"Livington says he was also concerned about the dangerous working conditions
for employees. "I had many manufacturing technicians from 2000-2002 tell
me," he said, "they did not want to work in the Prevnar manufacturing area
for fear of the chemicals used in the production process, including
cyanide."
"Sodium cyanide is a dangerous chemical," he says, "mix it with water and
you get hydrogen cyanide, the gas of choice used in the Holocaust."
Sodium cyanide is used in the Prevnar manufacturing process, but trace
amounts remain in the vaccine itself, according to Livingston.
There are in fact, he says, many toxic substances in vaccines. "Mercury,
lead, aluminum, cyanide, it's not a pretty picture," Livingston warns, "for
a child's immune system, for unsuspecting parents and caregivers, who are
never told about the presence of these chemicals, and for employees who have
to keep their mouths shut or face losing employment," he adds."
http://www.opednews.com/articles/genera_evelyn_p_060510_whistleblower_mark_l
htm
OpEdNews
May 10, 2006
Whistleblower Mark Livingston Battles Wyeth Pharmaceuticals
by Evelyn Pringle
http://www.opednews.com
Washington DC Attorney, Jason Zuckerman, says a positive result of the
recent corporate scandals is the recognition of the value of whistleblowers
in exposing fraud, corruption, and other wrongdoing within a company.
As a result of a shift in the public's perception, he says, some
whistleblowers are viewed as heroes for taking on powerful corporations like
Enron and serving the public interest. "The recent trial of Kenneth Lay was
a reminder that a whistleblower, in that case Sherron Watkins, had warned
senior management that the company would implode in a wave of accounting
scandals. Had management taken her concerns seriously and implemented
appropriate corrective action," he notes, "Enron might not have collapsed."
"This enhanced public perception," Zuckerman says, "coupled with the
substantial remedies available to whistleblowers, provides an incentive for
employees who have suffered retaliation for exposing fraud to bring claims
under the Sarbanes-Oxley Act, which contains a whistleblower protection
provision."
Zuckerman admits that battles against drug companies are extremely
difficult. "I can tell you that whistleblowers in the pharmaceutical
industry really face an uphill battle, a David versus Goliath struggle," he
says.
"Some pharmaceuticals are obsessed only with the bottom line," he notes,
"and they are determined not to let a whistleblower get in the way."
"My clients who have tried to raise concerns to management about Medicate
fraud, off-label marketing, and other improprieties" he says, "often come
under attack and are either terminated or forced out."
"Sadly," Zuckerman says, "management often adopts a shoot-the-messenger
mentality towards whistleblowers, and that is why we need to vigorous
enforcement of whistleblower protection laws."
A SOX action against a drug giant, is currently underway in a North Carolina
involving Mark Livingston, a former associate director of training at a
Wyeth vaccine manufacturing plant in North Carolina, who says he was fired
for raising concerns that vaccine production employees were not properly
trained, in violation of FDA regulations, and a consent decree previously
imposed on Wyeth by the FDA.
Whatever the outcome of the case, attorneys say it will be an important
decision due to the fact that it will be one of the first cases decided by a
federal court under the Sarbanes-Oxley Act.
Sarbanes was signed into law on July 30, 2002, and provides a tool for the
vigorous enforcement that Zuckerman says is needed. Coming on the heels of
the WorldCom, Enron and Author Andersen scandals, the Act was intended to
restore investor confidence in publicly traded companies by improving
corporate accountability through changes in corporate governance and
accounting practices and by providing whistleblower protection to employees
who report fraud.
The Act's official title is the "Public Company Accounting Reform and
Investor Protection Act of 2002," but is commonly called SOX. The law is
named after its sponsors Senator Paul Sarbanes (D-MD) and Representative
Michael G Oxley (R-OH).
The Act "mandated a number of reforms to enhance corporate responsibility,
enhance financial disclosures and combat corporate and accounting fraud, and
created the "Public Company Accounting Oversight Board," also known as the
PCAOB, to oversee the activities of the auditing profession," according to
the Security and Exchange Commission.
SOX applies to all companies that have obtained a listing in the US or have
registered securities with the Security and Exchange Commission and as of
this year, all publicly-traded companies are required to submit an annual
report on the effectiveness of their internal accounting controls to the
SEC.
To add teeth to the Act, the SEC adopted new rules that apply to top
management officials including: (1) requiring Chief Executive Officers and
Chief Financial Officers to certify information in company quarterly and
annual reports; (2) requires management to return bonuses or profits from
stock sales received within 12 months of a restatement resulting from
material non-compliance with financial reporting requirements as a result of
misconduct; (3) prohibiting company officers from trading during pension
fund blackout periods; (4) prohibits companies from making loans to
insiders; (5) accelerated deadlines and mandated electronic filing of
disclosures of insider transactions in company stock; (6) disclose whether
they have a code of ethics for CEO, CFO and senior accounting personnel.
SOX is one of 14 whistleblower laws passed since 1974, however, most of the
previous laws applied to specific areas such as nuclear materials; water and
air pollution, airline, trucking and shipping safety; and abuse of migrant
workers.
Another feature of SOX whistleblower protection is that it contains both
civil and criminal provisions and creates a civil cause of action for
whistleblowers who have been subject to retaliation.
It protects two types of conduct: (1) employees who provide information,
cause information to be provided, or otherwise assist in an investigation
regarding any conduct which the employee reasonably believes constitutes"
securities fraud, bank fraud, wire fraud, or violation of "any rule or
regulation of the Securities and Exchange Commission, or any provision of
Federal law relating to fraud against shareholders;" and (2) employees who
"file, cause to be filed, testify, participate in, or otherwise assist in a
proceeding filed or about to be filed (with any knowledge of the employer)
relating to an alleged violation" of the laws.
Under SOX, the assistance must involve: (A) a Federal regulatory or law
enforcement agency; (B) a Member of Congress or committee of Congress; or
(C) a person with supervisory authority over the employee (or other person
working for the employer who has the authority to investigate, discover, or
terminate misconduct).
Enforcement of the civil provision falls to the Secretary of Labor. However,
if within 180 days of the filing of a complaint, the Secretary has not
issued a final decision, and the delay was due to the bad faith of the
claimant, the employee may bring a de novo action in federal district court.
The US Courts of Appeals have the authority to review the Secretary of Labor
's final decisions.
Employees who believe that they have been subject to adverse action in
retaliation for a protected activity may file a complaint with the Secretary
of Labor within 90 days of the retaliatory act. The Secretary of Labor has
assigned responsibility for administering the Act to the Assistant Secretary
for Occupational Safety and Health Administration.
Under SOX, companies may not "discharge, demote, suspend, threaten, harass
or in any other manner discriminate against an employee in the terms and
conditions of employment" because of any protected activity.
A broad range of whistleblower activities are protected, including providing
information to Congress, federal agencies, or internally within a company,
and also filing, causing to be filed, testifying, participating in, or
assisting in proceedings.
Protected activity includes providing information that the employee
"reasonably believes" constitutes a violation of federal mail, wire, bank or
securities fraud, or a violation of any SEC rule or federal law relating to
fraud against shareholders.
SOX's criminal provision, makes it a felony for anyone to retaliate against
or take any action "harmful" to any person, including interfering with his
employment, for providing truthful information to a law enforcement officer
relating to the possible commission of a federal offense, and is enforced by
the US Department of Justice. Criminal penalties can include fines and or
imprisonment of up to 10 years.
In addition to the whistleblower provisions, SOX contains two other
mechanisms to encourage the disclosure of corporate fraud. First, it
requires companies to establish procedures for the receipt, handling, and
retention of anonymous complaints from employees relating to accounting or
auditing matters.
And second, to ensure the reliability of corporate disclosures, the SEC
issued a rule requiring attorneys "appearing and practicing before the
Commission" to report "evidence of a material violation" to their client's
chief legal officer or chief executive officer and, absent an "appropriate
response," to the company's audit committee or board of directors.
SOX whistleblower provisions also apply to "any officer, employee,
contractor, subcontractor or agent" of a covered company and therefore,
private companies, as well as other entities or individuals, that serve as
"agents" or "contractors" of the publicly traded employer, are subject to
the whistleblower provisions.
For instance, the 2003 OSHA, Whistleblower Investigations Manual, specifies
that a small accounting firm acting as a contractor could be liable for
retaliation against an employee who provides information regarding a
violation of SEC rules to the SEC.
And there have been cases, where the Act's retaliation provisions have been
applied to private subsidiaries of publicly traded companies. For example,
in Platone v Atlantic Coast Airlines Holdings Inc., 2003-SOX-27 (April 30,
2004), an Administrative Law Judge held that an employee of a subsidiary was
a covered "employee" where the subsidiary's parent company was publicly
traded and the company was the alter ego of the subsidiary and had the
ability to affect the employee's employment.
The ALJ in Gonzalez v Colonial Bank, 2004-SOX-39 (ALJ August 20, 2004),
concluded that Congress intended to provide whistleblower protection to
employees of subsidiaries and held that an employee of a subsidiary set
forth a cause of action sufficient to withstand a motion for summary
decision where the evidence reflected that the action affected the plaintiff
's employment and the company shared management and function with the
subsidiary.
In the first reported federal district court decision, Collins v Beazer
Homes USA, Inc, 334 F Supp 2d 1365 (ND Ga 2004), held that where the
officers of a publicly traded parent company had the authority to affect the
employment of the employees of the subsidiary, an employee was a "covered
employee" within the meaning of the SOX.
The remedies available to whistleblowers generally provide that an employee
subject to retaliation is "entitled to all relief necessary to make the
employee whole," and employees who proceed before the Department of Labor
are entitled to "interim reinstatement."
Tom Devine is the Legal Director of the Government Accountability Project,
the nation's leading whistleblower protection group, and describes the
procedure for filing and processing claims under SOX as follows:
(1) Claims must be filed with the Department of Labor (DOL) within 90 day of
the alleged retaliatory event.
(2) The DOL conducts an investigation, attempts to mediate a settlement,
and, if necessary, order temporary relief and issue an initial decision.
(3) Either party may appeal the final results of a DOL investigation to an
Administrative Law Judge. Relief from the initial ruling remains in effect.
(4) Either side may appeal to the Department of Labor's Administrative
Review Board for a final agency decision.
(5) Either party may appeal to a US circuit court of appeals for review of
the final Department of Labor ruling.
Although by statute the Department of Labor normally must complete this
process in 120 days, Devine says, the actual range has extended to 14 years,
with delays of two to three years common.
However, if an investigation is not completed in 180 days, the employee has
the right to seek injunctive relief and have a jury trial in a District
Court. "This opportunity long has been the promised land for whistleblowers
to have a fair system protecting their legal rights," Devine notes.
Since the SOX legislation was enacted in 2002, about 750 cases have been
filed with the DOL, by persons saying they were retaliated against for
revealing wrongdoings within a company. "The number of cases has risen, with
about 150 in the law's first year and nearly twice that in its third,"
according to the article, "Whistle-Stop Campaigns," by Kathleen Day, in the
April 23, 2006 Washington Post.
Day reports that the majority of cases have been dismissed and that fewer
than 100 cases have been settled.
"And only five whistle-blowers have won," she wrote, "though that number
dwindled to four last summer when the agency's administrative review board
overturned a case on appeal."
In addition, three of those four cases have been appealed to the board,
"whose handful of judges so far have not decided an appeal in favor of a
whistle-blower," according to Day.
The Washington Law Office of Jason M Zuckerman, PLLC, primarily represents
clients in whistleblower cases, including retaliation claims under the
Sarbanes-Oxley Act and qui tam actions under the False Claims Act. The
firm's principal, Jason Zuckerman, has lectured and written extensively
about whistleblower protection laws.
Whistleblower claims generally fall into two categories. One is retaliation
claims, which Zuckerman explains, are essentially discrimination claims
alleging that an adverse employment action was taken in retaliation for the
employee's protected conduct (exposing wrongdoing), and the other are qui
tam actions under the False Claims Act, civil fraud claims brought on behalf
of the government against companies that have defrauded the government.
In a qui tam action, "A qui tam relator brings forward to a federal
prosecutor information demonstrating that a government contractor is engaged
in fraud, typically charging the government for a service that was not
performed or a product that was not provided," Zuckerman explains.
Nowadays, he says, the consequences of retaliating against a whistleblower
can result in more than a civil lawsuit. "In the post-Sarbanes Oxley
regulatory climate," Zuckerman warns, "a whistleblower retaliation lawsuit
can also result in an investigation by a regulatory agency such as the SEC,
and in bad publicity."
Under the whistleblower protection provisions of SOX, the burden of proof is
more favorable to employees than it is under employment discrimination laws
such as Title VII of the Civil Rights Act of 1964. "A plaintiff in a SOX
claim merely needs to demonstrate that his protected conduct was a
contributing factor, not a motivating factor, in the employer's decision to
take an adverse employment action," Zuckerman explains, "and once the
employee has met his burden, the employer must demonstrate by clear and
convincing evidence that it would have taken the same adverse employment
action absent the employee's whistleblowing."
If an employer is forced to defend against a retaliation claim, "it will
need strong evidence to demonstrate that it would have taken the same
unfavorable action against an employee in the absence of the employee's
whistleblowing," Zuckerman points out.
Employees who go up against big Pharma can find themselves subjected to a
wide variety of retaliatory acts. "Their managers put them on pretextual
performance improvement plans and do everything to make the work environment
unbearable," Zuckerman reports.
"Whistleblowers also find themselves alienated," he explains, "their
coworkers try not to associate with them for fear that management will view
them as disloyal."
"My clients," he says, "whose only infraction was committing the truth have
found themselves unemployed and suffer permanent damage to career and
reputation."
Fortunately, he says, the False Claims Act provides a good remedy. "Damages
under the anti-retaliation provision of the FCA include reinstatement, three
times lost wages, compensatory damages, and attorney's fees," Zuckerman
notes. "In addition, a successful qui tam relator is entitled to between 15
to 25 percent of the amount that the government recovers."
Zuckerman, however, notes that when he obtains favorable settlements for his
clients, he feels that the client is not truly getting "make whole relief"
when the client has suffered permanent damage to career and reputation.
For instance, after a client recently accepted a substantial settlement in a
whistleblower retaliation case, he asked the client why he was still so
upset and the client told Zuckerman that he felt it was unfair that his
whistleblowing had derailed his career and that what he really wanted back
was the chance to continue his successful career at this company.
Mark Livingston is entangled in the same type of battle with pharmaceutical
giant Wyeth.
Wyeth denies his allegations that employees were not properly trained, but
says even if they are true, Livington's reporting of concerns that vaccine
production employees were not properly trained, in violation of FDA
regulations, is not a protected activity unless the rules relate to a direct
fraud against shareholders.
The Government Accountability Project is handling the case, with General
Counsel, Joanne Royce, Deputy General Counsel, Karen Gray, and former GAP
chief trial lawyer, Thad Guyer, as lead counsel, and disagrees.
The GAP and Livingston argue that SEC rules require the disclosure of any
violation of federal law, and all risks that could potently diminish stock
value, and that a failure to adequately train employees could lead the FDA
to halt the manufacturing process or result in infants being injected with
defective vaccines, and that either event would damage profits.
Therefore, Livingston maintains, the compliance failures are a direct threat
to stockholders.
Wyeth hired Livingston in 2000 to help in the introduction of Prevnar, a new
vaccine designed to fight pneumoccocal pneumonia and meningitis in infants.
The facility where he worked was the vaccine's only production site.
One of Livingston's responsibilities was to assure manufacturing compliance
through quality training and he discovered serious deficiencies in training
as soon as he arrived.
"When I got to the Wyeth vaccine plant in August 2000," he said, "they had a
part-time nurse delivering safety training to new hires."
An occupational health and safety specialist was not hired until February
2001, a full year after Prevnar was approved by the FDA, he says. "And this
occurred only after the October 2000 consent decree for ongoing
manufacturing violations," he adds.
A consent decree results when a company repeatedly fails to comply with FDA
standards.
The FDA announced a consent decree after inspectors determined that Wyeth
plants were not meeting manufacturing standards in New York and
Pennsylvania. As part of a settlement, Wyeth agreed to pay $30 million, and
to hire experts to conduct an all-inclusive inspection of the plants and to
certify overall quality efforts.
"This occurred," Livingston said, "after realization by Wyeth executives
that they had a blockbuster pediatric vaccine on their hands and no one had
bothered to do any planning for staff additions in the next several years."
Prevnar is definitely a blockbuster and its largest customer is the
government. According to a 2003 Institute of Medicine report, "Financing
Vaccines in the 21st Century," the US government spends more than $1 billion
annually to purchase childhood vaccines to give to poor and uninsured
children under the federal Vaccines for Children (VFC) program.
This represents about 55% of the total market for childhood vaccines. After
the CDC added the chicken pox and Prevnar vaccines to the program, the VFC
budget rose from $500 million in 2000, to over $1 billion in 2002.
In 2004, it became the first vaccine to top $1 billion in yearly sales,
mainly because it costs more than $220 per 4-shot regimen and the "federal
government recommends Prevnar and pays a good price for it -- as do private
purchasers," according to the November 9, 2005 Wall Street Journal.
And sales have continued to increase each year. According to Wyeth's first
quarter earnings report for 2005, Prevnar achieved net revenues of $391
million, or more than double the first quarter earnings reported in 2004.
And the company's first quarter earning report for 2006, show that Prevnar
sales rose another 10% to $432 million so far this year.
According to Livingston, once Prevnar was added to the childhood vaccine
schedule, Wyeth was caught totally unprepared, and as it attempted to meet
the skyrocketing demand for Prevnar, "large numbers of new employees with
limited backgrounds in vaccine production were being hired."
"Despite the presence of PhD's and MBA's out the wazoo," he said, "no one in
the marketing or research departments at Wyeth ever bothered to call the
supply chain folks up and ask if they could produce the vaccine in the
amounts they wanted."
Which Livingston says amounted to 20 million plus does per year on a
consistent basis.
In just 3 years, the plant's employment numbers went from 300 employees to
over 1200, he says, and providing proper training to that number of new
employees would be impossible. "Because of the complex nature of biological
vaccine manufacturing," he explained, "basic training for front-line
employees took 12 months."
According to Livingston, "repeated quality audits in 2000, 2001, and 2002
revealed noncompliance with corporate and FDA regulatory standards."
As it turns out, his prediction that vaccines production could be halted
came true and was revealed in February 2004, when Wyeth came up short of
Prevnar. In less than 4 months, the CDC, had to issue two advisories
relating to the rationing of Prevnar.
Publicly, Wyeth claimed that the supply was hampered by unspecified
production problems. However, many doctors were upset when they learned
about the extent of the manufacturing problems that led the shortage and
that Wyeth had been cited by the FDA for manufacturing violations again and
again in the years before the shortage occurred.
For instance, Wyeth failed to reveal that in 2003, FDA inspectors found so
many quality-control failings at the Prevnar packaging plant in Pearl River,
NY, that production was shutdown at the site.
Among the many problems listed in FDA reports, inspectors described dirty
work areas, sloppy operating procedures, contamination, improper
environmental monitoring and insects in a hallway outside the room where
vials were filled with the vaccine.
Wyeth's own internal investigations were also found to be inadequate.
"Manufacturing investigation reports are not always completed in a timely
manner," the FDA inspectors wrote in reviewing Wyeth's compliance in
correcting previously cited problems. "Further," they said, "there is a lack
of evidence that product impact is addressed in a timely manner and that all
batches/processes are fully investigated."
In one FDA report alone, inspectors identified 59 problems.
In 2001 and 2002, Livingston says he repeatedly reported the violations to
the managing director at the plant, an outside auditor, and a quality
council of managers and nothing was done to correct the problems.
Livington says he was also concerned about the dangerous working conditions
for employees. "I had many manufacturing technicians from 2000-2002 tell
me," he said, "they did not want to work in the Prevnar manufacturing area
for fear of the chemicals used in the production process, including
cyanide."
"Sodium cyanide is a dangerous chemical," he says, "mix it with water and
you get hydrogen cyanide, the gas of choice used in the Holocaust."
Sodium cyanide is used in the Prevnar manufacturing process, but trace
amounts remain in the vaccine itself, according to Livingston.
There are in fact, he says, many toxic substances in vaccines. "Mercury,
lead, aluminum, cyanide, it's not a pretty picture," Livingston warns, "for
a child's immune system, for unsuspecting parents and caregivers, who are
never told about the presence of these chemicals, and for employees who have
to keep their mouths shut or face losing employment," he adds.
Attorney, Thad Guyer, now of T.M. Guyer, Ayers & Friends, PC, says the
Livingston case is still undecided, but that a favorable ruling on the same
issue was handed down on March 29, 2006, in the whistleblower case of Walton
vs Nova Information System and US Bancorp.
Guyer's private law firm handled the Bancorp action and Guyer describes the
ruling as a "major victory," because the "court held for the first time that
a SOX claim does not require the allegation of fraud, but merely of any
violation of any SEC law," he explained.
In Bancorp, the company had also denied that any security lapses had
occurred, but said that even if some did, Walton's voicing concerns about
them did not constitute activity protected by the Act.
Like in Livingston, Guyer disagreed and argued that SOX protects the
providing of information on a violation of any provision of Federal law
relating to fraud against shareholders, or the violation of a rule or
regulation of the SEC.
The Administrative Law Judge agreed and stated: "the argument that SOX does
not protect providing information of a violation of a rule or regulation of
the SEC unless the Complainant also shows that the rule or regulation is
related to fraud against shareholder is rejected."
The ALJ pointed out that the Act contains the specific phrase, "any rule or
regulation of the Security and Exchange Commission," and said if the
activity was not protected, "there would be no reason to specify as
protected activity a violation of SEC rule or regulation as such a violation
is of course also a violation of Federal law."
"It is an elementary rule of statutory construction that every statute shall
be construed, if possible," the court added, "to give effect to all its
provision."
More information for whistleblowers can be found at Lawyers and
Lettlements.com
http://www.lawyersandsettlements.com/articles/wyeth.html