Ethics and Corporate Responsibility in the Workplace and the World
Wanda T. Diggs
Professor William Stone
Law, Ethics and Corporate Governance – LEG-500
March 4, 2014
Abstract
Pharmaceutical companies are trusted to provide drugs that are fit for human use. Consumers rely on these drugs for their wellbeing. Drug costs are prohibitive for many in the United States and consumers want to be assured that the drugs they are prescribed accomplish their intended purposes. When pharmaceutical companies operate unethically and circumvent the law, public health is at risk. It has become imperative that the government enforce the regulations that are in place and modify weak legislation to protect the public. PharmaCARE is a successful pharmaceutical company with a reputation of being socially responsible. PharmaCARE developed its brand by offering free and discounted drugs to low-income consumers and sponsoring healthcare educational programs. The company also launched community-based initiatives that focus on health care education and environmental concerns. While PharmaCARE enjoyed the fruits of its good reputation, the company’s moral fabric was unraveling into threads of greed, deceit and criminal behavior. PharmaCARE executives are a despicable bunch driven by greed as they go about their responsibilities of earning company profit. The company intends to make as much money as possible using minimal resources – even if that means ignoring their responsibility to protect their employees and the public. PharmaCARE made several important decisions that negatively impacted the Colberian nation, PharmaCARE employees, doctors and consumers.
Determine the stakeholders in this scenario.
The PharmaCARE executives and employees of PharmaCARE/CompCARE are the stakeholders in this case. Four stakeholders (Allen, Tom, Donna, and Ayesha) are employees of CompCARE. The Director of Operations at CompCARE is a stakeholder, as well.
The African nation of Colberia – its land and its people are stakeholders. PharmaCARE built a factory in Colberia and employed the native people to harvest plants for them. The company used the natural resources of Colberia, making the land, wildlife, and environment stakeholders.
The WellCo drugstore company and its employees are stakeholders. WellCo had acquired CompCARE weeks before AD23 was linked to numerous cardiac deaths. As a result, their stock plummeted. Needless to say, employees felt the brunt of this through reduced budgets for training, cut-backs in hours or job loss.
Physicians, hospitals, and clinics are all stakeholders. Specifically, physicians are complicit in defrauding the government by sending bogus patient names to CompCARE. Consumers are stakeholders too. They are unsuspecting players in this scenario. They believe when they take a medication as prescribed; they will feel better – not die.
Analyze the ethics of PharmaCARE’s treatment of the Colberia’s indigenous population and its rank-and-file workers versus that of its executives.
PharmaCARE’s conducted its business in Colberia with blatant disregard of the Colberian people and their environment to increase its bottom line. This is a demonstration of ethical egoism where the company considered its needs and not those of the Colberian land and its people. Ethical egoism is a position where one’s actions are performed from a perspective of selfishness (“Ethical Egoism,” n.d.). In the case of PharmaCARE, the focus of the company was on using Colberian natives to teach them about the natural cures available there and exploiting both the people and land for harvesting of plants that facilitated those remedies.
PharmaCARE used the Colberian people for profit. The natives of Colberia freely shared their knowledge of plant species that cure certain ailments and PharmaCARE capitalized on that information; creating quite a portfolio of intellectual property compliments of the healers of Colberia. Company executives enjoyed extremely comfortable living conditions while the Colberians lived in huts without the benefit of plumbing or electricity. One dollar-per-day does not begin to compensate the Colberian workers for the work they performed. The five-mile treks, in and out of the jungle, coupled with long hours, is not far from slave labor.
PharmaCARE should consider the impact to all stakeholders with respect to the African nation of Colberia and the company in the years to come. PharmaCARE is focused on immediate profits, so contemplation of the positive long-term effects of giving back to the Colberian people has not occurred to them. If they were forward thinkers, they would build homes and schools, pay a fair wage, and reserve seeds from harvested plants. Educated Colberians translate into a well-informed workforce; fair wages translate into healthier employees, and harvesting seeds sustains the supply chain – everyone benefits.
Determine whether Allen could legally fire each of the three (3) workers – Donna, Tom, and Ayesha. Suggest steps he should take to minimize the risks to his department and the company.
Donna. Donna is a loyal employee who, up until she became sick from the bad air at work, had perfect attendance. As a result of continuous exposure to the mold growing in the ventilation system at the CompCARE lab, her health began to deteriorate to the point she could not work any longer. When Donna filed a workman’s compensation claim, Allen was ordered to fire her. Allen can legally fire Donna under employment-at-will; however, there is a huge risk that Donna may file a lawsuit for wrongful discharge and win. CompCARE should pay the workman’s compensation claim and not fire Donna.
Donna can sue PharmaCARE for violation of the general duty clause of the Occupational Safety and Health Act of 1970 (OSH Act), which states that employers must keep workplaces safe from recognized hazards that cause serious physical harm (Halbert & Ingulli, 2012). The adverse side effects of mold on the human respiratory system are well documented as a serious health hazard, and PharmaCARE did not exercise duty of care when it did not fix the mold problem when it was initially reported. A jury may find that PharmaCARE's disregard of the mold problem is a demonstration of a blatant disregard of OSH Act requirements; allowing Donna to collect damages.
Workman's compensation protects both employees and employers when an illness occurs in the workplace (Halbert & Ingulli, 2012). The fund is established to give employees an alternative to filing a lawsuit when accidents occur on the job or when employees become ill as a result of the work environment. When employees are paid under workman’s compensation, the exclusivity rule prohibits them from filing a negligence suit against an employer for damages. Employers who offer workman’s compensation pay into a fund managed by the state where the business operates. Employers embrace workman's compensation as a way to mitigate the risk of employees suing them for negligence. This remedy is beneficial for both the employee and the employer; however, the Director of Operations is being careless in his decision to fire Donna. Furthermore, Donna's lawsuit could easily become a class-action case because she was not the only employee that was harmed by the mold at work.
Tom. When Tom threatened to complain to OSHA about the conditions in the lab, the Director of Operations told Allen to fire him. Whistleblower protection laws forbid employers from retaliating against employees who report wrongdoing – in this case, failure to remedy the mold problem at the CompCARE lab. Allen cannot legally fire Tom.
There are two whistleblower laws in place that protect Tom. First, The Clean Air Act prohibits retaliation against Tom for reporting violations regarding air emissions from area sources. Second, the OSH Act allows him to exercise his right to file a safety and health complaint (“Whistleblower Statues,” n.d.).
CompCARE needs to establish a whistleblowing policy that encourages employees to report defects in working conditions, management practices, and unethical behavior anonymously. The policy should require immediate response to remedy situations and mitigate the risk of employees reporting outside the company.
Ayesha. Ayesha filed an EEOC complaint alleging she had not been promoted to supervisor because she was Muslim. According to Allen, Ayesha was a good worker, but he did not believe she had the management or people skills to be a good supervisor. The Director told Allen to fire Ayesha. In order to do this, Allen must find a reason outside of anything tied to her filing the EEOC complaint, or terminating Ayesha would be considered retaliation, which is illegal.
Apparently, Allen has not made Ayesha aware of the reasons why she has not been promoted. Allen needs to communicate with Ayesha and acknowledge the good work she is doing. Then, he should develop a performance plan for her that specifies the areas that need improvement. He should also offer supervisory training opportunities.
Determine the whistleblowing opportunities, obligations, and protections that could help Allen. Explain why and how Allen would benefit.
Allen had several opportunities to blow the whistle. First, the speedy, low cost renovation of the CompCARE laboratory was a red flag - signaling that proper precautions in establishing the clean room conditions may not have been adequate. Assuming Allen was not involved in that decision, he certainly had an opportunity when the mold problem was not addressed after months passed. Public consciousness has been raised recently regarding the presence of mold and its effects on the human respiratory system. Specifically, mold growing in a compounding pharmacy in Framingham, Massachusetts resulted in tainted medications that caused a meningitis outbreak that killed 64 people and injured hundreds more (Unknown, 2013). The risk of a similar occurrence at the CompCARE lab is high; especially since remediation efforts had not been taken months following the initial report. Allen had an obligation to blow the whistle as part of his fiduciary duty of care. If Allen reported these findings, he would be protected from retaliation by whistleblower protection laws under the OSH Act and the Clean Air Act.

Allen was aware of the prescriptions filed under bogus patient names and was told to keep his mouth shut or lose his job. This represents another opportunity for Allen to blow the whistle. Once Allen reported the wrongdoing, he could not be retaliated against under FDA whistleblower protection laws. Another opportunity presented itself when PharmaCARE and CompCARE ignored reports that the people who took AD23 were suffering heart attacks at an alarming rate, yet they continued to fill large orders with the drugs. The company paid huge bonuses to the executives and managers, including Allen. It is Allen’s obligation to report this wrongdoing to the FDA in the interest of public safety. Whistleblowing laws under the National Institutes of Health and the FDA will protect him.
Assess PharmaCARE’s environmental initiative against the backdrop of its anti-environmental lobbying efforts and Colberian activities. Examine if this renders the company’s purported environmental stewardship better or worse and if the company’s public stance should carry an obligation to be a leader in environmental matters. Support the position.
PharmaCARE’s We CARE about YOUR world campaign strikes a distinct contrast to its activities in Colberia. PharmaCARE pledged a commitment to protect the environment through recycling, packaging changes, and other green initiatives. In contrast to this position, PharmaCARE’s repeated harvesting of plant life in Colberia has ruined the habitat and endangered the native species. Additionally, the company’s lobbying activity further demonstrates that all claims of social responsibility with respect to the environment are a front as they successfully defeated environmental laws and regulations.
PharmaCARE has a corporate responsibility to the community surrounding its manufacturing plant in Colberia. Their commitment to environmental stewardship, in light of their actual endeavors, renders the company unqualified to be a leader in environmental matters. Their business practices in Colberia demonstrate shortsighted thinking and disregard for the Colberian habitat and its people.
Analyze the original purposes of and changes to Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Determine which provision(s) of CERCLA apply to PharmaCARE in the scenario provided. Support the response.
In 1980, Congress passed the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), or Superfund, which authorized the EPA to identify companies responsible for inadequate storage and disposal of toxic waste and hold them accountable for cleanup activities. Congress allocated 1.6 million dollars to the fund in 1980, paid for by taxes from chemical and petroleum industries (Unknown, 2006). The fund includes a retroactive liability clause that holds companies responsible for cleanup of dump sites they used before 1980.
The Superfund Amendments and Reauthorization Act (SARA) amended CERCLA in 1986 to emphasize the importance of permanent remedies for site cleanup, grant enforcement authority, increase state involvement, focus on human health risks, and encourage citizen participation in how sites should be restored (“SARA Overview,” n.d.). SARA also requires the EPA to address how it assesses the degree of risk to human health and the environment presented by uncontrolled hazardous waste sites. In 1995, CERCLA was called out as ineffective; and many infidelities within the law were cited (Taylor, 1995). One concern focuses on retroactive liability, where property owners are held responsible to pay to clean up contamination that occurred long before they took ownership.
CERCLA is an environmental protection law that governs the storage, handling, and cleanup of toxic waste in the land and air. CERCLA does not address indoor air; therefore, this law is not germane to the PharmaCARE mold issue (Miller, 2006). In 2002, the United States Toxic Mold Safety and Protection Act passed. The Act directs the Centers for Disease Control (CDC) and the National Institutes of Health (NIH) to study the health effects of indoor mold on humans. The EPA, the Department of Housing and Urban Development (HUD) and the NIH are mandated to educate the public regarding mold identification, remediation and prevention. The EPA is also tasked to publicize standards for preventing, detecting, and remediating indoor mold growth. All this sounds good; however, this provision only addresses residences and makes no provision for commercial property. Furthermore, OSHA does not address mold specifically in its provision either; making mold claims addressable only under the general duty clause (Malaby, 2007). There is, therefore, no legal incentive for PharmaCARE to give-a-care about the mold problem in its lab.
It is unfortunate when a health care organization disregards its responsibility to the general public. PharmaCARE operated in selfishness and greed to earn a profit. The executives of that company practiced unethical and illegal behavior to bring its plans to fruition – only to come up short in the end. In hindsight, PharmaCARE executives realize why the FDA regulations are in place. There actions resulted in the deaths of over 200 people. That is a shame.

References
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Halbert, Ingulli. (2012). Law and ethics in the business environment. 7th Ed.
Malaby, F. (Sept. 2007). Osha policies regarding mold. Retrieved from: https://www.aiha.org/localsections/html/neaiha/OSHA%20Policies%20Regarding%20Mold.pdf
Miller, A. (2003, Jul 20). Sick buildings/a special report: Bad air breeds ailments in homes, schools, offices. The Atlanta Journal - Constitution. Retrieved from http://search.proquest.com/docview/336978790?accountid=30530
SARA Overview. Retrieved from: http://www.epa.gov/superfund/policy/sara.htm
Taylor, J. (1997). Hazardous waste landfills and superfund. CATO Institute. Retrieved from: http://www.cato.org/publications/congressional-testimony/hazardous-waste-landfills-superfundUnknown. (Dec. 2006). Superfund amendments and reauthorization act, united states. The Encyclopedia of Earth. Retrieved from: http://www.eoearth.org/view/article/156342/
Unknown. (Sept. 2013). Drug compounding safety legislation passes house. CBS News. Retrieved from: http://www.cbsnews.com/news/drug-compounding-safety-legislation-passes-house/
Whistleblower Statutes - filing time limits. Retrieved from: http://www.whistleblowers.gov/wb_filing_time_limits.html#env_nuke