Oral Argument Preview: Satisfying the Clarity Element of a Wrongful Termination Claim. McGowan v. Medpace.

Read the analysis of the oral argument here.

On February 8, 2017, the Supreme Court of Ohio will hear oral argument in the case of McGowan v. Medpace Inc., 2015-1756. At issue in the case is what is needed to satisfy the clarity element of a wrongful termination claim. Because Justices Fischer and DeWine sat on this case at the appeals court level, Judges Jennifer Brunner of the Tenth District Court of Appeals and Timothy Cannon of the Eleventh District Court of Appeals have been appointed to sit in their stead on this case.

Case Background

Medpace, Inc. (“Medpace”), a pharmaceutical research facility, hired Dr. Mary McGowan (“Dr. McGowan”) as an at-will employee in the spring of 2011. At the time, Medpace was seeking to consolidate two of its clinical director positions for Medpace’s Clinical Pharmacology Unit (“CPU”) and the Metabolic and Atherosclerosis Research Center (“MARC”) in anticipation of the retirement of Dr. Evan Stein (“Dr. Stein”), the current director of both clinics. As a result, when Dr. McGowan was hired by Medpace, she assumed the role of Executive Director of both clinics and became responsible for replacing Dr. Stein as principal investigator on the studies at MARC that he previously recruited and any new studies that she recruited.

Dr. Stein also had his own private practice, the Cholesterol Treatment Center (“CTC”). Dr. Stein wanted Dr. McGowan to take this over upon his retirement. CTC, while technically unaffiliated with Medpace, was located on the Medpace campus, shared employees with MARC, and was the basis for Dr. Stein’s recruitment in the MARC studies.

Upon her assumption of these roles, Dr. McGowan became troubled with several of the practices she observed at both MARC and CTC. In particular, Dr. McGowan disagreed with Dr. Stein’s practice of prescribing patients a larger dose of medication and then directing the patients to split pills so as to allow the patients to receive twice the  amount of medicine for a single copay. Dr. McGowan was asked by her CTC patients and staff to continue this practice, which she felt constituted insurance fraud in violation of R.C. 2913.47. Additionally, Dr. McGowan felt that the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) was being violated by the practices of leaving patient charts open on carts outside of treatment rooms at MARC, as well as combining into one chart the medical records of CTC patients who were also enrolled in a MARC study.

After consulting a health-care attorney who confirmed that her concerns about the pill-splitting were legitimate, Dr. McGowan called a MARC staff meeting on July 22, 2011. At the meeting, Dr. McGowan expressed her concerns about the pill-splitting and HIPAA violations, stating that Dr. Stein’s previous practices were fraudulent and would no longer be tolerated. Shortly thereafter, Dr. Stein learned of the allegations made at the meeting, and decided to remove Dr. McGowan from her role as principal investigator on the studies he had previously recruited at MARC, and as the head of CTC.

By this time, Medpace management had also been informed about the allegations, and set up a meeting with Dr. McGowan on July 27, 2011. At the meeting, Dr. McGowan informed Medpace’s CEO, Dr. August Troendle (“Dr. Troendle”), along with Medpace’s in-house counsel and human resources director, about her concerns. Dr. Troendle told Dr. McGowan that her concerns would be investigated, but also told her that it was inappropriate to have accused Dr. Stein of fraud at the MARC staff meeting. Further, Dr. Troendle assured Dr. McGowan that she would retain her position as executive director of both MARC and CPU, but that Medpace had no control over CTC or Dr. Stein’s previously recruited studies at MARC, so there was nothing they could do to return those responsibilities to her.

Dr. McGowan and Medpace management continued along their rocky course. Through several exchanges, it became apparent that Dr. McGowan felt that she was being intimidated and retaliated against for expressing her concerns, while Medpace management felt that Dr. McGowan had acted inappropriately by accusing Dr. Stein of fraud in front of Medpace staff, and was being insubordinate by expressing her concerns in this way, and also by accusing Dr. Troendle himself of being a liar. On August 18, 2011, Medpace informed Dr. McGowan that she had been fired.

As a result, Dr. McGowan sued Medpace for wrongful discharge in violation of public policy, sex discrimination, intentional infliction of emotional distress, and promissory estoppel. A jury trial ensued, and at the close of the case, Medpace moved for a directed verdict. The trial court denied Medpace’s motion and the jury subsequently found in favor of Dr. McGowan, but only on the claim for wrongful discharge in violation of public policy.  Dr. McGowan was awarded $300,000 in compensatory damages, $500,000 in punitive damages, and attorney fees. Medpace’s posttrial motions were denied by the trial court.

On appeal, in a split decision, the 1st District reversed, finding that the trial court erred in failing to dismiss Dr. McGowan’s wrongful discharge claim as a matter of law for failure to establish the clarity element. For the majority, then-Judge Fischer, joined by then-Judge DeWine, held that settled law required an employee, as part of the clarity element of a wrongful discharge claim, to establish that a clear public policy existed, and 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. Neither Dr. McGowan’s claims regarding the pill-splitting insurance fraud nor the potential HIPAA violations met this standard, and therefore, she had failed as a matter of law on her claim for wrongful discharge.

Dissenting, Judge Hendon agreed that the standard outlined by the majority was required to satisfy the clarity element, but would find that Dr. McGowan met this standard through her HIPAA violation claims.

 Votes to Accept the Case

Yes: Chief Justice O’Connor, and Justices Pfeifer, Lanzinger, Kennedy, and O’Neill.

No:  Justices O’Donnell and French.

Key Statutes and Precedent

45 C.F.R. 160.316 (HIPAA’s Privacy Rule)

(A covered entity may not threaten, intimidate, coerce, harass, discriminate against, or take any other retaliatory action against any individual or other person for— (a) Filing of a complaint under §160.306; (b) Testifying, assisting, or participating in an investigation, compliance review, proceeding, or hearing under this part; or (c) Opposing any act or practice made unlawful by this subchapter, provided the individual or person has a good faith belief that the practice opposed is unlawful, and the manner of opposition is reasonable and does not involve a disclosure of protected health information in violation of subpart E of part 164 of this subchapter.)

R.C. 2913.47 (Ohio’s Insurance Fraud Statute)

(B) No person, with purpose to defraud or knowing that the person is facilitating a fraud, shall do either of the following:

(1) Present to, or cause to be presented to, an insurer any written or oral statement that is part of, or in support of, an application for insurance, a claim for payment pursuant to a policy, or a claim for any other benefit pursuant to a policy, knowing that the statement, or any part of the statement, is false or deceptive;

(2) Assist, aid, abet, solicit, procure, or conspire with another to prepare or make any written or oral statement that is intended to be presented to an insurer as part of, or in support of, an application for insurance, a claim for payment pursuant to a policy, or a claim for any other benefit pursuant to a policy, knowing that the statement, or any part of the statement, is false or deceptive.)

Anders v. Specialty Chem. Resources, Inc., 121 Ohio App.3d 348, 700 N.E.2d 39 (8th Dist. 1997) (clear public policy against insurance fraud manifest in R.C. 2913.47 was sufficient to satisfy the clarity element.)

Collins v. Rizkana, 73 Ohio St.3d 65, 652 N.E.2d 308 (1995) (In order to establish a claim for wrongful termination in violation of Ohio public policy, the employee must prove (1) a clear public policy exists and is manifested in a state or federal constitution, statute, or administrative regulation, or in the common law (the clarity element); (2) the employee’s dismissal would jeopardize that public policy (the jeopardy element); (3) the employee’s dismissal was motivated by conduct related to the public policy (the causation element); and (4) the employer lacked an overriding legitimate business justification for the dismissal (the overriding justification element).)

Dean v. Consol. Equities Realty #3, L.L.C., 2009-Ohio-2480 (1st Dist.)  (former employee failed to establish that he had been wrongfully terminated in violation of public policy for reporting his concerns that the employer’s business practices constituted fraud because the statute he relied upon failed to impose an affirmative duty on the employee to report a violation, failed to prohibit an employer from retaliating against an employee who had filed complaints, and did not protect the public’s health or safety.)

Dohme v. Eurand Am., Inc, 2011Ohio4609 (“To satisfy the clarity element of a claim of wrongful discharge in violation of public policy, a terminated employee must articulate a clear public policy by citation of specific provisions in the federal or state constitution, federal or state statutes, administrative rules and regulations, or common law.”(syllabus.))

Greeley v Miami Valley Maintenance Contrs., Inc., 49 Ohio St.3d 228, 551 N.E.2d 981 (1990) (recognizing an exception to the employment-at-will doctrine by holding that at-will employee may maintain a cause of action in tort for wrongful discharge when the employee is terminated in violation of a clearly expressed public policy.)

Hale v. Volunteers of America, 2004-Ohio-4508 (1st Dist.) (former at-will employees of a residential treatment center could not maintain an action against their former employer for wrongful discharge in violation of public policy because the administrative code provisions relied upon did not affirmatively require the employees to report their concerns, did not prohibit the rehabilitation center from terminating employees for reporting their concerns, and because the employees had not alleged that they were terminated for reporting workplace-safety violations.)

Kulch v. Structural Fibers, Inc., 1997-Ohio-219 (The jeopardy and clarity elements in a claim for wrongful termination in violation of Ohio public policy are questions of law and policy to be decided by the court.)

Sabo v. Schott, 70 Ohio St.3d 527, 639 N.E.2d 783 (1994) (Ohio’s perjury law manifests a sufficiently clear public policy against giving false testimony to satisfy the clarity element.)

Wallace v. Mantych Metalworking, 2010-Ohio 3765 (2d Dist.) (HIPAA’s clear public policy favoring patient privacy and confidentiality of medical records was sufficient to satisfy clarity element.)

Hageman v. Southwest Gen. Health Ctr., 2008-Ohio-3343 (In general, a person’s medical records are confidential. Numerous state and federal laws recognize and protect an individual’s interest in ensuring that his or her medical information remains so.)

Dr. McGowan’s Argument

The public policy exception to the employment-at-will doctrine, also known as a Greeley claim, has been recognized in Ohio for over 25 years. Under the four-part test set forth by this Court, Dr. McGowan has established a claim of wrongful discharge in violation of public policy by virtue of her claims that Dr. Stein committed insurance fraud and HIPAA violations.

In order to establish the clarity element, a former employee need only articulate a clear public policy based on specific provisions in federal or state constitutions, federal or state statutes, administrative rules and regulations, or common law. It is not necessary that the source of the public policy be employment-related or regulate health and safety. Both Ohio’s insurance fraud statute and HIPAA set forth sufficiently clear public policies to satisfy the clarity element of a Greeley claim. Ohio’s insurance fraud statute sets forth a clear public policy designed to prevent, deter, and punish perpetrators of insurance fraud. Such a policy was directly implicated by Dr. McGowan’s concerns about Dr. Stein’s improper prescription writing practices. Similarly, HIPAA manifests a clear public policy against the unauthorized and unprivileged disclosure of a patient’s health information. This policy too, was directly implicated by Dr. McGowan’s concerns that patient charts were being left in the open and improperly combined at MARC and CTC. Therefore, Dr. McGowan’s complaints about the violations of either Ohio’s insurance fraud statute or HIPAA are sufficient to satisfy the clarity element of her Greeley claim.

Contrary to Medpace’s assertions, there is no additional need to establish that the source of the public policy places an affirmative duty on the employee to report a violation, prohibits an employer from retaliating against an employee who had reported a violation, or protects the public’s health and safety. In other words, the source of public policy need not parallel the reporting and retaliation provisions of the Ohio whistleblower statute. Therefore, in determining whether the clarity element was met, the First District erred in relying on two of its previous rulings that imposed these additional criteria. The First District’s prior precedent effectively precludes an at-will-employee who was subsequently fired after a good-faith report of HIPAA and insurance fraud violations from bringing a Greeley claim. Such a result is contrary to the law in other Ohio districts which have applied the clarity test as articulated by this Court.

Furthermore, even if the additional criteria set forth by the First District’s precedent were applicable, Dr. McGowan’s claims based on the HIPAA violations satisfy the clarity element because of the anti-retaliation provisions contained in the Privacy Rule, a regulation enacted pursuant to HIPAA.

Medpace’s Argument

Dr. McGowan urges the Court to accept a position that would cause the exception to swallow the rule. A Greeley claim is a very limited exception to Ohio’s longstanding employment-at-will doctrine. A discharged employee cannot simply identify any public policy on which to base a Greeley claim. The First District’s precedent clearly establishes that in order to meet the clarity element of a Greeley claim when it is not based on the Ohio whistleblower statute, the employee must identify a specific public policy that (1) places an affirmative duty on the employee to report the violation; (2) specifically prohibits the employer from retaliation; or (3) protects the public’s health and safety. The First District precedent does not create new criteria for the clarity element; it simply applies Greeley criteria in a manner consistent with the Court’s guidance and public policy. Neither Ohio’s insurance fraud statute nor HIPAA can satisfy these criteria.

First, Dr. McGowan has failed to point to specific language in Ohio’s insurance fraud statute that establishes a clear public policy beyond a general prohibition against fraudulent behavior. A prohibition on insurance fraud has no relation to the protection of public health and safety. Additionally, pill-splitting is a legitimate way to lower patient health care costs and not conduct by which a person can assert a good faith claim of insurance fraud. Also, Dr. McGowan cannot make any connection between pill-splitting and any violation of the Ohio Revised Code.  Moreover, even if the Court accepts Ohio’s insurance fraud statute as an acceptable basis for Dr. McGowan’s Greeley claim, Dr. McGowan fails to show how the prescription practices that occurred in Dr. Stein’s private practice applies to Medpace. Essentially, Dr. McGowan is asking the Court to subject an employer to a Greeley claim when one of its employees has complained to the employer about the alleged misconduct of an unrelated third party.

Second, contrary to Dr. McGowan’s allegations, HIPAA does not contain anti-retaliation provisions. The Privacy Rule to which Dr. McGowan cites for this contention is not even part of HIPAA itself, but rather, a subsequently enacted regulation. Dr. McGowan cannot now raise this argument for the first time and claim that her general references to HIPAA throughout the case somehow excuse the omission. Additionally, HIPAA doesn’t embody the type of public policy contemplated by a typical Greeley claim. HIPAA regulates patient privacy and confidentiality. It is not intended to protect the public’s health and safety. Further, at no point did Dr. McGowan have a good faith belief that HIPAA was being violated when she raised her concerns. At most, Dr. McGowan alleged evidence of incidental uses and disclosures of patient information, but never of disclosure to an unauthorized individual. As a result, Dr. McGowan not only fails to satisfy the clarity element under the foregoing rule, but also fails to establish the jeopardy element.

Medpace terminated Dr. McGowan because of her gross and repeated insubordination. While Medpace gave her numerous opportunities to correct her behavior, Dr. McGowan deliberately continued on a self-destructive path that led to her termination. Attempting to persuade the Court to vastly expand the exceptions to Ohio’s long-standing employment-at-will doctrine based on her improper and mistaken allegations against Dr. Stein is yet another display of Dr. McGowan’s continued attempts to avoid personal responsibility.

Dr. McGowan’s Proposed Proposition of Law 1

Under this court’s jurisprudence, a Greely claim does not derive solely from statutes or other sources that impose an affirmative duty on an employee to report a violation, prohibit an employer from retaliating against an employee who reports a violation, or protect public health and safety.

Dr. McGowan’s Proposed Proposition of Law 2

The public policies manifested by R.C. 2913.47 and HIPAA are sufficiently clear to satisfy the clarity element of a Greely claim under the facts of this case.

 Amicus in Support of Dr. McGowan

Amicus, Ohio Employment Lawyers Association (OELA), is an organization of lawyers specializing in labor, employment, and civil rights disputes. As devoted advocates of employee interests, OELA asserts that the additional criteria required by the First District’s precedent to satisfy the clarity element of a Greeley claim defy every precedent of the Supreme Court of Ohio on wrongful discharge. Dr. McGowan has established two clear public policies as the basis of her claims, and therefore, has satisfied the clarity element.

Student Contributor: Danielle List

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