Retaliation Against CCOs: Three Tales

Compliance officers deal with claims of whistleblower retaliation all the time. Today we’re going to recap three examples much closer to home — compliance officers pressing claims of retaliation themselves.

We hear those stories from time to time: a compliance officer reports some concern to management (otherwise known as doing your job), and management responds by punishing the compliance officer rather than considering the issue itself. Lately I’ve seen a string of such cases in the news, so in the interest of defending this noble profession, let’s take a look at them.

The Kickbacks Case

Most recent is the case of Ronald Sherman, former chief compliance officer at Christiana Care in Delaware. Sherman was chief compliance officer at Christiana in the early 2010s, and says he uncovered a kickback scheme in the neonatal care unit that violated the Anti-Kickback Statute. According to a lawsuit Sherman filed against the hospital system in 2017, upon further investigation he found similar kickback schemes in other hospital departments.

In 2014, the hospital fired Sherman. That included security escorting Sherman off the premises, and he never had chance to gather internal documents and work papers that he says can prove his allegations.

Sherman’s lawyers were back in court last week, arguing before a federal judge that Christiana Care should turn over numerous audit logs, emails, and other memoranda. Christiana had submitted some of those documents to Medicaid investigators several years ago, but Sherman’s lawyers say those disclosures don’t show the full picture — a “multi-year, multi-department series of fraudulent acts committed by large numbers of doctors and administrators.”

One awkward detail: those disclosures that Christiana Care made, which Sherman says covered up the full extent of misconduct, were signed by Sherman himself. So the case grinds on, with outcome uncertain.

The DPA Debacle

Second we have Juan Lozada, former chief compliance officer at MoneyGram International. He filed a lawsuit against the company last month. Lozada headed MoneyGram’s AML compliance team from October 2016 until he was fired in April 2017. He claims MoneyGram sacked him because he kept raising concerns that the company was violating a deferred-prosecution agreement the company struck with the Justice Department in 2012.

(This would be the same MoneyGram, by the way, where a former chief compliance officer was fined $250,000 by the Treasury Department for gross negligence in the 2000s.)

Lozada

Lozada first filed a whistleblower complaint with the Labor Department in 2018. That complaint was dismissed, then appealed, and scheduled for a new hearing in January. Lozada’s attorney then decided to file a federal lawsuit against MoneyGram instead, and here we are.

Lozada’s case got a boost last fall, when Justice Department prosecutors decided that MoneyGram had violated the terms of its DPA. So the deferred-prosecution agreement was renewed and prosecutors hit the company with another $125 million fine.

MoneyGram’s lawyers say, naturally, that Lozada’s claims are baseless and will fail in court.

Railroaded

Third is the case of Todd Barretta, former compliance officer at New Jersey Transit. Barretta filed his whistleblower retaliation complaint against NJT one year ago, and has been battling the agency ever since. Even worse, the state of New Jersey filed a counter-lawsuit against him, shortly after Barretta went public with his concerns about the transit agency at a state hearing.

Barretta

Barretta took the NJT compliance officer job in early 2017. He quickly found no shortage of dysfunction, including safety lapses, inadequate policies, and a culture of secrecy. My favorite: Barretta documented one policy about drug and alcohol use among train drivers that hadn’t been reviewed in 13 years — while federal regulators had made all sorts of changes to prohibited substances, testing methods, acceptable results, and so forth.

Five months after Barretta arrived at NJT, his bosses forced him out. When Barretta later testified about NJT’s shortcomings anyway, those same bosses responded that Barretta was an ill-fitting, novice employee who abused his state-issued car for personal travel. Then came the state’s lawsuit against him.

That lawsuit against Barretta was filed during the administration of former Gov. Chris Christie, who slouched out of office at the end of 2017. Now, adding insult to injury: current Gov. Phil Murphy ordered an independent audit of NJ Transit, and that audit confirmed many of the allegations Barretta had raised in the first place. The lawsuit continues, however, and now the Murphy Administration is using New Jersey taxpayer dollars to continue the lawsuit that Christie and his minions started.

Barretta gave an interview to NorthJersey.com last October painting a glum picture of his situation: jobless, broke, facing foreclosure. He dropped his complaint against NJT last year, and now hopes to recoup damages in state court. He keeps up the fight on Twitter at @ToddBarretta.

All three cases are troubling, but Barretta’s strikes me as especially appalling because Gov. Murphy could end the lawsuit against Barretta tomorrow with one order — and save taxpayer money, to boot.

Is This Widespread?

How often does retaliation happen in the compliance profession? Statistical evidence is hard to find; I don’t recall seeing any formal survey of compliance professionals to get a measure of the problem. If you have your own story of retaliation to share, drop me a line by email at [email protected]. Happy to provide anonymity to those who request it.

We can probably get some clues from our friends in the internal audit profession, since they face similar pressures to compliance officers. In one study the Institute of Internal Auditors conducted in 2016, 55 percent of respondents said they were asked to suppress unwanted findings of trouble at some point in their career. Forty-nine percent said they were specifically asked not to audit some high-risk area in their organization for fears of stirring up trouble.

55 percent of respondents said they were asked to suppress unwanted findings of trouble at some point in their career.

Those same respondents cited a long list of retaliatory moves they’d seen: termination, threats, promotions denied, budgets cut, loss of access to important information, jobs restructured out of resistance, and more.

We’ve all heard about it. Many of us have seen it. And as these three examples above show, too many of us are living it.

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