Client Alert: Employer Compliance Guidance for Whistleblower Provisions Under New Food Safety Modernization Act

Client Alert: Employer Compliance Guidance for Whistleblower Provisions Under New Food Safety Modernization Act

As previously reported by Keller and Heckman LLP, President Obama signed the Food Safety Modernization Act (FSMA) into law on January 4, 2011. While most of the provisions regarding stricter food safety standards will not be effective until 2012, FSMA Section 402, which provides sweeping protections for employees who "blow the whistle" on unsafe practices related to food manufacturing, processing, packing, transportation, reception, and holding, became effective upon signing. Whistleblower advocates already are advising employees that under the new law they are protected from adverse job actions if they complain about storing food products at the wrong temperature which could lead to spoilage or growth of harmful bacteria; use of allegedly harmful food additives; storing foods in facilities infested with flies and rodents; failure to recall contaminated raw food products; and use of harmful chemical lubricants in food processing and packaging.

Given the strong protections afforded FSMA whistleblowers, FDA regulated employers are urged to take prompt action to implement effective compliance policies and contingency plans. The CBS "60 Minutes" profile of Cheryl Eckhart, which aired January 2, 2011, dramatically illustrates the reasons why an effective whistleblower compliance plan is essential to protect a company from injury to reputation and potential civil and criminal liability. Ms. Eckart is the former global quality assurance manager for GlaxoSmithKline (GSK). In August 2002, she led a team of 100 scientists sent by GSK to investigate previously cited FDA violations at its plant in Cidra, Puerto Rico. Ms. Eckard told "60 Minutes" that she found far more serious violations than those cited by FDA, including product packaging mix-ups, non-sterile production conditions, air handling systems that misdirected the flow of product powders, and a water system contaminated with microorganisms. As a result, Eckart concluded that GSK could not assure that its product was free from contamination and made according to the drug formula registered with FDA. Initially, Ms. Eckart urged Cidra plant management to take corrective action or shut down the plant, but her recommendations were ignored. She then made a full report to the GSK Compliance Department but her findings were treated as unsubstantiated. Thereafter, she reported her findings to FDA. In May 2003, GSK terminated Eckart. Based on her reports, FDA launched an investigation and later seized an estimated $2 billion in drug inventory. Ms. Eckart filed a qui tam whistleblower lawsuit against GSK on behalf of the federal government claiming that the company had defrauded tax payers by selling adulterated drugs paid for with Medicare funds. Ultimately, GSK pleaded guilty to a felony and paid over $750 million to settle the criminal conviction and qui tam lawsuit, from which Ms. Eckard received $96 million.

The GSK experience could repeat itself now that the FSMA has been enacted. Previously, there was no federal whistleblower scheme in the food safety arena and employees had to rely on state wrongful discharge laws for relief. Now, any employee who complains about a policy, practice, process or procedure that the employee reasonably believes to be in violation of the FSMA or any regulation or order enforced by FDA is protected from any form of adverse job action or harassment based in whole or in part on such a complaint.

Any failure to effectively manage a FSMA whistleblower personnel issue could result in filing of a complaint with the U.S. Department of Labor (DOL). The Occupational Safety and Health Administration (OSHA) is the agency designated to investigate such complaints. Should OSHA finds sufficient evidence to support a prima facie case of retaliation, the Secretary of Labor is authorized to issue a preliminary order instructing the employer to reinstate the employee with back pay and benefits even before the employer has an opportunity to present its case before an Administrative Law Judge. Although this process might seem unfair to employers, in 1986 the Supreme Court rejected an employer's administrative due process challenge to a similar preliminary reinstatement scheme contained in the Surface Transportation Assistance Act.

To reduce the risk of exposure to costly lawsuits, government investigations, and injury to reputation, we recommend the implementation of an effective FSMA whistleblower protection policy, providing a procedure for the reporting and investigation of food safety complaints (including anonymous reporting), and prohibiting all forms of retaliation based on a good faith complaint. In addition, we recommend that all managerial personnel be required to complete specialized FSMA whistleblower training that identifies the many forms of protected conduct and unlawful retaliation, and provides lawful personnel management strategies in the aftermath of protected conduct.

For more information regarding the implications of the whistleblower provisions of the FSMA or assistance with drafting or revising FSMA whistleblower policies, procedures, and managerial training programs, please contact Mary E. Pivec at 202-434-4212 or pivec@khlaw.com or Manesh K. Rath at 202-434-4182 or rath@khlaw.com.

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