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Healthcare Whistleblower Litigation

An Overview

Whistleblower lawsuits generally follow a very familiar pattern, and healthcare whistleblower lawsuits are no exception. Healthcare whistleblower lawsuits frequently start when a healthcare provider terminates one of its employees or takes some other adverse employment action against an employee (e.g., demotion, decrease in wages, diminished job responsibilities, loss of seniority). Because most employees are at-will employees who do not have employment contracts guaranteeing the terms of employment, a healthcare provider generally does not need a reason to terminate or take adverse action against an employee. However, frequently healthcare providers do have legitimate reasons in the form of the employee’s deficient job performance, excessive tardiness or absences, or other improper conduct. No matter the provider’s reason for terminating or taking adverse action against an employee, healthcare whistleblower lawsuits typically arise whenever an employee believes that the employer’s true motivation behind the termination or adverse employment action was actually to retaliate against the employee for reporting some statutory or regulatory violation committed by the provider that the employee witnessed. Notably, healthcare whistleblower statutes typically do not require the employee to report the violation beyond the internal structure of the healthcare provider (though the employee certainly can), nor do they set any materiality or severity thresholds regarding the reported violation. This means that employees who report even minor regulatory violations to their superiors can qualify as healthcare whistleblowers.

Representative Matter: DBS attorneys defended a community hospital against claims that it illegally retaliated against a former nurse in violation of the Massachusetts Healthcare Whistleblower Statute, and the anti-retaliation provision of the Emergency Medical Treatment and Active Labor Act (EMTALA).

A healthcare provider that is accused of terminating or taking adverse employment action against an employee in retaliation for protected whistleblowing will usually learn of the allegations through a demand letter or draft complaint sent by the employee’s attorney, the receipt of which will trigger a host of evidentiary preservation obligations. Should the provider not take immediate and thorough steps to preserve all relevant evidence once it is on notice of a healthcare whistleblower claim—including suspending automatic archiving and automatic deletion processes on its email system—it can be found to have spoliated evidence and may be subject to significant sanctions. For this reason alone, healthcare providers should share any demand letter or draft complaint with internal or external counsel immediately upon receiving it. The receipt of a demand letter or draft complaint may also trigger certain insurance obligations to the extent the provider has insurance coverage for defending the whistleblower lawsuit.

Employers in every industry have to worry about whistleblower lawsuits, but healthcare providers are particularly susceptible to whistleblower claims for two main reasons. First, given the high-degree of regulation in the healthcare industry there are simply more federal and state statutes that include provisions protecting healthcare whistleblowers than there are in most other industries. Second, the sheer volume of rules and regulations that are applicable to healthcare providers make it far easier for employees to point to some violation—even one that is highly technical—about which they complained shortly before being terminated or subjected to some other adverse employment action. Case law in many jurisdictions is clear that if an employee’s complaint about a regulatory violation is followed closely in time by a termination or adverse action, a rebuttable presumption of retaliatory motive will arise, thereby shifting the burden onto the employer to establish that it had good cause for the termination. Given this legal framework, it is not uncommon for whistleblower cases to persist for months, if not years, based on employees identifying technical violations they complained about shortly before being terminated or subjected to adverse employment action.

Healthcare whistleblower cases certainly share many characteristics with more traditional employment retaliation lawsuits in the non-healthcare setting. For example, many of the traditional defenses to wrongful termination lawsuits—most notably documented poor performance that predated the alleged whistleblowing—are useful and applicable in the healthcare whistleblower context as well. But healthcare whistleblower litigation often has an added layer of complexity that requires counsel who has experience with the regulatory environment governing the healthcare industry. Indeed, healthcare whistleblower cases can be won or lost depending on defense counsel’s ability to disprove or minimize the validity of the violation(s) the alleged whistleblower reported.

Kelly McGee and Callan Stein prepared this overview.

Health Law

Health Law




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