State laws can affect your whistleblower response
Some states limit how aggressive you can be
Executive Summary
State laws can vary significantly regarding a provider’s options when responding to a whistleblower. Risk managers should study their own state laws to know the limits and opportunities.
California recently passed laws giving providers more freedom to respond to whistleblowers, but New Jersey passed more restrictive legislation.
The differences can affect what constitutes prohibited retaliation.
Some laws are written to encourage more internal reporting rather than whistleblowing.
Healthcare providers are facing more whistleblowers than ever before, as employees and others realize they can reap big rewards from exposing fraud. A strong and coordinated response is necessary, but exactly what you can and can’t do is dictated by state laws that can vary substantially.
Providers must tread carefully when faced with potential whistleblower claims, says Alex J. Brackett, JD, partner with the law firm of McGuireWoods in Richmond, VA. State legislatures have taken different approaches to protecting whistleblowers and the organizations accused, so you must know your own state law, he says. Those laws also are changing.
For instance, whistleblowers in California benefited from new laws that took effect Jan. 1, 2014. The laws expanded whistleblower protections in the state. The new statutes modified existing whistleblower protections in California, which already were considered among the most protective. Under the new statutes, employees are encouraged to identify potentially illegal activity without fear of retaliation.
Whistleblowers in California are now protected from retaliation for reporting suspected activity internally, as well as externally. The law includes internal auditors. Definitions of prohibited retaliation were expanded to include anticipatory retaliation against a potential or suspected whistleblower.
New Jersey took a different tack, with an appeals court ruling in December 2013 that states whistleblower protections did not apply to an employee charged criminally for taking confidential documents related to the alleged wrongdoing. In State v. Saavedra, a Board of Education clerk had filed a complaint against her employer alleging retaliation for her reporting pay irregularities. To support her case, she provided her attorney with confidential documents. The county prosecutor obtained an indictment for theft.
The defendant sought to dismiss the indictment and cited an earlier ruling that an employer could not terminate an employee for the unauthorized taking of documents to support an employment discrimination case. The appeals court agreed with the trial court that this ruling did not extend to criminal cases, and the court said it had serious concerns about supplanting the judicially supervised discovery process in discrimination claims.
"Every state is going to have its own whistleblower protections, and the variance could involve any number of things," Brackett says. "In many cases they define specific types of people or specific topics that can qualify for protection under the whistleblower laws. A state might have very narrowly defined categories and in others it can be very broad."
Default to most restrictive laws
The issue is complicated when a healthcare organization has facilities in several states. Researching each state law and formulating appropriate policies can be time-consuming, so Brackett says some providers determine which of their locales has the broadest definitions and the most protection for whistleblowers, and then they build their systemwide whistleblower policy on those.
"If you are acting as if that restrictive set of parameters applies, then you’re covering your bases everywhere," Brackett says. "You will be handling yourself in a way that satisfies everyone. If a state has some sort of outlier definition or requirement that is really odd, you can have just a minimum of rules that cover that in addition to your blanket policy."
However, once you have a whistleblower incident, it can be wise to dig deeper into that state’s applicable laws, he says. In this way you avoid spending time and money on researching each state’s laws and writing separate policies, but once a claim is made you can take advantage of what the state allows and double-check that you are not violating any state-specific limitations.
"That’s where the problems usually occur, not in the day-to-day operations, but in the response to a whistleblower," Brackett says. "That’s when you can get allegations of retaliation or changing someone’s work assignment as a way that can be construed as retaliatory. As long as your managers have been trained well in a whistleblower situation, then you typically will be in a good position to investigate the claims and come to a resolution."
Brackett notes, however, that there is some risk in creating an organization-wide policy that is the most conservative so that it complies with the law in all your applicable states, and then upon further research taking more aggressive action that is allowed under the one state’s laws in a particular incident. The other party could question why you took action that is not consistent with your own policy.
"That is always a potential trap if the other side can show your policy and ask why you didn’t follow it," he notes. "In this case, you can explain that you were acting in the most conservative manner across the board, but then followed the specific state laws that apply to an actual situation. There is some risk/reward balance in taking this approach."
- Alex J. Brackett, JD, Partner, McGuireWoods, Richmond, VA. Telephone: (804) 775-4749. Email: [email protected].
