Whistleblowers, Do Tell?

by Gray Reed & McGraw
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Whizzle Blour, a professor of surgery at University Medical School, complained to his supervisor that trauma residents at University Hospital were treating and operating on patients without an attending physician’s supervision in violation of Medicare and Medicaid law.  After agreeing to settle those federal claims, University Hospital stripped Whizzle of his faculty chair position claiming he was a poor administrator. Later he was fired. He filed a whistleblower suit alleging his demotion was in retaliation for reporting the federal law violations. Will Whizzle Blour prevail?

No. Whizzle Blour failed to prove all the required elements for retaliation under the Texas Whistleblower Act (TWA). Reporting the Medicare and Medicaid violations to his supervisor did not satisfy the TWA because the supervisor was not qualified as “an appropriate law enforcement entity.”

The Law.

The TWA protects public employees from retaliatory acts by their employers when the employees in good faith report a violation of law by the employer to a proper law enforcement agency. Telher failed to prove all the elements: (1) while he is a public employee; (2) who acted in good faith in making a report; (3) that involved a violation of law; (4) the report was NOT made to an appropriate law enforcement authority; and (5) even though he suffered retaliation as a result of making the report, the Texas Supreme Court held he was not entitled to relief.

Authorized to Enforce.

To file a lawsuit after facing retaliation or discovering retaliatory actions, employees must report the violation “to an authority the employee believes is authorized to regulate or enforce the law alleged to be violated” or “who is authorized to investigate or prosecute a violation of criminal law.” Despite favorable lower court rulings that Telher’s reports to University Medical School department chairmen who were responsible for “ensuring the goals of billing compliance are met,” the Supreme Court disagreed, finding that “a whistleblower cannot reasonably believe his supervisor is an appropriate law-enforcement authority if the supervisor’s power extends no further than ensuring the governmental body itself complies with the law.”

Sovereign Immunity.

All states have sovereign immunity – they can’t be sued unless the state agrees. Regularly excepted from the general rule is enforceability of a state’s contracts. Another is protecting whistleblowers so that they may be encouraged to report violations of state or federal law. Even the Texas Attorneys’ General Office is not immune from such lawsuits.

Federal Whistleblower Claim?

Yes, there is. No, to these facts. A False Claims Act complaint is not actionable unless the employee’s conduct was directed at exposing fraud on the government. Reporting problems concerning a hospital’s alleged failure to comply with patient standards, for example, does not constitute protected activity under the FCA either.

Tilting the Scales in Your Favor.

Public Employees. Individuals must report the violation to the correct party. Despite different facts and experiences, in the last three Texas Supreme Court cases the complaining party did not report its findings to the correct parties. Public entities such as universities and university hospitals should encourage legitimate whistleblower complaints to protect the public good, regardless of how they may reflect on individual administrators. They should let employees know specifically how and to whom they should report allegations of wrongdoing. The Texas Municipal League posted a useful memorandum explaining the TWA.

Private Employees. Should your company have a Whistleblowing Policy? Despite some downside, there are compelling reasons to encourage employees to disclose wrongdoing within the company by protecting them from retaliation.

See prior Tilting articles – Asylum’s Just Another Word for Nowhere Left to Go (2013) and “Whistleblower” Lawsuits (2011)

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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