The Sarbanes-Oxley Act created new standards for corporate accountability as well as new penalties for acts of wrongdoing. It changes how corporate boards and executives must interact with each other and with corporate auditors. The Act specifies new financial reporting responsibilities, including adherence to new internal controls and procedures designed to ensure the validity of their financial records. The Sarbanes-Oxley Act, officially named the Public Company Accounting Reform and Investor Protection Act of 2002, became law on July 30, 2002.
Section 806 of the Sarbanes-Oxley Act protects employees of publicly-traded companies and employees of contractors and subcontractors of publicly-traded companies. The whistleblower protection provisions of the Sarbanes-Oxley Act prohibits a broad range of retaliatory adverse employment actions, including discharging, demoting, suspending, threatening, harassing, or in any other manner discriminating against a whistleblower.
This paper will critically analyze the whistle blowing protections under the Sarbanes-Oxley Act, SOX.
Characteristics of whistle blower:
Donald Gale, a former Omnicare employee was the whistle blower and his main characteristics are:
a. Courageous
b. wanted to step forward
c. do the right thing. Donald Gale, a pharmacist who complained that his employer was paying kickbacks to nursing homes for the right to supply drugs to elderly patients . Gale alleged that Omnicare improperly discounted some Medicare drugs for skilled nursing facility clients, and in exchange the nursing facilities continued to refer more lucrative business to Omnicare.
Omnicare Inc. has agreed to pay $124 million to settle whistleblower allegations of healthcare fraud. The whistleblower lawsuit alleged that the company engaged in a kickback scheme with skilled-nursing facilities all across the country.
Donald Gale will receive more than $17 million in bringing this case to the attentions of government and as his whistleblower reward from the settlement. $8.24 million will go to the various states which jointly funded the Medicare and Medicaid programs that were affected by Omnicare’s misconduct, while the remaining amount will be paid back to the federal government.
Justified
Donald Gale did blow the whistle on Omnicare because; he was sure about:
a. his claim against Omnicare was legitimate
b. Omnicare engaged in immoral or illegal conduct
c. He had convincing evidence to prove his claim
Donald Gale, the whistleblower definitely justified by his action against the company Omnicare because, Omnicare:
1. Did a fraudulent claim for payments against the government
2. allegedly offering improper financial incentives to skilled nursing facilities
3. paid nursing homes Medicare kickbacks for referrals
4. Purely unethical and illegal activities which was affecting the health of many SOX
