The case arose in the Boyle County Sheriff's office when Sheriff Marty Elliott first demoted and then fired a long-time deputy, Warren Lanham, following complaints by grand jury members about Lanham's case work to Boyle Circuit Judge Hon. Darren Peckler. Lanham claimed that his rights were violated, because he was not allowed the due process steps provided for in the Police Officers' Bill of Rights. The circuit court ruled for the sheriff, but the Court of Appeals ruled for Lanham, thus bringing the case to the Supreme Court.
Is an employee who declines to remain employed and facilitate healthcare fraud constructively discharged? This is the question presented to the Sixth Circuit by Sue Smith v. LHC Group, which was argued yesterday to a panel of Judge Gilbert Merritt, Judge Karen Nelson Moore and Judge John Bush. Robert L. Abell represents the plaintiff and appellant, Sue Smith; take a listen:
KRS 216B.165 requires a health care worker to report quality of care issues (as well as other issues) and also prohibits retaliation against them by the healthcare facility. A healthcare worker wrongfully terminated in retaliation for reporting quality of care issues can pursue a lawsuit for his or her damages.
The damages a healthcare worker fired in violation of the anti-retaliation prohibition of KRS 216B.165(3) may recover in their wrongful termination lawsuit includes "such damages ... sustained by reason" of the wrongful termination. This includes future lost income, often referred to as "front pay," the Kentucky Supreme Court ruled this week in MacGlashan v. Cumberland Hall Hospital.
Can a plaintiff who alleges that her employment was wrongfully terminated in violation of KRS 216B.165 assert a claim for the recovery of front pay, along with other damages she may have sustained, by reason of her discharge?
Front pay is another term for lost future income which are a garden-variety form of damages recoverable in tort cases under Kentucky law. E.g., Caton v. McGill, Ky., 488 S.W.2d 345 (1972); Middlesboro Coca-Cola Bottling Works v. Ball, 262 Ky. 101, 89 S.W.2d 875 (1936). front pay, as with lost future income, "represents a reasonable estimate of damages that will occur after the trial." As such, "the practical and functional reality [is] that [front pay] is an award of monetary damages to recompense a loss 'sustained by reason of the [KRS 216B.165] violation."
The employer, Zwicker & Associates, a collection law firm, had been sued for sex discrimination by a number of ex-employees. The employer's defense counsel interviewed a number of witnesses including Clinton Burton. Burton was interviewed "several times" and in each interview "made statements that supported the former employees." After the interviews, various supervisors expressed dissatisfaction to Burton with his statements to the employer's lawyers, although non-"came right out and directly told [Burton] to lie to the outside lawyers." Burton was subsequently fired and filed a wrongful discharge claim asserting that "one of the reasons Zwicker fired him was because he refused to perjure himself in the discrimination case." This was the focus of the Sixth Circuit's recent decision in Burton v. Zwicker & Associates, No 13-6406 (August 22, 2014).
Burton prevailed at trial and was awarded $350,000 in damages and $600,000 in punitive damages (later reduced to $350,000).
Kentucky wrongful discharge law is clear and well-established:
An employer cannot discharge an employee for a reason "contrary to a fundamental and well-defined public policy as evidenced by existing law." Well-defined public policy includes the Commonwealth's criminal laws. This means that an employer cannot fire an employee because the employee refuses to commit perjury, which is a crime in Kentucky.
The court cited the following testimony from Burton as supporting the jury's verdict in his favor:
Q: Did you support the company's position and [the sex discrimination lawsuit], or did you give [Zwicker's lawyers] some information that supported the employees?
A: Oh, I gave them information that supported the employees.
...
Q: And how did the company react to your information you were providing to the company's lawyers?
A: They were not happy about it and they began to make comments, explain their displeasure for me taking the support of these employees.
Q: All right. Now, you say "they." How about Jamie Walker; did she say anything to you about it?
A: Absolutely.
Q: What did she say?
A: In one exchange, Jamie Walker was actually in there with the attorneys, and she was finishing or they were talking. And so it was my turn, and they were calling me in, and Jamie Walker stated to me, she said, "Clinton, you can tell the truth. You won't lose your job."
Q: Were you telling the truth in the first place?
A: Absolutely.
Q: Was another individual you spoke to about this or who spoke to you was John Twite?
A: Correct.
...
A: ... And he stated to me, "hey Clinton, you need to make better choices. You need to make better decisions."
Q: Make better choices. And this was after you had met with lawyers?
A: Three to five times, being badgered, berated.
...
Q: And did [Mike Koziol] speak with you about your – the information you were giving to the lawyers?
A: He did.
Q: What did he say?
A: He said that I made poor judgment and that my job was in jeopardy.
The Sixth Circuit rejected Zwicker's argument that "an employer must make an affirmative request that the employee commit a crime, explaining in an obvious point of legal realism:
... a request is still affirmative if both the employer and employee understand that the employer is asking the employee to commit a crime even if the employer asked in a roundabout way. It should not be surprising that employer would not come right out and command an employee to "commit perjury," but rather would choose to make the request in a more subtle way.
The Sixth Circuit's decision follows two prior Kentucky cases also upholding the employee's wrongful discharge claim in similar circumstances: Hill v Kentucky Lottery Corp, 327 SW3d 412 (Ky 2010) and Northeast Health Mgmt., Inc. v. Cotton, 56 S.W.3d 440, 449 (Ky App. 2001)
In a decision exemplifying how determined is the Sixth Circuit to assure that the federal courthouse doors are closed to individuals no matter their claim, it has ruled that Kentucky Supreme Court ethics rules for lawyers DO NOT represent or establish Kentucky public policy. This appalling decision came in the case of Gadladge v. Winters & York, No. 12-5401 (October 24, 2013).
Gadladge, an attorney, was employed by Winters & York law firm. He claimed that he was fired because he refused to follow the firm's policy of routinely referring personal injury clients to a Florida chiropractor, Dr. Gary Kompothecras, which Gadladge asserted was a quid-pro-quo arrangement. Gadladge alleged that this quid-pro-quo arrangement violated conflict of interest rules established by the Kentucky Supreme Court.
Gadladge's claim was for wrongful discharge. A wrongful discharge claim arises when, among other things, an employee is fired for refusing to violate a law or rule representing public policy in the course of his employment. Gadladge's claim was that he refused to violate a Supreme Court rule in the course of his employment with Winters & York and, as a result, he was fired.
Although two Kentucky circuit court decisions directly supported his Gadladge's claim, the district court dismissed the case on a Rule 12 motion. The Sixth Circuit in a per curiam opinion joined by Judges Ralph Guy and Martha Daughtrey affirmed. The Sixth Circuit ruled that based on all available data the Kentucky Supreme Court, if presented with the question, would rule that the rules it promulgates for lawyers do not represent public policy and should not be considered as anything like rules of law.
Judge Helene White dissented, noting that the majority's misguided ruling was contrary not only to two Kentucky circuit court decisions but also one by the Sixth Circuit itself, Martello v. Santana, 713 F3d 309 (6th Cir. 2013).
About the only good thing about this decision is that the Sixth Circuit did not designate it for precedential value. It is astounding that the Sixth Circuit ruled that the Kentucky Supreme Court would rule that its rules for lawyers did not represent public policy.
Kentucky recognizes a claim for wrongful discharge, and one way it arises is when an employee is fired for refusing to violate a law in the course of his or her employment. Here's two examples:
Hill v. Ky. Lottery Corp., 327 S.W.3d 412 (Ky. 2010)(refusal to commit perjury in legal proceeding)
Follett v. Gateway Regional Health System, Inc., 229 S.W.3d 925 (Ky. App. 2007) (refusal to condone irregular medical billing and a doctor working under the influence of alcohol)
A number of other states recognize the same, here are some more examples:
Wagenseller v. Scottsdale Memorial Hospital, 147 Ariz. 370, 710 P.2d 1025, 1035 (Ariz. 1985) (“the termination for refusal to commit an act which might violate A.R.S. § 13-1402 [indecent exposure] may provide the basis of a claim for wrongful discharge.”)
Webb v. HCA Health Serv., 780 S.W.2d 571 (Ark. 1989) (protecting refusal to falsify medical records required by Medicaid and Medicare)
Tameny v. Atlantic Richfield Co., 610 P.2d 1330, 27 Cal.3d 167 (Cal. 1980) (wrongful firing of employee for refusing to participate in illegal price-fixing scheme)
Collier v. Superior Court of Los Angeles County, 228 Cal. App. 3d 1117 (Cal. App. 4th Dist. 1991) (allowing wrongful termination claim to protect refusal to engage in bribery, kickbacks, tax evasion, drug trafficking and money laundering as the claim serves the public interests and protects innocent persons)
Martin Marietta Corp. v. Lorenz, 823 P.2d 100, 109 (Colo. 1992) (en banc)(refusing to violate federal statute by providing NASA with false information regarding product quality and pricing)
Bonidy v. Vail Valley Ctr. for Aesthetic Dentistry, P.E., 186 P.3d 80, 83 (Colo. Ct. App. 2008), cert. denied, 2008 WL 2486232 (Colo. 2008) (protecting an employee who “objects to performing a[] [wrongful] act” and “is immediately fired before having an opportunity to refuse to perform the directed act”)
Faulkner v. UnitedTechnologies Corp., 240 Conn. 576, 693 A.2d 293 (Conn. 1997) (refusing to defraud U.S. Army by using defective helicopter parts in violation of 18 U.S.C. § 1031)
Adams v. George W. Cochran & Co., Inc., 597 A.2d 28, 33 (D.C. 1991) (refusing to drive truck that lacked required inspection sticker)
Norris v. Hawaiian Airlines, Inc., 842 P.2d 634 (Haw. 1992) (refusing to falsify airline maintenance records in violation of FAA regulations), aff’d sub nom. Hawaiian Airlines, Inc. v. Norris, 512 U.S. 246 (1994)
McClanahan v. Remington Freight Lines, Inc., 517 N.E.2d 390 (Ind. 1988) (refusing to drive truck over legal weight limit)
Borschel v. City of Perry, 512 N.W.2d 565, 567 (Iowa 1994) (referring to refusal “to commit an unlawful act” as one basis for wrongful discharge claim)
Fitzgerald v. Salsbury Chem., Inc., 613 N.W.2d 275, 280 (Iowa 2000) (refusal to commit perjury protected)
Kessler v. Equity Management, Inc., 82 Md.App. 577, 572 A.2d 1144 (1990) (refusal to commit trespass and invasion of privacy)
DeRose v. Putnam Mgmt. Co., 496 N.E.2d 428 (Mass. 1986)(refusing to testify falsely at criminal trial)
Trombetta v. Detroit, T.&I.R.R., 265 N.W.2d 385 (Mich. Ct. App. 1978) (refusing to falsify pollution control records in violation of state law)
Drake v. Advance Construction Service, Inc., 117 F.3d 203 (5th Cir. 1997) (applying Mississippi law) (protecting a refusal to submit false quality-control reports to U.S. Army Corps of Engineers), following McArn v. Allied Bruce–Terminix Co., Inc., 626 So.2d 603, 607 (Miss. 1993)
Fleshner v. Pepose Vision Institute, 304 S.W.3d 81 (Mo. 2010) (employee may not be terminated for refusing to violate the law or any well-established and clear mandate of public policy, or for reporting wrongdoing or violations of law to superiors or public authorities)
Schriner v. Meginnis Ford Co., 421 N.W.2d 755 (Neb. 1988) (refusal to commit odometer fraud)
Tartaglia v. UBS PaineWebber, Inc., 197 N.J. 81, 961 A.2d 1167 (2008) (actual or threatened complaint to outside agency was not required to support common law cause of action for retaliatory discharge; attorney protected for refusing to engage in conflict of interest)
Coman v. Thomas Manufacturing Co., Inc., 381 S.E.2d 445 (N.C. 1989) (refusing to violate federal regulations by driving truck excessive hours and falsifying records)
Sabo v. Schott, 1994 Ohio 249, 70 Ohio St. 3d. 527, 639 N.E.2d 783 (refusal to commit perjury)
Todd v. Frank’s Tong Service, Inc., 1989 Ok. 121, ¶ 12, 784 P.2d 47 (refusing to drive truck with defective brakes, headlights, and turn signals, in violation of state law)
Delaney v. Taco Time Int’l, Inc., 297 Or. 10, 681 P.2d 114 (1984) (refusal to sign a false and defamatory statement)
Anderson v. Evergreen International Airlines, Inc., 131 Or. App. 726, 886 P.2d 1068 (1994), rev. denied, 320 Or. 749 (1995) (refusing to use defective parts in defendant’s aircraft, and refusing to cover up safety violations)
Woodson v. AMF Leisureland Centers, Inc., 842 F.2d 699 (3d Cir. 1988) (applying Pennsylvania law) (discharging bartender for refusing to serve visibly intoxicated patron, in violation of state liquor code)
Strange v. Nationwide Mutual Ins. Co., 867 F. Supp. 1209, 1218-19 (E.D. Pa. 1994) (applying Pennsylvania law; protecting a refusal to engage in illegal “redlining”)
Dugan v. Bell Telephone of Pennsylvania, 876 F. Supp. 713, 725-26 (W.D. Penn. 1994) (applying Pennsylvania law; protecting a refusal to participate in destruction of records subpoenaed by state legislature)
Reynolds v. Ozark Motor Lines, Inc., 887 S.W.2d 822 (Tenn. 1994) (refusing to violate laws requiring trucks be inspected for safety violations before driving)
Webb v. Nashville Area Habitat for Humanity, Inc., 346 S.W.3d 422, 437 (Tenn. 2011) (protecting a refusal to engage in age discrimination in housing)
Sabine Pilot Service, Inc. v. Hauck, 687 S.W.2d 733, 735 (Tex. 1985) (protecting a refusal to dump ship’s bilges into public waterway, an illegal act)
Nguyen v. Technical and Scientific Application, Inc., 981 S.W.2d 900 (Tex. Ct. App. 1998) (refusing to violate federal criminal copyright laws)
Peterson v. Browning, 832 P.2d 1280 (Utah 1992) (refusing to falsify tax and customs documents)
Hubbard v. Spokane County, 146 Wash.2d 699, 707, 50 P.3d 602, 611 (2002) (en banc) (director of planning department fired for seeking assistance of county prosecutor to prevent issuance of permit to build new hotel in violation of zoning code and airport master plan)
Collins v. Elkay Mining Co., 371 S.E.2d 46 (W. Va. 1988) (refusing to falsify mine safety reports and refusing to violate mine safety laws)
Kempfer v. Automated Finishing, Inc., 564 N.W.2d 692 (Wis. 1997) (refusing to drive delivery truck without proper licensing)
These cases were collected in a brief filed by NELA member Richard Renner in a brief he filed with the Nevada Supreme Court in his case, Reuber v. Reno Dodge, No. 61602
A claim of wrongful discharge under Kentucky law arises where an employee's discharge from employment in contrary to public policy. The two prime examples are (1) where the employee is fired for refusing to violate a law in the course of his or her employment; and, (2) where the reason for discharge was the employee's exercise of a statutory right. Grzyb v. Evans, 700 S.W.2d 399 (Ky. 1985). The Kentucky Supreme Court relied on a Michigan case, Suchodolski v. Michigan Consolidated Gas Company, 316 N.W.2d 710 (Mich. 1982), for these clarifications.
Does a wrongful discharge under Kentucky law require proof that the employer ordered the employee to violate the law? Kentucky courts are yet to squarely address this question in a published opinion. The Sixth Circuit's recent decision in Morrison v. B. Braun, No. 10-1548 (6th Cir., December 8, 2011), should provide some guidance since it relied upon Suchodolski. The Sixth Circuit, in an opinion authored by Judge Boyce Martin, rejected the employer's argument that the discharged employee must prove that she was ordered to violate the law by her employer:
Courts applying Michigan law have consistently defined the wrongful discharge tort at issue here as an employer's termination of an employee because of the employee's "failure or refusal to violate a law in the course of employment." No Michigan court has defined this cause of action to require a plaintiff to show that the employer directed him or her to violate the law.
Terminating an employee in retaliation for filing a Kentucky workers compensation claim was ruled to constitute the tort of wrongful discharge by the Kentucky Supreme Court in Firestone Textile v. Meadows, 666 S.W.2d 730 (Ky 1984). Subsequently, the General Assembly enacted KRS 342.197 and codified a cause of action for workers compensation retaliation.
Employers in defense to a workers compensation retaliation claim under KRS 342.197 often assert that punitive damages are not available as a remedy. That position was undermined by the recent Court of Appeals decision in Taylor v King, 2009-CA-1599 (Ky App, October 1, 2010).
The most pertinent issue in Taylor v King was whether the Kentucky Dram Shop Act, KRS 413.241, could constitutionally prohibit recovery of punitive damages against a seller or provider of alcohol. Because the Kentucky Dram Shop Act is similar to KRS 342.197, because it was enacted after significant common-law development of claims, defenses and remedies, the court's analysis is applicable to the similar issue presented with regard to claims for workers compensation retaliation under KRS 342.197.
Kentucky's jural rights doctrine "flows from a reading of sections 14, 54, and 241" of the Kentucky Constitution and "states that the General Assembly has no authority to abolish or restrict a common-law right of recovery for personal injury or wrongful death." The doctrine, the court added, applies not only to causes of action recognized at the time Kentucky's constitution was adopted in 1891 "but also to actions in remedies which have developed through the common-law since the adoption of the Constitution. Perkins v. Northeastern Log Homes, 808 S.W.2d 809, 815-18 (Ky 1991)." The court then concluded that the Kentucky Dram Shop Act had restricted the opportunity to recover punitive damages in violation of the jural rights doctrine.
A similar rationale applies to KRS 342.197. First, wrongful discharge is a tort and essentially a cause of action for personal injury. Second, the tort of wrongful discharge, like dram shop liability, is an action developed in the common-law since adoption of Kentucky's Constitution in 1891. Accordingly, a construction of KRS 342.197 that punitive damages are not a remedy would similarly violate the jural rights doctrine.
Wrongful discharge occurs under Kentucky law where (1) the discharge is contrary to a fundamental and well-defined public policy, and (2) the policy is evidenced by constitutional or statutory provision. Firestone Tire and Rubber Co. v. Meadows, 666 S.W.2d 730 (Ky. 1983). That has been wall in Kentucky for over 25 years; nonetheless, the Kentucky Court of Appeals was recently required to address what allegations were sufficient to properly plead (not prove but simply plead) a claim of wrongful discharge in Mitchell v. Coldstream Laboratories, No. 2009-CA-1885 (September 24, 2010).
Mitchell, a former Vice President for Quality and Regulatory Compliance for the defendant, Coldstream Laboratories, pleaded in his claim that "his discharge violated a well-defined public policy requiring 'honest and full compliance with the FDA investigators' and that his discharge came as a result of his refusal to violate law – albeit unspecified by name or number." This was sufficient the Kentucky Court of Appeals ruled in reversing a dismissal of the case ordered by Fayette Circuit Judge Pamela Goodwine.
The panel of judges for the Kentucky Court of Appeals was as follows: Hon. Sara Combs (who wrote the opinion), Hon. Michael Caperton and Hon. Joseph Lambert, former Chief Justice of the Kentucky Supreme Court and sitting as a Special Judge.
