LOS ANGELES (CNS) — Health Net Inc. will pay $340,000 to resolve allegations that the company illegally used its severance agreements to prevent outgoing employees from benefiting from government whistleblower awards, federal regulators said Tuesday, Aug. 16.
The U.S. Securities and Exchange Commission said the Woodland Hills-based health insurer settled the case without admitting or denying wrongdoing.
A statement issued by the insurer, which has since merged with St. Louis, Missouri-based Centene Corp, said Centene was not a party to the SEC case.
According to the SEC’s order, Health Net violated federal securities laws by taking away from departing employees, who wanted to receive severance payments and other post-employment benefits, the ability to file applications for SEC whistleblower awards.
Health Net added the provision in August 2011 after the SEC adopted a rule to prohibit any action to impede someone from communicating with the SEC about possible securities law violations.
Health Net removed the SEC-specific language from its severance agreements in June 2013, but retained restrictive language that removed the financial incentive for reporting information until finally amending the agreements to strike all such restrictive language last year, according to the agency.
“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.”