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Attorney R. Scott Oswald Quoted in Law360 Regarding Sarbanes-Oxley Decison


R. Scott Oswald, Managing Principal of The Employment Law Group® law firm, discusses in the Law360 article titled Revival of SOX Case Stokes Confidentiality Concerns, which outlines the U.S. Department of Labor Administrative Review Board’s blockbuster holding in Vannoy v. Celanese Corp. 

Whistleblower Matthew Vannoy noticed potential weaknesses in his employer’s credit card reimbursement program and reported those weaknesses internally and to the IRS.  Some of the documents Vannoy sent to the IRS included confidential employer information such as employee home addresses and social security numbers.   The ARB held that disclosures containing employer confidential information are protected disclosures under the SOX whistleblower provisions so long as those disclosures contain original information evidencing the purported securities law violation.

R. Scott Oswald of the Employment Law Group, which represents employees, said that with the exception of the May 25 decision in Sylvester v. Parexel, the Vannoy decision was the most significant ruling to come out of the ARB in 2011.

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“It will facilitate cooperation between whistleblowers and the law enforcement agencies that Congress has designated to root out fraud in the corporate sector,” Oswald said of the Vannoy ruling.

According to Oswald, the Vannoy decision eviscerates the argument that using or supplying information that an employer deems confidential to a government body may serve as the basis for disciplinary action.

How the ALJ will rule is still an open question, but if there’s a nexus between the documents Vannoy accessed and his tax fraud allegations, that would be enough to trigger the protections of SOX, he said.

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OSHA Awards $99K to Environmental Whistleblower

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Over the course of four years, Bennar allegedly witnessed SWODA using water from an adjacent sewage treatment plant to irrigate the golf course. Since the water was not properly chlorinated patrons and workers were exposed to harmful toxins. Bennar reported this to his supervisors but his complaints were ignored.

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TELG Attorney Scott Oswald Discusses Landmark SOX Whistleblower Decision for LawyersUSA

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The Employment Law Group® attorney R. Scott Oswald discusses the landmark Menendez decision with LawyersUSA in an article titled SOX whistleblower decision creates employer problems.  The Department of Labor Administrative Review Board (ARB) ruled that a failure of management to maintain the confidentiality of a whistleblower is a violation of the anti-retaliation provision of the Sarbanes-Oxley Act (SOX).  Mr. Oswald outlines the positive consequences of the decision for whistleblowers:

According to R. Scott Oswald, the managing partner of Washington, D.C.-based law firm The Employment [Law]Group, “this is a very significant ruling [because] for the first time, the act itself of revealing a whistleblower’s identity can be an adverse action under the statute.”

Whistleblowers may now feel safer coming forward to report information, he said, knowing their identity will be kept confidential.

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Oswald said the decision adds “teeth” to existing confidentiality policies.

Most companies have a policy that they will maintain a whistleblower’s confidentiality, he said. “But in reality, many corporations do not maintain adequate internal controls over their disclosure protocols.”

The Menendez decision provides additional incentives to employers to maintain confidentiality going forward, in part because the ARB said that damages may be available.

Menendez could receive “special damages” under Sarbanes-Oxley, said Oswald, which could include recovery for the damage to his reputation as well as emotional distress.

In addition to establishing that the act of breaching confidentiality is actionable, the decision also changes the standard for what constitutes an adverse action.

The ARB “articulated a more favorable iteration of adverse action than defined under other whistleblower statutes,” explained Oswald.

As a practical matter, this more generous standard will allow more cases to survive summary judgment, he said.

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TELG Attorney Quoted in Crain’s Detroit Business Article Predicting Rapid Expansion of Whistleblower Claims

On October 14, 2011, Crain’s Detroit Business published an article titled “Are there enough private crimes in Michigan to warrant beefing up the state’s false claims act?” in which The Employment Law Group® law firm attorney R. Scott Oswald states:

Having whistleblowers in government and the health care sector will ensure that individuals and corporations engaged in fraudulent acts (will think twice about committing crimes).  It will serve as a deterrent….

Recently, whistleblower and SEC attorney Darcy Flynn revealed that the SEC was shredding documents relating to corporations under investigation, including thousands of inquiries into the $50 billion Bernard Madoff Ponzi scheme, Goldman Sachs, and Lehman Brothers.  Before blowing the whistle at the SEC, Flynn blew the whistle on health care fraud:

Flynn also was the whistleblower in the 1995 Medicare fraud case against Blue Cross Blue Shield of Michigan. The Blues settled with the federal government and paid a $27.6 million fine.

Over the next decade, Oswald believes false claims act complaints will go up by a factor of 100.

“There has been an explosion in government contracting. A huge amount of work is being outsourced,” Oswald said.

“Another reason is the expansion of health care services with the health care reform bill. As more people become covered by insurance and prescribed medications there will be more opportunities for pharmaceutical companies to engage in unlawful activities.”

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