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Whistleblower suit against insurer reinstated

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A federal appeals court on Thursday reinstated a whistleblower retaliation suit filed by Navigator Group Inc.’s former chief risk officer, who claimed she was fired after warning the insurer that certain misrepresentations about its investment risk models were illegal and constituted shareholder fraud.

Jennifer Yang was hired by New York-based Navigators in June 2012 and terminated that November after approaching the insurer’s CEO, chief financial officer and general counsel about her concerns, according to court papers in Jennifer Yang v. Navigators Group Inc.

Among her complaints, Ms. Yang said company officials did not heed her concerns about the insurer’s risk models for its municipal bonds and structured financial products, which accounted for about 60% of Navigator’s investment portfolio.

Ms. Yang filed a lawsuit charging violations of the anti-retaliation provision of the Sarbanes-Oxley Act and the whistleblower protection provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act in U.S. District Court in White Plains, New York, in March 2013. 

The court dismissed her lawsuit, and Ms. Yang appealed. A three-judge panel of the 2nd U.S. Circuit Court of Appeals in New York unanimously reinstated her case in the ruling.

Ms. Yang disputes the District Court’s conclusion she did not engage in protected activity, said the appeals court ruling. “Yang’s own testimony as to the communications at issue constituted admissible evidence and, thus, shouldn’t have been excluded from consideration in reviewing defendant’s summary judgment motion,” said the ruling. 

The appellate panel also concluded Ms. Yang had alleged a prima facie case of retaliation. “The record shows she was terminated approximately two weeks after she told Navigator’s general counsel that Navigator’s proxy statement might contain misrepresentations regarding the adequacy of the company’s risk models and how frequently the company’s risk management subcommittees met,” said the ruling. 

The lower court pointed to an “allegedly disorganized and incoherent presentation by Yang to Navigator’s senior executive team” during the intervening period as defeating her prima facie case, said the panel’s ruling.

However, Ms. Yang and her former supervisors have offered “substantially different accounts” of this presentation “and a court must assume that the factfinder will assess credibility and draw inferences in favor of Yang,” said the panel in remanding the case for further proceedings.

 

 

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