The U.S. government provides incentives for former private employees wanting to take advantage of the whistleblower program. It is an open invitation to everyone who can provide valuable information on corporate misdeeds, and it’s illegal to suppress it. Notwithstanding, Health Net tried to skirt around the law.
An investigation by the Securities and Exchange Commission (SEC) in August 2016 concluded that the Centene Corp. subsidiary directly targeted the regulating agency’s whistleblower program. The government probe found that Health Net’s actions tried to sabotage whistleblowing by forcing departing workers to accept a severance package that specifically prohibits access to the SEC’s financial incentives.
According to the investigating body, Health Net essentially omitted this powerful option from employees on the way out. In effect, the California-based insurer violated federal securities law. Unsurprisingly, the erring company did not challenge the findings and accepted the punishment.
Health Net paid $340,000 for its illegal action. In addition, the company implemented the SEC’s order to adjust its in-house labor rules and regulations. The insurer tried to defy a vital government initiative and paid dearly for its bold actions.
How Health Net Attempted To Circumvent Federal Regulations
The SEC whistleblower program is a component for the government to check on possible oversteps committed by private companies. It promises a handsome reward to persons willing to reveal corporate wrongdoings. Strangely, Health Net took steps to prevent its former employees from accessing the government program.
The company took away the incentive by attaching severance payments and other benefits with an agreement that discourages access to whistleblowing. The move proved a success for Health Net as employees had no choice but to sign on the illegal deal. Inevitably, SEC learned of the illicit practice and launched an investigation.
Following the SEC probe, the agency issued a cease-and-desist order, which Health Net immediately accepted. The company paid the sum required by the SEC directive, and in exchange, it was given a pass – no need for Health Net to admit wrongdoing.
However, the SEC made clear that Health Net must stop its practice of prohibiting employees from applying and taking advantage of the government’s whistleblower program. The government also ordered the insurer to edit the language used on its severance package documents to make clear that whistleblowing is an option always available to everyone.
A Tradition Of Bending The Law
Health Net behaving like a bad boy is not out of character at all. The company is currently swamped with legal cases that underscored its appalling business practices. In California, Health Net arbitrarily denied payment claims or significantly reduced policyholders’ benefits.
The surprise move led to a nearly en masse shutdown of mental care treatments in the state. But the truly disappointing part was Health Net’s decision to deny healthcare services to thousands of patients, thus effectively erasing the progress of their recovery from depression and substance abuse.
