WASHINGTON (Legal Newsline) — Health Net Inc. will pay
$340,000 to resolve allegations of illegally using severance agreements
requiring outgoing employees to waive their ability to obtain monetary awards
for whistleblowing, the Securities and Exchange Commission (SEC) has announced.
Health Net allegedly added this provision in August 2011
after the SEC created rules to ban any actions that impede someone from
communicating with the SEC about possible violations.
“Financial incentives in the form of whistleblower awards,
as Congress recognized, are integral to promoting whistleblowing to the Commission,”
said Antonia Chion, associate director of the SEC Enforcement Division. “Health Net used its severance agreements
with departing employees to strip away those financial incentives, directly
targeting the Commission’s whistleblower program.”
Health Net has not admitted or denied the findings but has
consented to the SEC’s cease-and-desist order. It agreed to make reasonable
efforts to inform former employees that the clause about whistleblowing is no
longer in effect. The company will certify to the SEC’s Enforcement Division
that it has complied with the order.
The SEC’s Jennie B. Krasner oversaw the case, supervised by
Ricky Sachar and Chion.
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U.S. Securities and Exchange Commission
100 F Street Northwest
Washington, DC 20001
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