Hamilton County Court of Appeals Rejects Public Policy Wrongful Discharge Claim Based on Alleged HIPAA and Insurance Fraud Violations

Last week, a divided Hamilton County Court of Appeals reversed a jury verdict entered in favor of a terminated physician on a public policy wrongful discharge claim on the grounds that her accusations of HIPAA and insurance fraud violations were not supported by sufficiently clear sources of public policy because neither statute imposed an affirmative obligation on the plaintiff to report her concerns or prohibited the employer from retaliating against an employee who reports violations of the statute.  McGowan v. Medpace, Inc., 2015-Ohio-3743. Unlike Cuyahoga and Franklin County Courts of Appeal, the Hamilton County Court of Appeals requires a statutory source of public policy to parallel the general whistleblower statute by requiring an employee to report concerns and to prohibit the employer from retaliation for reporting those concerns.  Also, this case rejects a prior Montgomery County Court of Appeals decision finding HIPAA to be a valid source of public policy to support a wrongful discharge claim.

According to the Court’s opinion, the plaintiff had been hired into three positions to replace a retiring physician: to be the Executive Director of two research centers and to take over the retiring physician’s private practice.  In addition, the retiring physician appointed her to replace him as the Principle Investigator on the research studies being conducted by the two research centers.   While the research centers was not affiliated with the private medical practice, they shared office space, employees and patients. Shortly after she started, the plaintiff became concerned with how the staff treated patient files (in that the research studies and medical practice operated using the same file instead of having different charts).  Staff also left the charts open on carts outside patient rooms.  She felt that this violated HIPAA.  She was also concerned that the retiring physician routinely ordered larger doses of medication than medically necessary and directed the patients to split them.   She felt that this was insurance fraud.   She also conferred with an attorney who confirmed her suspicions.  Accordingly, at the next staff meeting, she directed the staff to cease the offending practices and expressed her opinion that they violated HIPAA and insurance fraud laws.  The retiring physician learned of her accusations and removed her as the PI and from his private practice.  The defendant employer did not fire her or remove her from her ED positions, but explained that she should not have made the allegations and it could not control the retiring physician from removing her from his practice and research studies.  After she refused to apologize to the retiring physician and accused the employer of retaliation, it fired her a few weeks later.  She was awarded $800,000 in compensatory and punitive damages by a jury.  The employer appealed.

Unlike Franklin and Cuyahoga Counties, the Hamilton County Court of Appeals only recognizes narrow exceptions to the employment at will doctrine and  public policies as actionable wrongful discharge claim if the underlying statute – like the general whistleblower statute – requires the plaintiff to report concerns and prohibits the employer from retaliating against the employee for reporting those concerns:

In a claim for wrongful discharge in violation of public policy, an employee satisfies the clarity element by establishing that a clear public policy existed, and that the public policy was one that imposed an affirmative duty on an employee to report a violation, that prohibited an employer from retaliating against an employee who had reported a violation, or that protected the public’s health and safety.

With respect to the plaintiff in this case, the Court concluded that the insurance fraud statute did not impose an affirmative duty on her to report her concerns about the retiring physician’s insurance fraud or prohibit her employer from terminating her for reporting those concerns.  Accordingly, that statute could not constitute a clear source of public policy as required for a public policy wrongful discharge claim under Ohio law.

The Court reached the same conclusion with respect to the HIPAA issues even though the Montgomery County Court of Appeals had previously recognized it as providing a sufficiently clear source of public policy protecting patient’s privacy rights.  The dissent would have recognized the HIPAA public policy claim as protecting public safety.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Ohio Supreme Court Finds Broad Statutory Whistleblowing Protection for Patient Abuse

Less than a week after rejecting a different whistleblower claim for not strictly complying with the applicable whistleblower statute, the Ohio Supreme Court this morning approved a whistleblower retaliation claim brought by a nurse who was terminated by a hospice employer after reporting suspected patient abuse to a nursing home and patient family. Hulsmeyer v. Hospice of Southwest Ohio, Inc., Slip Opinion No. 2014-Ohio-5511.  As reported here last year, the plaintiff alleged that she was terminated by her hospice employer in retaliation for reporting patient abuse (that had been reported to her by a subordinate) to the nursing home of the patient which had allegedly been abused and the patient’s family.  The employer had successfully argued to the trial court that her report was not protected by R.C. § 3721.24 because she did not report or threaten to report the potential patient abuse to the Ohio Director of Health.  On appeal, the Court held that an employee or contractor “who reports or indicates an intention to report suspected abuse or neglect of a long-term care-facility or residential-care-facility resident is not required to report or indicate an intent to report the suspected abuse or neglect to the Ohio director of health in order to state a claim for retaliatory discharge under R.C. 3721.24.”  The Court refused to address whether the plaintiff had stated a common law wrongful discharge claim in her complaint.

 According to the Court’s opinion, the plaintiff had alleged in her complaint that she had received a report from one of her subordinates that a patient had been bruised, presumably by the nursing home staff where she resided.  The nurse had taken pictures of the bruises.  The plaintiff had been advised by a social worker and staff physician to report this to the nursing home and the patient’s family.  She claims that she also reported this to her own boss before she discussed it with the nursing home and patient family.  However, a few weeks later, she was terminated for bringing the issue to the nursing home and patient family and authorizing the pictures to be taken of the patient without first informing or obtaining authorization from her employer.

The statute which prohibits retaliation against employees or contractor for reporting suspected patient abuse is silent about where the report must be made to come within coverage of the statutory protection.  R.C. § 3721.24 states in relevant part that: 

(A) No person or government entity shall retaliate against an employee or another individual used by the person or government entity to perform any work or services who, in good faith, makes a report of suspected abuse or neglect of a resident or misappropriation of the property of a resident; indicates an intention to make such a report; provides information during an investigation of suspected abuse, neglect, or misappropriation conducted by the director of health; or participates in a hearing conducted under section 3721.23 of the Revised Code or in any other administrative or judicial proceedings pertaining to  the suspected abuse, neglect, or misappropriation. For purposes of this division, retaliatory actions include discharging, demoting, or transferring the employee or other person, preparing a negative work performance evaluation of the employee or other person, reducing the benefits, pay, or work privileges of the employee or other person, and any other action intended to retaliate against the employee or other person.

The defendant employer argued that this silence makes the statute ambiguous and should be interpreted to refer to an earlier statutory section which covers licensed healthcare professionals and others, including residents of long-term care and residential facilities, at R.C. § 3721.22.  That section requires licensed healthcare professionals to report suspected abuse to the Director of Health, permits residents and others to make such reports and protects them from criminal and civil prosecution.   However, §3721.24 covers a different groups, such as any employees (rather than merely licensed professionals) and contractors.  The Court found this difference to be significant:

Providing employees broader reporting options than those found in R.C. 3721.22 is consistent with the purpose of preventing retaliation against employees. Employees may be more likely to report suspected abuse or neglect to someone other than the director of health, such as a resident’s family member or a coworker.   

The Court also found the anti-retaliation provision was not ambiguous by omitting where reports of suspected abuse were to be made.   

Because the General Assembly enacted R.C. 3721.22 and 3721.24 in the same bill, we presume that the absence of any requirement in R.C. 3721.24 that a report, or intent to report, suspected abuse or neglect must be made to the director of health was intentional. If the  General Assembly had intended to afford protection to only those employees who reported, or indicated an intention to report, suspected abuse or neglect to the director of health, it could have done so by inserting the words “to the director of health” after the word “report” in R.C. 3721.24(A), or by incorporating the requirement from R.C. 3721.22. It did neither. And we will not add those words by judicial fiat.

The lone dissent agreed with the employer that §3721.24 should be interpreted to be consistent with §3721.22.  However, Justice French also would have found a public policy wrongful discharge claim to exist from the allegations in the Complaint.  

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit: Vague Complaint To HR About Derogatory Comments Forms Basis for Next Week’s Retaliatory Discharge

Yesterday, a divided Sixth Circuit reversed summary judgment in favor of an employer on a retaliatory discharge claim brought under Title VII by a former executive who was fired for not being a “good fit”  shortly after “venting” to the Vice President of Human Resources on an overseas trip about repeated and inappropriate derogatory racial comments about other individuals made by another executive.  Trujillo v. Henniges Automotive Sealing Systems North America, Inc., No. 11-1148 (6^th Cir. 10-17-12).   The Court did not find the plaintiff’s vague expressions of discomfort to the offending speaker to constitute protected conduct because they were not complaints or expressions that he was in any way offended.  However, complaining to the VP about repeated derogatory statements about other races “can be construed as a complaint about a hostile work environment caused by racial and national origin discrimination.”

 It did not matter that the comments were not directed to him or about him.  It also did not matter that the individual incidents might not constitute actionable harassment, if collectively they could do so.   “We have repeatedly held that complaints to human resources personnel regarding potential violations of Title VII constitute protected activity for purposes of establishing a prima facie case of retaliation.”

 The district court had found the conversation with the VP was too informal to constitute protected conduct.  The Court conceded that in the past it has “found that some complaints to human resources personnel are not sufficiently specific to constitute opposition to employment discrimination.”  It has not extended protection to complaints about management style or vague comments of possible discrimination.   However, it concluded that a good faith complaint about a possible hostile work environment was sufficiently related to opposing unlawful employment practices to warrant protection in this case.

 The dissenting judge would have found the comments to be protected under Title VII only if the plaintiff had brought the issue to the attention of HR because it constituted discrimination against him or against other employees.  Instead, the plaintiff admitted that he had only been venting and had not intended for her to take any action. “Not every casual remonstrance against bad language equates to complaining of illegal discrimination.”

 NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Ohio Appeals Court Lowers $46.5M Damage Award to $10.5M In Retaliatory Discharge Case

Last Thursday, the Cuyahoga County Court of Appeals ruled that Ohio's Tort Reform Act required the reduction of $43M in punitive damages to no more than $7M (which was twice the amount of compensatory damages awarded by the jury) in a retaliatory discharge case brought under the Ohio Civil Rights Act. Luri v. Republic Servs., Inc., 2011-Ohio-2389. In that case, the plaintiff general manager alleged that his employer manufactured a reason to fire him in April 2007 in violation of Ohio Revised Code § 4112.02(I) after he refused to fire the company's three oldest employees in November 2006. He had protested that one of the older employees had strong performance evaluations and could sue the company for age and disability discrimination. In addition, the plaintiff presented evidence that the defendants had altered and/or fabricated evidence to support its illegal termination decision and then refused to waive his non-competition agreement after firing him.

The Court held that the trial court did not abuse its discretion in refusing to bifurcate the trial (between liability and damages) because the evidence that proved liability was also relevant to the defendant's bad faith, justifying punitive damages. In particular, evidence that the defendants had manufactured evidence proved not only guilty intent in the termination decision, but also bad faith. The Court refused to find an error in the jury instructions because the defendants had failed to ask in the jury interrogatories or instructions for the economic and non-economic damages to be separately specified. In addition to the $3.5M in compensatory damages awarded by the jury, the trial court also awarded over $1M in attorney fees and prejudgment interest. However, the Court of Appeals found that the Tort Reform Act at Ohio Revised Code § 2315.21(D) limited the punitive damages to twice the amount of compensatory damages and those damages should be imposed collectively, rather than per plaintiff. Otherwise, the amount of the $43M punitive damage award did not shock the Court's conscience or constitute a violation of due process under the circumstances.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Ohio Appellate Court: National Bank Act Pre-empts Ohio Discrimination Claim, But Question Exists Whether Board Properly Terminated Plaintiff under NBA

Late last month, the Summit County Court of Appeals held that the National Bank Act pre-empted the state law gender discriminatory treatment claims of a discharged business banking officer, but not her state law retaliatory discharge claims. Boesch v. Champaign National Bank, No. 2008-Ohio-3282 (6/30/08). While the undisputed evidence showed that the plaintiff was a bank “officer” who was appointed by the bank’s board of directors, there was an evidentiary question as to whether she was discharged by the bank’s president or the board because of the manner of preparation and presentation of the board’s minutes and an amendment concerning her termination.

The Court recognized that the power granted to banks by the National Bank Act “to appoint and dismiss officers at ‘pleasure’ conflicts with the Ohio statutory provisions precluding employment discrimination and retaliation.” While the National Bank Act, 12 U.S.C. § 24 (Fifth), gives national banks the power: "[t]o elect or appoint directors, and by its board of directors to appoint a president, vice president, cashier, and other officers, define their duties, require bonds of them and fix the penalty thereof, dismiss such officers or any of them at pleasure, and appoint others to fill their places, " the Ohio Civil Rights Act State Act, O.R.C. § 4112.02(A), in contrast provides that “ it is an unlawful discriminatory practice: [f]or any employer, because of the race, color, religion, sex, national origin, disability, age, or ancestry of any person, to discharge without just cause, to refuse to hire, or otherwise to discriminate against that person with respect to hire, tenure, terms, conditions, or privileges of employment, or any matter directly or indirectly related to employment.” Moreover, “[w]ith respect to retaliation, state law provides that it is an unlawful discriminatory practice: [f]or any person to discriminate in any manner against any other person because that person has opposed any unlawful discriminatory practice defined in this section or because that person has made a charge, testified, assisted, or participated in any manner in any investigation, proceeding, or hearing under sections 4112.01 to 4112.07 of the Revised Code."

The court was faced with deciding whether the National Bank Act preempted state law under the constitution’s supremacy clause and recognized that the Sixth Circuit regularly recognized this preemption. Because the plaintiff had been properly hired by the bank president with authority from the bank’s board of directors and the decision was properly ratified by the bank’s board, the court found that the evidence showed that she was a bank “officer” covered by the National Banking Act. Therefore, the court concluded that her state law discrimination claims were pre-empted by federal law.

However, the Court also concluded that there was an evidentiary question as to whether her discharge was authorized and/or ratified by the bank’s board of directors. The bank’s president discharged the plaintiff and during litigation submitted an affidavit asserting “that the bank's board of directors terminated [plaintiff] and that such action is reflected in an amendment to the minutes of the meeting in which the board made that decision.” The plaintiff questioned the authenticity of the board minutes because “the amendment was undated and dealt with no other bank business . . . [and the bank] did not provide the original minutes of the board's meeting. She alleges that the amendment appears to have been created for litigation purposes and concludes that there is a question as to whether the ratification was "prompt" and appropriate under the NBA.” The Court agreed that these were valid evidentiary issues for a jury to resolve. Moreover, the court was “unable to determine from the record whether the board had delegated its authority to Lamping to terminate Boesch. . . . [raising] the issue of whether [plaintiff’s] termination was accomplished by the board of directors, or whether it was an individual action” by the bank president.

Insomniacs can read the full decision at http://www.sconet.state.oh.us/rod/docs/pdf/9/2008/2008-ohio-3282.pdf.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.