On October 31, 2019, the ARB held that an employee who merely “hints” that he or she intends to file a whistleblower complaint has not engaged in protected activity sufficient to invoke the whistleblower protection provision in SOX.  Hoptman v. Health Net of California, ARB Case No. 2017-0052, (Oct. 31, 2019).

Background

Complainant was a claims representative for the Company, a health maintenance organization.  Complainant alleged that he discovered systemic overpayments to the Company by plan members and began working with a plan member to purportedly expose his employer’s actions.  Complainant allegedly texted the plan member and asked her to fill out a HIPAA form so that he could access her personal information, explaining that he could not afford to continue with his investigation against the Company and that he would share money with her if she would help him with his case.  Following Complainant’s suggestion, the plan member filed a complaint with California’s Department of Managed Health Care (DMHC) regarding her alleged overpayments.

Later, during a meeting with a Company manager on an unrelated matter, Complainant mentioned that he had a complaint “in the works” and that the Company would get “in a lot of trouble,” though he conceded that he did not mention any fraudulent activity nor that he was considering filing a complaint with the SEC.  Shortly thereafter, the plan member informed DMHC about her communications with Complainant and DMHC shared this information with the Company.  The Company then terminated Complainant’s employment.

Complainant filed a SOX complaint with OSHA and after OSHA dismissed his complaint for lack of protected activity, an ALJ granted Respondent’s motion for summary judgment on the same basis.  He then appealed to the ARB.

Ruling

The ARB affirmed, finding that Complainant did not engage in protected activity under SOX.  Complainant argued that in his communications with the plan member he had revealed that he was “about to file” a complaint, and his later conversation with a senior manager “hinted” at this assertion.  However, the ARB ruled that because the communications with the plan member were “deliberately concealed” from the Company, and Complainant stated only that he was planning on filing a complaint, he had not engaged in protected activity under SOX.

Implications

This decision demonstrates that the current ARB may take a more limited approach to determining the scope of what constitutes protected activity under SOX.

Posted in Key ARB Decisions
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Photo of Steven J. Pearlman Steven J. Pearlman

Steven J. Pearlman is a partner in the Labor & Employment Law Department, where he is Head of the Restrictive Covenants, Trade Secrets & Unfair Competition Group and Co-Head of the Whistleblowing & Retaliation Group.

Employment, Restrictive Covenant & Trade Secret, and Whistleblower…

Steven J. Pearlman is a partner in the Labor & Employment Law Department, where he is Head of the Restrictive Covenants, Trade Secrets & Unfair Competition Group and Co-Head of the Whistleblowing & Retaliation Group.

Employment, Restrictive Covenant & Trade Secret, and Whistleblower Practice. Steven’s national practice focuses on defending companies in federal and state courts and in arbitration fora against the full spectrum of employment-related claims, including claims of executives; restrictive covenant violations; employee raiding; theft of trade secrets; whistleblower retaliation under the Sarbanes-Oxley Act, the Dodd-Frank Act and similar state laws; and wage-and-hour violations, including class, collective and PAGA actions.

Steven has successfully handled trials in multiple jurisdictions; prevailed in seeking and defending against applications for temporary restraining orders and preliminary injunctions; defended one of the largest Illinois-only class actions in the history of the federal courts in Illinois (over 90k putative class members); and prevailed following his oral arguments before federal and state appellate courts. He brings his litigation experience (beginning in 1998) to bear in counseling clients to minimize risk and avoid or prepare for success in litigation.

Investigations. Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has the unusual experience of testifying in federal court in connection with investigations. His investigations have involved complaints of sexual harassment involving C-suite officers; systemic violations of employment laws and company policies; and fraud, compliance failures and unethical conduct.

Thought Leadership and Accolades. Steven was named Lawyer of the Year for Chicago Labor & Employment Litigation in the 2023 edition of The Best Lawyers in America. He is a Fellow of the College of Labor and Employment Lawyers. Chambers has reported:

  • Steven is “one of the best in the country and has a lot of experience”;
  • Steven is as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field”;
  • He is thoughtful, attentive and demonstrates an acute understanding of matters top of mind for business-minded general counsel; and
  • “He is someone who can navigate the twists and turns of litigation without difficulty.”

Steven was 1 of 12 individuals selected by Compliance Week as a “Top Mind.” Earlier in his career, he was 1 of 5 U.S. lawyers selected by Law360 as a ”Rising Star Under 40” in the area of employment law and 1 of “40 Illinois Attorneys Under Forty to Watch” selected by Law Bulletin Publishing Company. Steven is a U.S. Library of Congress Burton Award Winner for “Distinguished Legal Writing.”

Steven was appointed to Law360’s Employment Editorial Advisory Board and selected as a Contributor to Forbes.com. He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is often quoted in leading publications such as The Wall Street Journal. The U.S. Chamber of Commerce has engaged Steven to serve as lead counsel on amicus briefs to the U.S. Supreme Court and federal circuit courts of appeal.

In 2024, Steven received the Excellence in Pro Bono Service Award from the United States District Court for the Northern District of Illinois and the Chicago Chapter of the Federal Bar Association.

Read more about Steven J. Pearlman
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Photo of Abigail Rosenblum Abigail Rosenblum

Abigail is an associate in the Labor & Employment Law Department and a member of the Employment Litigation & Arbitration Group. She is currently on client secondment.

At Proskauer, Abigail focuses her practice on counseling clients on various employment matters, including accommodation requests…

Abigail is an associate in the Labor & Employment Law Department and a member of the Employment Litigation & Arbitration Group. She is currently on client secondment.

At Proskauer, Abigail focuses her practice on counseling clients on various employment matters, including accommodation requests, discrimination and harassment issues, complying with workplace safety requirements, as well as employee terminations. Abigail also represents employers in federal and state court litigations dealing with allegations of discrimination, harassment, retaliation, and breach of contract.

Abigail earned her J.D. from the University of Pennsylvania Law School, where she also completed a certificate program in business management at The Wharton School and served as a Senior Editor of the Journal of International Law. During law school, she interned for the Honorable Eduardo C. Robreno of the Eastern District of Pennsylvania.

Prior to law school, Abigail worked in management at an industrial supply company, doing internal consultant work.

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