What’s On Their Minds: Satisfying the Clarity Element of a Wrongful Termination Claim. McGowan v. Medpace.

Update: on April 12, 2017, the Court dismissed this case as improvidently accepted.

“I don’t understand how this is anything other than a termination for supporting public policy in Ohio.”

Justice O’Neill, to counsel for Medpace

On February 8, 2017, the Supreme Court of Ohio heard 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 when it was decided by the First District, Judges Timothy Cannon of the Eleventh District Court of Appeals and Jennifer Brunner of the Tenth District Court of Appeals sat for them in this appeal.

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 First 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 to satisfy the clarity element of a wrongful discharge claim, the law had to impose a duty on an employee to report a violation, expressly prohibit retaliation for reporting a violation, or protect public health and safety. Neither Dr. McGowan’s insurance fraud claim 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.

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, 2011–Ohio–4609 (“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.)

Perritt, The Future of Wrongful Dismissal Claims: Where Does Employer Self Interest Lie? 58 U.Cin.L.Rev. 397 (1989) (Law review article written by Villanova Law Professor, and cited in Collins v. Rizkana as a useful description of the elements of the tort of wrongful discharge. Clarity element defined as “[a] clear public policy existed and was manifested in a state or federal constitution, statute or administrative regulation, or in the common law.”)

At Oral Argument

Arguing Counsel

Frederick M. Gittes, The Gittes Law Group, Columbus, for Appellant Dr. Mary McGowan

Deborah S. Brenneman, Thompson Hine LLP, Cincinnati, for Appellee Medpace, Inc.

Dr. McGowan’s Argument

There is no factual appeal here challenging the jury verdict. This is an appeal based purely on two legal issues, clarity and jeopardy.  The appeals court addressed only the clarity element, which Medpace raised as an afterthought, after the plaintiff had presented her case.  Everybody knew that the insurance fraud statute and HIPPA were the policy issues in question here. The jury found with a general verdict that Dr. McGowan was fired for raising these issues. That is not on appeal here.

Of the public policy cases the court has addressed since Greeley was decided 27 years ago, the court has never suggested, let alone held, that in order to determine whether the clarity element has been met, the statute or other provision must contain an anti-retaliation provision, a mandatory reporting requirement, or address health and safety.  Nor does the oft-cited Perrit article and standards require that. The First District has engrafted these requirements onto the court’s jurisprudence. That was wrong. The court should reject this holding. If accepted, there would no longer be protection for employees reporting various wrongdoings.

Medpace’s Argument

While employers certainly should treat their employees in a nondiscriminatory manner, not retaliate against them, and comply with the law, it is also important that employers be allowed to keep control over their own work force and be able to end employment relationships that are not working out without fear of being sued. The employment at will doctrine is the cornerstone on which Ohio’s businesses stand.

Greeley claims are not a matter of course—they are an exception to the general rule of employment at will. There are volumes of statutes and regulations and codes. To suggest that every single one of them would support an exception to the employment at will doctrine would abrogate the employment at will doctrine altogether. Employment lawyers now see public policy claims in almost every employment lawsuit.

In this case the clarity element, which is a matter of law, should never have gone to the jury. Dr. McGowan never established the necessary specificity to meet the clarity element, as required by Dohme. Dohme also holds that it is up to the plaintiff to point to a specific provision in a specific statute in order to prevail. That did not happen here. Dr. McGowan is asking this court to let her base a public policy claim on statutes that do not in any way address the conduct at issue in this case. The Ohio insurance fraud statute does not speak to patient safety, either generally or specifically. The HIPPA statute also cannot supply the specificity needed –it is vague on this issue. What the HIPPA statutes do allow is for information in patient charts to be combined so long as the patients consent, which every affected patient did in this case.

Nor did Dr. McGowan meet the First District requirements of Hale and Dean. Those cases did not establish a new set of mandatory requirements or replace this court’s requirements for a prima facie case. Those cases set forth three different components, approved and applied by the First District in this appeal, to help ascertain whether the clarity element has been met. The reporting obligation is one, an anti-retaliation provision is another, and the last is whether it affects public health or safety. These requirements are an acceptable means of evaluating whether there was a public policy violation sufficient to justify an exception to the employment at will doctrine. Dr. McGowan did not establish clarity or jeopardy in this case. Medpace should have been granted a directed verdict.

What Was On Their Minds

Dr. McGowan’s Actual Responsibilities

Did Dr. McGowan’s duties and responsibilities include, for example, setting a policy on how to write prescriptions, asked Justice French? As an employee, would she have the kind of authority to really do things the way that she wanted them to be done? If, as part of her duties, she had the ability to change the way things were done, isn’t that contrary to what we normally think of as a whistleblower? Doesn’t that suggest that if she had a problem with the way prescriptions were being written, she could have changed that?

Chief Justice O’Connor commented that her reading of the filings in the case suggested that much of Dr. McGowan’s problem stemmed from the way she went about things, and that her conducts with peers and supervisors was the basis for her termination. Mr. Gittes pushed back, saying the jury had found that she was fired because of the issues she raised.  Was she under an obligation to report, asked the Chief? To whom did she report her findings? Anyone outside the company, like the Pharmacy Board, or a government oversight agency? Is there a requirement that the employee report concerns to a governmental or oversight or regulatory entity?
Wasn’t Dr. McGowan under a duty to report under the Medco employee policy, asked Judge Brunner?

The Role of Medpace

Was Dr. McGowan actually employed by Medpace, asked Justice French? Does anyone there write or submit prescriptions? Isn’t Medpace a distinct entity from Dr. Stein’s practice?

Ohio Public Policy

Isn’t there a public policy in Ohio against insurance fraud, asked Justice O’Neill? And in support of HIPPA?

HIPPA

Did the jury make a finding that combining patient files violated HIPPA regulations on patient privacy, asked Justice O’Donnell?

Why isn’t the HIPPA violation squarely within exactly what the First District said was required, asked Judge Cannon? He noted, though, that no one had brought that regulation up to the appeals court.

Insurance Fraud

Does the insurance fraud statute even apply to Medpace, asked Justice French?

Isn’t insurance fraud by her employer what Dr. McGowan reported, asked Justice O’Neill?

The Jury Verdict

Which public policy was the basis of the jury’s finding the wrongful termination, asked Justice O’Neill? What was the specific finding as to the HIPPA violation? What exactly did the jury find as to why Dr. McGowan was fired? Later, he commented that the jury found that Dr. McGowan reported a HIPPA violation and she was fired, adding that he didn’t understand how that was anything other than a firing for supporting Ohio public policy. (Counsel for Medpace replied that it was a matter of law and never should have gone to the jury.)

What did the jury actually find, asked Judge Brunner?

So it’s not contested that the prescriptions were written for twice the dosage, and patients were told just to split the tablet and take half, commented Justice O’Donnell. Was it conceded that the practice of double prescribing medication violates the insurance fraud statute? (it was not conceded, replied Medpace’s counsel). Wasn’t that a finding by the jury? Were there interrogatories submitted to the jury?

If the court found it was incorrect to instruct the jury on fraud, but correct as to HIPPA, would that require the whole jury award to be vacated, asked Judge Cannon? Without a special interrogatory, how would the court know the jury didn’t find that it was the fraud that was the determining factor?

Requirements to Meet the Clarity Element

Must there be a requirement for disclosure or whistleblowing placed on the employee, asked Chief Justice O’Connor? Did the First District introduce that requirement? How does that add clarity to the clarity element? She went on to comment that insurance fraud was insurance fraud whether an employee has the responsibility to report it or it is discovered through an audit or a patient complaint.

Is there really a need to put more restrictions on what was set forth in Greely, asked Judge Brunner, commenting that the proverbial floodgates had not opened after that decision came out.

So, absent a duty to report insurance fraud, if someone uncovers it, it’s ok to fire that person, asked Justice O’Neill? (sarcastically)

Is the test for the clarity element one of law or fact, asked Justice O’Donnell, commenting that he thought the law was settled on this point.

How it Looks from the Bleachers

To Professor Emerita Bettman

My student contributor Danielle List and I disagree on this. I’m calling this for Dr. McGowan, although the court is far from united here. There is no question that when the court held in Painter v Graley that sources of public policy can include not only Ohio statutes (later extended to include federal laws), but also the Ohio and U.S. Constitutions, administrative rules and regulations, and the common law, that’s awfully broad.  As Ms. Brenneman tried to suggest, all those volumes of codes and regulations can’t all support public policy wrongful termination claims.  So the First District’s test is an attempt to narrow the public policy exception by adding some limiting requirements to the clarity element, which is indeed a question of law.  I don’t think there are four votes to buy that test.

Justice O’Neill and Judge Brunner are clearly on Dr. McGowan’s side, period. They aren’t buying the First District’s test. They see both HIPPA and the insurance fraud statute as providing the requisite public policy to support the wrongful termination claim. I think Justice O’Donnell will join them because despite Ms. Brenneman’s efforts to define the clarity element as a matter of law, he seemed to believe the jury had determined this matter, period.

But I think that even if some of the justices or judges buy the First District’s requirements—that the statute or other provision must contain an anti-retaliation provision, a mandatory reporting requirement, or address health and safety—a coalition may coalesce around Judge Hendon’s dissenting viewpoint in the appellate decision that HIPPA does address health and safety, and thus the clarity element was met here. Judge Cannon would seem to go farther. He seems to believe that one of the HIPPA regulations specifically includes anti-retaliation provisions, and thus falls squarely within the First District’s test. But since that particular regulation was apparently not cited below, he might default to Judge Hendon’s more general position that the HIPPA statute does affect public health and safety. So that’s four votes for the plaintiff, although not necessarily for the same reasons.

Justice French may not feel a need to address the test at all. She is clearly with Medpace, finding most, if not all, of what Dr. McGowan was arguing inapplicable to Medpace—McGowan’s quarrel was with Dr. Stein’s practices.

As for the Chief—she seemed out of sorts at times with both counsel. She seemed to feel that Dr. McGowan brought most of her misfortunes upon herself by the way she went about things. But she also seemed not to be buying Medpace’s argument about the clarity element—I thought her comment was very telling when she said that insurance fraud is insurance fraud and it was irrelevant whether an employee has the responsibility to report it, or whether state investigatory agencies discover it through audits, or a patient complaint.  If that is her view, she will probably side with Dr. McGowan, but not necessarily with the First District’s test. And Justice Kennedy, of course, said nothing.

The wrinkle here is that the two appellate judges are subbing for the two justices who just reinforced and approved the First District test. So, depending on the way the vote comes out, this decision might always have an asterisk next to it.

To Student Contributor Danielle List

To say the facts drove this argument would be an understatement. From beginning to end, counsel for Dr. McGowan was peppered with questions relating to the jury findings, the actions supporting the insurance fraud and HIPAA violations, and Dr. McGowan’s reporting methods. Medpace’s connection with Dr. Stearns’ private clinic was also an added complication, leading Justice French to ask whether the insurance fraud statute even applied to Medpace. Chief Justice O’Connor seemed to express some doubt as to whether Dr. McGowan really was fired for the reporting or insubordinate conduct. However, as a factual issue that wasn’t appealed, it seems unlikely that this view will gain any traction.

Justice O’Neill, however, was clearly not of the same view, perceiving Dr. McGowan to do just as she should have: report the misconduct. To him, it was apparent that as legislative enactments, both the insurance fraud statute and HIPAA were public policy decisions and would thus satisfy the clarity element. Judge Brunner seemed to agree with this view and appeared hesitant to require any additional restrictions on the clarity element. Along the same line, Chief Justice O’Connor observed that it was hard to see how the First District’s elements “added clarity to the clarity element.” Both she and Justice O’Neill seemed particularly concerned about requiring the source of the public policy to place an affirmative reporting duty on the employee.  Counsel for Medpace tried to alleviate this concern by asserting that the First District’s test was merely a more formalized way of evaluating what is already required by the Court’s jurisprudence, but she probably would have been better off emphasizing the disjunctive nature of the elements.

Nonetheless, Medpace probably pulled out a win on this one. Though I wouldn’t be surprised if the court tried to walk back the significance of the First District’s test. While the First District elements are relevant considerations, I think there is sufficient concern on the bench as to whether these elements should become the exclusive and determinative factors for the clarity element.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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