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Judge awards former Rockwood CFO $1.9 million in whistleblower accounting complaint

 (SR)

A judge awarded Rockwood Clinic’s former chief financial officer $1.9 million this week after ruling the company pushed him to file misleading financial reports, then fired him for refusing.

Gregg Becker filed a whistleblower lawsuit in 2012 against Rockwood and its parent company, Tennessee-based Community Health Systems, alleging he was fired after he refused to rework his projections of the company’s 2012 losses, which he estimated at $12.8 million.

His suit alleged he was repeatedly pressured to project losses of $4 million, even after he argued he couldn’t meet that number without violating the federal Sarbanes-Oxley financial reporting laws.

Becker refused to use the $4 million number, believing it would mislead investors by underestimating the company’s losses, said his attorney, Mary Schultz. He was put on a performance improvement plan and ultimately forced to resign.

“You can’t fire somebody because they refused to commit a crime for you,” Schultz said Friday.

In his ruling, administrative law Judge Christopher Larsen, with the U.S. Department of Labor, said Becker had been “ignored, pleaded with and cajoled” to submit the lower number.

“Nobody appeared concerned that he had no reasonable basis for approving the figure and an entirely reasonable basis for rejecting it,” Larsen wrote.

“This is not a simple disagreement over company policy or a matter of different philosophies about the best way to do business. This is a dispute going to the very heart of what it means to be the Chief Financial Officer of an organization which is a component of a publicly-traded business.”

“It really validates Mr. Becker’s integrity and his resoluteness with doing what he did,” Schultz said of the ruling.

Multiple attempts to contact Rockwood, Rockwood’s attorney Kendell Allen, and Community Health Systems on Friday afternoon were unsuccessful.

CHS attorney Stellman Keehnel said he was disappointed with the decision and was planning to appeal.

Both CHS and Rockwood said Becker’s claims were baseless when the suit was filed.

The 46-page ruling emphasized that Rockwood and Community Health Systems presented no justification supporting the $4 million figure as reasonable, either to Becker or at trial.

Larsen awarded Becker $341,380 in back pay and nearly $1.5 million in front pay, saying Becker likely would have worked at Rockwood through his retirement at the age of 66. He was also awarded $15,000 for damage to his reputation and attorneys’ fees and costs.

Schultz said the decision to award that many years of front pay is uncommon and reflected the significance of the case.

A separate state court case over Becker’s dismissal is scheduled for trial in January. The suit alleges Becker was constructively discharged for refusing to violate state laws against misleading financial reporting.