.
San Diego Education Report
Wednesday, July 21, 2010
Dodd-Frank and whistleblowers
Miriam Baer
Prawfs Blawg
July 21, 2010

As noted in the National Law Journal and in the Workplace Law Prof Blog (which in
turn quotes the analysis of the Employment Law Group's Whistleblower Blog), a
portion of the Dodd-Frank Act attempts to shore up whistleblowing incentives by
offering between 10-30% of the proceeds, at the discretion of the SEC, of any
monetary sanctions in excess of $1 million for instances where whistleblowers
come forward with "original information" derived from the whistleblower's
independent knowledge. [This also applies to the CFTC, but I'm going to refer only
ot the SEC for convenience].  

Although the SEC has maintained a whistleblower program until now, it
has rarely paid out rewards under that program.  Congress apparentlly
assumes that the SEC is not offering enough money for whistleblowers.  
Accordingly, it has upped the payout.  

This may or may not work, depending on the signal it sends.
 See this
forthcoming article by
Orly Lobel and Yuval Feldman in the Texas Law Review for
an experimental and comparative analysis of bounties and other enforcement
mechanisms.

It seems to me that bounties, however large, simply do not address the concerns of
many employees who are aware of wrongdoing but choose not to report it.

I would think that the key impediments to whistleblowing are as follows (in rough
order):

1. The potential whistleblower is herself responsible for some of the wrongdoing (or
believes she will be blamed for it) and fears that she will be punished, potentially
with criminal sanction such as imprisonment.

2. The potential whistleblower did not participate in the wrongdoing, but fears that
disclosure will result in such harm to the company that she loses her job, or
otherwise substantially undermines her future job prospects.  For example, one
need not worry about anti-retaliation if and when the company goes out of
business.  Similarly, one's boss cannot offer a stellar reference letter for promotion
if one's boss is preoccupied with avoiding (or serving) a jail term.

3. The potential whistleblower is afraid of both formal and informal retaliation by
her peers.

Theoretically, anti-retaliation laws can curb fears of formal retaliation (such as
firings and demotion), but they cannot counteract fears of informal retaliation by
peers (although punishment of formal retaliation may create some beneficial
spillovers).   Perhaps bounties overcome the sting of isolation from one's peers,
but for some employees of particularly close-knit organizations and industries, the
bounties will do little to dislodge their well-honed loyalty to their peers.

Nor can bounties solve the problems outlined in #1 and #2.

If, for example, the potential whistleblower has engaged in criminal wrongdoing as
part of her job responsibilities, she may so fear criminal prosecution that she
decides it is better to stay silent (at least until caught) rather than to confess
wrongdoing to authorities.  Moreover, even where the whistleblower has steered
clear of personal misconduct, she still may conclude that the result of her
intervention will be to harm her company, harm her prospects for future
advancement, and possibly harm her friends. Are all of these (rather alarming and
seemingly immediate dislocations) worth the potential bounty of 10-30% of the
proceeds of an SEC sanction, a sanction (and process) that may be years away
and over which the whistleblower has little to no control?  I'm guessing the answer
here is "maybe, but probably not."  That is, in most situations -- and particularly in
a bad economy, where new jobs are difficult to find -- I would expect employees to
say nothing, even with an increased bounty for whistleblowing.   

The caveat to this analysis is that rational employees will come forward and blow
the whistle when they feel they have nothing left to lose - ie, when they believe
they are about to be fired or that they will never be promoted anyway.  Notice,
then, that according to the rational actor account, the whistleblowers most likely to
come forward are those that already have personal reasons for wanting to harm
the company and the people with whom they work.  Bounties do not solve this
brewing conflict; instead, they exacerbate it.
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"I mean, if you thought of it, that would be sacrilegious."

Police: Evidence in killing of former beauty queen points to
ex-priest
By Scott Bronstein and Gary Tuchman
CNN Special Investigations Unit
May 31, 2013

On April 16, 1960 -- the day before Easter -- schoolteacher and former beauty queen
Irene Garza, age 25, went to confession at her family's church in McAllen, Texas. She
never came home. On Easter, her father filed a police report that his daughter was
missing. Click through this gallery to see evidence and crime scenes in Garza's still
unsolved death. On April 16, 1960 -- the day before Easter -- schoolteacher and former
beauty queen Irene Garza, age 25, went to confession at her family's church in McAllen,
Texas. She never came home. On Easter, her father filed a police report that his
daughter was missing. Click through this gallery to see evidence and crime scenes in
Garza's still unsolved death.


McAllen, Texas (CNN) -- All evidence pointed police to one conclusion: A priest had
killed a beautiful 25-year-old schoolteacher.

Searchers had found the lifeless body of former Miss South Texas, Irene Garza, face
down in a canal in her hometown of McAllen. She'd disappeared on the day before
Easter after going to Sacred Heart Catholic Church for confession.

An autopsy determined Garza had been raped while in a coma, and then had died from
suffocation. Near Garza's body investigators found items that belonged to the church,
including a candelabra.

One item, a metallic Kodak slide photo viewer, belonged to a 27-year-old priest who was
assigned to the church: the Rev. John Feit.

To say the scandal rocked McAllen is an understatement.

Questioned by police, Feit failed lie detector tests. What was also suspicious was that
just 24 days before the killing, Feit had been arrested for attacking another young
woman at a church in a town about 10 miles from McAllen. Feit pleaded no contest to
misdemeanor aggravated assault. A judge found him guilty and fined him $500 with no
prison time.

All this took place in 1960.


Now, more than half a century later, Feit lives in a pleasant neighborhood in Phoenix,
after leaving the priesthood in the late '60s. In a sworn statement to authorities and
during an interview with CNN, Feit denied he killed Garza. Feit told police Garza left the
rectory after he heard her confession and the last time he saw her, she was standing
outside the church.

But to this day, police officers and law enforcement agencies that have dealt with the
case say they believe Feit killed her.

For folks growing up in McAllen at the time, it was unthinkable that a Catholic priest
would commit such a crime. That's the way Garza's cousins remember it.

"We were accusing a priest that -- in those days priests were infallible, " said
Lynda De La Vina, who was 9 years old at the time.

Another cousin, Noemi Sigler, was only 10 when Garza was killed. "It was
impossible for a priest to do such a deed. I mean, if you thought of it, that
would be sacrilegious."

But Feit was the likely suspect, said former Texas Ranger Lt. Rudy Jaramillo, who
started investigating the murder in 2002 when he served with a Rangers cold case unit.
The evidence, he said, "suggests and indicates that that's who it's pointing to."

Authorities at the time protected Feit, said Sigler. "I don't know whether it was out of
respect for the church or anger or fear, I have no idea," she said. Shortly after the
killing, the church transferred Feit far away to a monastery. He would be moved to other
locations over time, and about three years after the killing, the church transferred Feit
to Our Lady of Assumption monastery in Ava, Missouri.

Sheltering Feit "was about protecting the church and somehow believing that the church
takes care of their own," said De La Vina. "It was the best that could have happened at
that point. Because nothing else was being done."
Cousin Noemi Sigler visits Garza\'s grave. She has promised to \
Cousin Noemi Sigler visits Garza's grave. She has promised to "never leave her behind."

Sigler describes her view in more succinct terms: It was "a cover-up."

An assistant to the bishop at the Brownsville, Texas, Catholic Church diocese that
oversees McAllen told CNN that Garza's death happened so long ago that no one at the
diocese has any direct knowledge about it. The assistant said the diocese would always
cooperate in every way with the investigation.

For De La Vina and Sigler, the killing opened their young eyes to a world that did not
appear to offer equal justice under the law.

Trying to make sense of what seemed like chaos, De La Vina became a "little detective,"
trying to figure out what really happened by eavesdropping on conversations and
looking for clues.
Now living in Arizona, John Feit told CNN\'s Gary Tuchman he did not kill Irene Garza.
Now living in Arizona, John Feit told CNN's Gary Tuchman he did not kill Irene Garza.

Her father was a local sheriff's deputy and she joined the search during the five days
when the town was desperately looking for Garza. "I actually went out with my dad in one
of the search parties ... I was so afraid I'd find her."

"He put his whole heart and soul into trying to find her because he really liked the
parents, the family," she recalled.

One day Sigler says she realized her beloved cousin wasn't coming back. "Maybe that's
why I started off on the journey to find out who killed Irene Garza," she said.

During the next four decades, Sigler made it her mission to knock on doors, interview
witnesses and catalog every piece of evidence in the case. The case got colder over
the years and eventually faded from the headlines. But the cousins kept pushing until
2002, when the Rangers and Jaramillo reinvigorated the investigation.

Hopes for solving the case were never higher.

Two surprise witnesses had independently come forward -- each separately claiming
that they heard Feit confess.

One witness -- a priest named Joseph O'Brien -- worked with Feit at Sacred Heart,
where Garza's family worshiped. "We knew he was dangerous, so we shipped him off to
a monastery," O'Brien told Sigler during a recorded phone conversation obtained by
CNN. "So he told you also, sir, that he had killed her?" asked Sigler. "Yes," O'Brien
answered on the recording.

Sigler could only respond, "Oh my God."

When asked if he believed O'Brien was a good, credible witness, McAllen Police Chief
Victor Rodriguez responded, "Absolutely." As O'Brien first shared his story with
Rodriguez, the chief noticed, "the lifting of a ... heavy burden that he'd carried for a long
time," Rodriguez said.


The other witness to come forward was Dale Tacheny, who had served as a monk and
Feit's spiritual counselor at the Missouri monastery where Feit had been sent.

Tacheny told authorities it had taken him 40 years to come forward because the guilt
had become too much to keep quiet...
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Watchdogs and whistle-blowers
Charles Piller

Law Ignored, Patients at Risk
Medical
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Embattled medevac firm files bankruptcy
A former employee was awarded over $700,000 after being
wrongfully terminated for complaining the company violated state
regulations
July 26, 2016
By Kristen Consillio
The Honolulu Star-Advertiser

HONOLULU — Hawaii Air Ambulance Inc., predecessor of Hawaii Life Flight, filed for bankruptcy
Wednesday following a lengthy battle with a former whistleblower employee.

The air medical transport company, which flew critically ill and injured patients between the
islands until it merged in 2010 with another medevac provider, AirMed Hawaii, listed former
employee James P. Stone as one of two creditors.
Related Article

Stone, a former Hawaii Life Flight pilot, was awarded $760,680 last year by the Hawaii Labor
Relations Board for being wrongfully terminated in 2010 after complaining that his employer did
not follow state and federal requirements when refueling planes, among other safety issues. The
decision was affirmed by the First Circuit Court. An appeal by Hawaii Life Flight was dismissed in
May by the Intermediate Court of Appeals, and the company has filed a second appeal.

The bankruptcy was filed in the middle of the appeals process, essentially preventing the court
from moving ahead with the case, said Honolulu attorney Gregory Kugle, who represents Stone.

“(The bankruptcy filing) is a gimmick to try to delay collection efforts. It’s probably a bad-faith
filing intended only to try to avoid (paying) James Stone’s judgment,” he said. “We’re evaluating
our options, but we are going to continue to pursue recovery of the money they owe Mr. Stone
for violating whistleblower protection laws.”

Hawaii Life Flight attorney Jesse Riddle, based in Utah, said the current company has never filed
for bankruptcy and is not part of that proceeding. However, Hawaii Life Flight and Hawaii Air
Ambulance share common executives, including President Joseph Hunt and Chief Financial
Officer Zandra Anderson, who signed the bankruptcy filing on behalf of Hawaii Air Ambulance.
The second creditor, Air Medical Resource Group, is the parent company of Hawaii Life Flight
Corp.

The company listed assets of up to $50,000 and liabilities of $1 million to $10 million and
estimates there will be no funds available to unsecured creditors after the bankruptcy.

Stone, a former Aloha Airlines pilot, joined Hawaii Air Ambulance in 2008 and was laid off in June
2010, shortly after the company merged and changed its name to Hawaii Life Flight.

Meanwhile, Kaiser Foundation Health Plan Inc. is suing Hawaii Life Flight, one of the
state’s two air ambulance providers, for secretly funding patient lawsuits against the
health plan to pay for what Kaiser calls excessive medevac charges.

The state’s largest health maintenance organization filed the suit in U.S. District Court
on Feb. 18, claiming that the air ambulance company is charging exorbitant rates that
are significantly higher than those of its competitor, AMR Air Hawaii.

Kaiser’s complaint is related to a lawsuit against the health plan by Toby Sidlo, a tour
boat captain who was flown to Oahu after falling into a beach bonfire last year on
Kauai. He is the lead plaintiff in a class-action suit against Kaiser, which paid 28
percent — or $14,000 — of his $50,000 air ambulance bill from Hawaii Life Flight. Sidlo
was left with a $36,000 balance due and is attempting to get Kaiser to pay the full
amount for the emergency transportation services
News, information and ideas about our
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