Teva FCPA Whistleblower Retaliation: What Finance Saw and What the Court Decided

In the Teva FCPA whistleblower retaliation case, a federal court ruled for Teva Pharmaceutical USA in a dispute arising from a finance employee’s reports. The reporting history ran through internal-control memoranda, government interviews, invoices and expense reports. If your work puts you between a payment request and the decision to approve it, those are familiar documents.

This account follows the reporting record and employment judgment. Our page on finance and accounting staff examines the payment patterns those employees can recognize across foreign-bribery cases.

Finance Worked Where the Payments Needed Support

Teva Pharmaceutical USA hired the employee as a manager of internal controls supporting its Latin America business. The court described a role that brought her into contact with the documentation behind payments and the company’s response when controls needed improvement. In November 2013, she became associate director of finance for the region.

Her responsibilities in the Finance Shared Services Center included developing SOX test plans, carrying out compliance work, supporting fraud and Foreign Corrupt Practices Act investigations, and helping management implement internal-audit recommendations. She also monitored documentation for vendor payments. The work joined a transaction to the control meant to check it: what supported the invoice, what the audit recommended and what management did afterward.

In the pharmaceutical business, that documentation can connect a commercial expense to a public purchasing decision. In remarks on pharmaceutical compliance published in 2015, the Securities and Exchange Commission’s enforcement director described regular contact with doctors, pharmacists and administrators in public hospitals who influence what those institutions buy. The same remarks explained how a distributor’s margin can fund bribes while the supplier records an apparently ordinary expense. An invoice’s description can conceal the purpose of the payment.

The Memoranda and Government Interviews

The employee alleged that changes by the regional compliance officer had left Latin America without monitoring. According to the court’s account, she raised that concern in May 2011 with the global compliance officer, the regional finance chief and external auditors. The finance chief created a Shared Service Center position with financial-compliance and internal-control responsibilities, and she transferred into it.

The employee helped prepare a November 2011 memorandum recommending improvements to Latin American internal controls, according to the court’s account. The regional chief financial officer sent it to Teva’s chief compliance officer.

She also alleged that she helped write a second SOX deficiency memorandum in 2012 concerning continuing failures to address problems in Argentina. These were reports about how the business checked itself, with a history of recommendations and alleged problems left unresolved. For someone working in books, records and internal controls, that history connects a concern to the people who received it.

The court recorded that the Securities and Exchange Commission and the Justice Department notified Teva in 2012 that they were investigating its compliance with the Foreign Corrupt Practices Act. Teva’s legal department later asked the employee to participate in government interviews. She sat for government interviews in late 2013 and early 2014, and alleged that she later supplied follow-up documents.

The court also recorded that the chief accounting officer knew the employee appeared on an interview list. The human resources executive knew she had some involvement in the foreign-bribery investigation.

The Invoices and Commissions Behind the Concern

The employee alleged that a May 30, 2014 exception report identified invoices and expense reports showing potential FCPA violations. According to the court’s account, she said she told a senior Latin America compliance director that Teva would stop paying improperly documented invoices because of bribery and corruption concerns. She also reported raising concerns about commission payments from Teva Mexico to the Algerian government.

These allegations put the concern at the payment decision itself. The employee described particular records, a compliance recipient and a conversation about whether invoices should be paid. We would want to understand that connection with a finance insider: what the paperwork said, what support was missing and who gave the answer when finance asked. In the Fresenius Medical Care case, the Securities and Exchange Commission found that a retroactive Mexican distributor contract mislabeled commissions as advice.

How Did the Court Rule on Teva’s FCPA Whistleblower Retaliation Case?

On September 30, 2016, the Southern District of Florida granted Teva summary judgment in the FCPA whistleblower retaliation case. The court ruled for Teva on the Dodd-Frank and Florida whistleblower claims because the employee failed to connect her reporting to her dismissal or show that Teva’s stated reason concealed retaliation. The judgment also covered the family-leave claim, which the employee had conceded.

Teva said it dismissed her for violating its electronic communications policy after an anonymous hotline complaint prompted an internal investigation. According to the order, she did not dispute using company email, equipment and other employees’ help for outside business activities, causing Teva to be listed as a party to a vendor contract, or sending confidential Teva documents to her mother. The human resources executive recommended dismissal, and the chief accounting officer approved it.

The court assumed for its analysis that the internal reports and government interviews were protected activity. It found that positive reviews, promotions and raises after her reporting undermined her claim of continuing hostility. It also found that the later hotline tip and investigation uncovering the conduct broke any connection between her reporting and dismissal that the claimed hostility might otherwise have supported.

The employee argued that the policy allowed limited personal use, that most of her email use was for work and that her productivity had received favorable ratings. The court distinguished her disagreement with Teva’s interpretation of its policy from a dispute about whether the underlying conduct happened. It declined to second-guess that interpretation and found too little evidence that the policy violation was a cover for retaliation.

She also challenged Teva’s reliance on her perceived lack of candor and on a final investigation report completed after her dismissal. The court cited the investigator’s testimony that she minimized her outside business activities, and evidence that Teva normally completed final reports after disciplinary decisions based on interim reports or communications. It found neither challenge sufficient to support a jury finding that Teva’s explanation concealed retaliation.

The Corporate Admissions Concerned the Controls Themselves

In a separate corporate case, the Justice Department’s December 22, 2016 announcement reported that Teva Pharmaceutical Industries admitted under its criminal deferred prosecution agreement that executives knowingly approved inadequate anti-corruption policies and that failures to implement and enforce controls allowed its Mexican subsidiary to bribe government-employed doctors to prescribe Copaxone. We see the absurdity in a company approving controls it already knows cannot do the job. The policy got its approval anyway.

What the Person Behind the Control Can Add

Accounting research gives a broader reason to take the person inside the system seriously. The 2019 working paper Do Corporate Whistleblower Laws Deter Accounting Fraud?, hosted by MIT Sloan, studied companies exposed to state False Claims Acts through public pension-fund ownership. It estimated a 5% to 9% reduction in accounting-fraud likelihood following that exposure. In a smaller sample, the study found little evidence that increased investment in internal auditing explained the effect.

The study’s question reaches beyond the existence of a compliance department to the effect of people being able to report what they know. In Teva’s employment case, the finance role produced a specific reporting history: control recommendations, interviews and alleged transaction-level concerns. That combination is why we ask about both the payment and the conversation it prompted.

Under the separate False Claims Act, a whistleblower case can pay 15% to 30% of what the government recovers. We work through FCPA whistleblower reward questions with you in the context of your foreign-bribery information and your contribution.

You Know Why the Invoice Was Questioned

If you handled the payment, raised the exception or saw what happened to an internal-control recommendation, speak to one of our Whistleblower Experts about the payments you questioned. We develop your strongest case with you, bring in foreign-bribery whistleblower lawyers who know pharmaceutical payment cases, and stay beside you through the process. If whistleblower protection is part of your concern, we work through it with you and your whistleblower lawyers.