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 It agreed to make reasonable efforts to inform former employees that the clause about whistleblowing is no longer in effect.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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