers of Hieronymous Bosch (1550-1600)

This Easter, I was struck by a thought while preparing for the day’s celebrations.  I was reflecting on the significance of the day and also thinking of a topic for this week’s post when that 1990s phrase came to mind: WWJD (“What would Jesus do?”).  Although it might be biting off a bit too much to speculate as to how Jesus would vote or how God would reform the American health care system, I have settled for the more modest task of applying Catholic social thought to the debates of the day.

Health Care as a Human Right

In 1963, Pope John XXIII stated in Pacem in Terris that man “has the right to bodily integrity and to the means necessary for the proper development of life,” including the right to “medical care” and “to be looked after in the event of ill health.”  This concept is reflected in a February 2009 publication by the U.S. Conference of Catholic Bishops (USCCB):

All people need and should have access to comprehensive, quality health care that they can afford. Access to health care should not depend on a person’s stage of life, where or whether one works, how much one earns, where one lives, or where one was born. Health care is a social good, and accessible and affordable health care for everyone benefits both individuals and society as a whole.

Although the Bishops call for universal access to affordable care, the means to such an end are left to policy-makers.  For instance, this could be obtained by setting price caps, instituting a single-payor system, or requiring every citizen to maintain a minimal amount of insurance.  With regard to the means, the Bishops call for a system that “respect[s] pluralism, offering a variety of options and ensuring respect for the moral and religious convictions of patients and providers.”

Who Should Be Responsible for Providing Health Care?

In Laborem Exercens, Pope John Paul II explains that it is the role of an employer to provide for “[t]he expenses involved in health care… medical assistance should be easily available for workers, and [] as far as possible it should be cheap or even free of charge.”  However, this is not to say that employers should be the sole providers of health insurance or health care.  Such a structure would neglect the dignity of the unemployed and it would render superfluous the many religious orders that provide health care as a part of their mission.  “Health care ministry is one way the Church continues Jesus’ mission of healing and care for the “least of these” (Mt. 25).”  Catholic health care remains the largest non-profit health care system in the nation, providing care to one in six U.S. patients.

The government also has a duty to protect citizens’ rights to “those things that make life human.”  In Pacem in Terris, Pope John XXIII calls on governments to “give considerable care and thought to the question of social as well as economic progress, and to the development of essential services,” including medical care and the provision of insurance facilities.  Even imprisoned criminals are entitled to receive “timely medical care.”  Furthermore, the U.S. Conference of Catholic Bishops has called on all Catholics “to ensure that everyone has access to those things that enhance life and dignity: decent housing, a job with a living wage, and health care.”

All stakeholders should be financially responsible for universal healthcare, according to ability to pay.  “A fair health care system assures society’s obligation to finance universal access to comprehensive health care in an equitable fashion, based on ability to pay.”  At a bare minimum, the legislatively structured system should reallocate wealth to the extent that all pay their fair share.

The Individual Mandate

The individual mandate, section 1501 of the Affordable Care Act, has been the most contentious (or at least most litigious) aspect of the Affordable Care Act.  As such, it raises the question: WWJD?  At the very least, the USCCB would design the system to create:

1)      effective measures to reduce waste, inefficiency, and unnecessary care;

2)      measures that control rising costs; and

3)      incentives to individuals and providers for effective and economical use of resources.

According to the District Court of the Northern District of Florida, the argument for the individual mandate is that “[w]ithout the individual mandate and penalty in place… people would simply ‘game the system’ by waiting until they get sick or injured and only then purchase health insurance (that insurers must by law now provide), which would result in increased costs for the insurance companies.”  Essentially, the individual mandate forces all individuals to pay their fair share into the insurance pool.  As a result, health insurance costs will decrease.

Although the individual mandate would spread responsibility for universal access to affordable health care, it does not address the three USCCB principles for socially beneficial health reform.  First, it fails to address inefficiency or create incentives for the economical use of resources (except that some may spend less on luxury items or vices to pay their insurance premiums).  Second, although it would reduce premiums, it fails to reduce costs.  Universal insurance coverage does not address the problem of moral hazard.

What the individual mandate does do, is redistribute wealth to the extent needed to cover all individuals and make health care more accessible to all regardless of ability to pay.  Although the individual mandate achieves one Catholic objective (universal, affordable access), it fails to truly “fix” the broken health care system.  More is needed to achieve “true reform” in the Catholic sense.


The satisfaction of universal needs, including adequate healthcare, is a constant endeavor.  In the words of Pope John XXIII: “What has so far been achieved is insufficient compared with what needs to be done; all men must realize that. Every day provides a more important, a more fitting enterprise to which they must turn their hands–industry, trade unions, professional organizations, insurance, cultural institutions, the law, politics, medical and recreational facilities, and other such activities. The age in which we live needs all these things.”


Propublica, Pharma Payments to Physicians

November 18, 2010 by · Leave a Comment
Filed under: Ethics 

tribute_money_01Newly compiled data on payments to physicians from pharmaceutical companies has kindled mainstream media conversation on the ethics of such practices. NPR station WNYC ran this feature, showing the top physician earners in New York, and the radio piece, “Physicians on Pharma’s Payroll.” You can hear the radio piece immediately below. It is interesting in that in addition to giving  background, the piece also features interviews of physicians on the receiving end of those payments. One of those doctors describes the process of recruitment– wherein Pharma reps track doctors’ prescription records to see who is using their wares, and then approaching those doctors to see if they’d be interested in being paid presenters– or educators– depending I suppose upon your frame of reference.

Seton Hall University Interim Vice Provost, Law Professor and regular contributor to HRW, Kathleen M. Boozang, appeared in the Star Ledger regarding the ramifications of Pharma payments totaling millions of dollars to physicians in New Jersey. The article was prompted by a Pro Publica database which has compiled information from court documents detailing payments by six pharmaceutical companies to physicians, as well as the voluntary disclosure of two quarters of such payment information by Merck. The database tracks these payments for the period between January, 2009 and June 2010; it is sortable by state and amount.

Within the above named limitations, seven New Jersey doctors received more than $100,000 during the timeframe shown, from the pharmaceutical companies named.

In addition, The Ledger reports:

Overall, seven pharmaceutical companies wrote 1,215 checks totaling $8.3 million to doctors in New Jersey, the 10th highest total in the nation, according to ProPublica.

Doctors nationwide earned $258.7 million for speaking and consulting, according to information culled from court documents involving six companies and records from Whitehouse Station-based Merck, which voluntarily disclosed two quarters of payment information. And that’s just a taste of the $1.2 billion doctors earn on the speaking circuit annually, according to a 2008 article in the Journal of the American Medical Association….

Kathleen M. Boozang, law professor at Seton Hall University’s Center for Health & Pharmaceutical Law and Policy, said new requirements to publicly disclose how much doctors are paid by drug companies aren’t enough to protect patients, noting many won’t look up their doctor on databases.

Boozang said while doctors may be in the best position to teach each other how to make decisions about which drugs or devices should be used, drug companies shouldn’t be paying them.

The Center last year issued a report calling for an end to “commercial support for continuing medical education,” suggesting medical schools and physician associations should take over the role of educating doctors. “We have blurred the line between promotion and education,” Boozang said. “It shouldn’t be the obligation of patients to protect themselves from conflicts of interest.”

document Read the Star Ledger article, “Drug companies paid N.J. doctors millions to promote their products”


Shortage of Lethal Injection Drug Opportunity for Manufacturer to Do the Right Thing

October 3, 2010 by · Leave a Comment
Filed under: Ethics 
Photo by World Coalition Against the Death Penalty

Photo by World Coalition Against the Death Penalty

Prescription drug shortages are a persistent, difficult-to-solve problem.  Things have not improved since this 2002 South Carolina Law Review article by Professor Lars Noah in which he warned of a growing number of “shortages of antibiotics, vaccines, and other medical technologies.”  In fact, the problem may have worsened in recent years.

This month, a shortage of the drug sodium thiopental has made headlines.  Indicated for a number of uses, most related to anesthesia induction, the drug is largely employed for just one off-label use: execution.  Per the New York Times, sodium thiopental’s manufacturer, Hospira, “has blamed the shortage on ‘raw-material supplier issues’ since last spring, first promising availability in July, then October, then early 2011. The company has refused to elaborate on the problem. But according to a letter obtained by The Associated Press from the Kentucky governor’s office, Hospira told state officials that it lost its sole supplier of the drug’s active ingredient and was trying to find a new one.”

In an NPR story, Richard Dieter, of the Death Penalty Information Center, explains that “[s]tates can’t just change their method of execution without either some legislation — or at least an administrative procedure – that goes before public comment . . . And so to make the change is a six-month or a year process.”  In all likelihood, the new method of execution would then be subjected to constitutional challenge.  And so a number of states have delayed executions in anticipation that the sodium thiopental shortage will ease; there are likely to be more delays in the coming months.

The AP reports that “Jonathan Groner, an Ohio State University surgeon and death penalty opponent who researches the issue, speculated the real reason for the unavailability of sodium thiopental is that its medical uses ‘have shrunk to the point that the company doesn’t want to make a drug that has no use but to kill people.'”  Hospira denies that there is any ulterior motive behind the shortage, although it has stated in the past that “‘[t]he drug is not indicated for capital punishment, and Hospira does not support its use in this procedure.'”  Regardless of the reason or reasons for the shortage, Hospira should use it as an opportunity to do the right thing and exit the market for sodium thiopental.  As Jim Edwards of the Placebo Effect blog put it, by doing so the company would “earn itself kudos from the medical community and burnish its brand as a company that helps people live, not die.”


Health Care and Disparity in a “Post-Racial” Era

September 22, 2010 by · 2 Comments
Filed under: Ethics, Health Reform, Public Health 

Photo by Sean Sime Photography

Seton Hall Law School recently hosted the Third National People of Color Conference, which was convened to “address critical national and global issues through the lens of legal scholarship that explicitly and implicitly examines contemporary racial context.”

The conference brought together over 400 judges, law professors, lawyers and students to our campus over the course of  four days and featured panels and speeches by people such as the Reverend Jesse Jackson; the Honorable Cory Booker, Mayor of Newark, New Jersey; Professor Derek Bell, Visiting Professor at New York University School of Law; Kathleen Martinez, Assistant Secretary of Labor for Disability Employment; The Honorable Joseph A. Greenaway, U.S. Court of Appeals, Third Circuit; Gay McDougall, United Nations Independent Expert on Minority Issues; Keith Harper, former Appellate Justice of the Mashantucket Pequot Tribal Nation; and just too many other smart and interesting people to list here. (A good account of the Conference in Diverse Magazine can be found here).

Involved in some of the on site prep work, I was unable to attend nearly as much as I would have liked. But I did have the opportunity to listen to a number of thought provoking presentations, including speeches by Jesse Jackson, Mayor Booker, Keith Harper and Katleen Martinez.

In considering the theme of the conference, “Our Country, Our World in a ‘Post-Racial’ Era,” it was made clear time and time again that despite the rhetoric that has bounced about our nation since President Obama took office, when looking at numerical indicators for well being in the United States racial identity, ethnicity, gender, sexual identity, and disability status matter.

I realize that I am saying nothing new here–nor am I saying it as well as I heard it. But I think it also bears repeating.

It is also worth noting, when looking at the disparity in health care access, utilization, and quality of received care, that here in New Jersey as a response to a budget crisis, the state recently summarily stripped over 12,000 legal immigrants of their right to health care through Medicaid. Our Center for Social Justice here at Seton Hall Law has sued the State of New Jersey for doing so as a violation of both the state and federal constitutions as a matter of, among other things, equal protection. Such actions by the state assuredly do not bode well for the health care variance numbers below; and maybe, when considering the disparities in health care, “equal protection,” in the largest sense of the word, is the appropriate lens through which to view this.

But it is also, within the context of anyone’s verbal meanderings about a supposed “post-racial” society, important to note that news of the suit was featured in the Wall Street Journal, Star Ledger, Asbury Park Press, The Record, The Daily Record, The Courier Post, Home News & Tribune, The Jersey Journal, MSNBC, PolitickerNJ, Newsday, Immigration Prof Blog and other media throughout New Jersey, New York, Pennsylvania, and Connecticut.

Reader’s comments were decidedly not kind. Having done a great deal of work with and for immigrant communities, the urban disenfranchised, Guantanamo Detainees, and others unpopular and unjustly treated, we’re used to it here at Seton Hall Law. But I invite anyone entertaining delusions about a “post-racial” era to take a look at the comments. Or, for that matter, the comments on almost any newspaper article that deals with immigration– or race.

Having said that, I also invite you to take a look at the following numbers and study results from HHS’ Agency for Healthcare Research and Quality. Below that, you’ll find a really interesting lecture from a Health Care Disparities Class at Case Western Reserve University from Professor Insoo Hyun. The video is courtesy of the Case Center for Reducing Health Disparities and their well produced blog and resource center.

As for the studies and numbers, though just a small sampling, I’ll let them speak for themselves:

Identifying Disparities in Care

Access to Primary Care

Primary care is the underpinning of the health care system, and research studies have shown that having a usual source of care raises the chance that people receive adequate preventive care and other important health services. Data from AHRQ’s Medical Expenditure Panel Survey (MEPS) reveal that:

  • About 30 percent of Hispanic and 20 percent of black Americans lack a usual source of health care compared with less than 16 percent of whites.
  • Hispanic children are nearly three times as likely as non-Hispanic white children to have no usual source of health care.
  • African Americans and Hispanic Americans are far more likely to rely on hospitals or clinics for their usual source of care than are white Americans (16 and 13 percent, respectively, v. 8 percent).

Diagnosis and Treatment

Race and ethnicity influence a patient’s chance of receiving many specific procedures and treatments. Of nine hospital procedures investigated in one study, five were significantly less common among African American patients than among white patients; three of those five were also less common among Hispanics, and two were less common among Asian Americans. Other AHRQ-supported studies have revealed additional disparities in patient care for various conditions and care settings including:

  • Heart disease. African Americans are 13 percent less likely to undergo coronary angioplasty and one-third less likely to undergo bypass surgery than are whites.
  • Asthma. Among preschool children hospitalized for asthma, only 7 percent of black and 2 percent of Hispanic children, compared with 21 percent of white children, are prescribed routine medications to prevent future asthma-related hospitalizations.
  • Breast cancer. The length of time between an abnormal screening mammogram and the followup diagnostic test to determine whether a woman has breast cancer is more than twice as long in Asian American, black, and Hispanic women as in white women.
  • Human immunodeficiency virus (HIV) infection. African Americans with HIV infection are less likely to be on antiretroviral therapy, less likely to receive prophylaxis for Pneumocystis pneumonia, and less likely to be receiving protease inhibitors than other persons with HIV. An HIV infection data coordinating center, now under development, will allow researchers to compare contemporary data on HIV care to examine whether disparities in care among groups are being addressed and to identify any new patterns in treatment that arise.
  • Nursing home care. Asian American, Hispanic, and African American residents of nursing homes are all far less likely than white residents to have sensory and communication aids, such as glasses and hearing aids. A new study of nursing home care is developing measures of disparities in this care setting and their relationship to quality of care.

Looking Beyond Income and Insurance

Disparities in health care are often ascribed to differences in income and access to insurance. Research has shown these to be important, but by no means the only factors. For instance, the proportion of Hispanic Americans with a usual source of care has declined substantially over the past decade (from 80 percent in 1986 to 70 percent in 1996). Insurance coverage has also declined, and the lack of insurance in some groups is dramatic (among Hispanic men, for instance, 37 percent have no health insurance). Nonetheless, declines in insurance coverage explained only one-fifth of the change in access to a usual source of care.

In another recent study, AHRQ-funded researchers in Boston examined the quality of care provided to hospital patients with congestive heart failure or pneumonia. Quality of care was measured both by physician review and by adherence to standards of care. The researchers found no difference in quality of care for patients from poor communities compared with other patients, after adjusting for other factors. They did find, however, that African American patients received a lower quality of care than white patients.

Physician Decisionmaking

A small study of physicians’ decisions about whether to refer patients for cardiac catheterization, a diagnostic procedure for heart disease, provides supportive evidence that factors other than insurance and income can influence the quality of care people get. This study, which used actors portraying similar economic backgrounds, found that black women were significantly less likely than white men to be recommended for referral, despite reporting the same symptoms. (Differences between other groups studied were not statistically significant.)

Hospital Characteristics

In the Boston study of the quality of care, quality for African American patients was lower in nonteaching than in teaching hospitals. In another study, white patients were more likely than Hispanic and African American patients to receive invasive cardiac procedures in hospitals performing a high volume of such procedures, a factor strongly associated with the quality of cardiac care.


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