Citing Chapter and Verse in NJ Whistleblowing Claims

sullivan_charlesNew Jersey has perhaps the most employee-friendly whistleblower law in the nation, and the NJ Supreme Court is one of the most employee-friendly courts.  It was, therefore, more than a little surprising to read the court’s most recent Conscientious Employee Protection Act decision, Hitesman v. Bridgeway, Inc.

A quick summary of the law and the facts make it even more surprising.

Law-wise, CEPA protects employees from retaliation for opposing any activity “the employee reasonably believes . . . is incompatible with a clear mandate of public policy concerning the public health.”  Further, and seemingly tailor-made for Mr. Hitesman, CEPA also bars retaliation “in the case of an employee who is a licensed or certified health care professional, [for opposing conduct he] reasonably believes constitutes improper quality of patient care.”

As for the facts, plaintiff, a registered nurse who was shift supervisor for the defendant, believed that there was an upswing in respiratory and gastrointestinal infections at the nursing home. He reported his concerns first to management, then to local and state health agencies, and, not getting much of a reaction, went to a local television station. Perhaps needless to say he was fired.

In this kind of scenario, if the whistleblower loses, it’s usually because (1) he can’t prove that he was reasonable in his belief as to a violation of public policy or (2) he can’t prove that the adverse employment action he suffered was causally linked to his protected conduct. But neither was the problem for plaintiff since a jury had found both that Hitesman’s beliefs about improper patient care were “objectively reasonable” and that Hitesman’s reporting his concerns to the government was a “determinative motivating factor” in his discharge.

So why did he lose before the Supreme Court? Apparently, because his attorney never put in evidence that inadequate infection control was a threat to patient health.  Really. And in a nursing home at that, which necessarily serves a more vulnerable population. Although it would seemingly have been easy to prove medical standards of care in dealing with potential infection, for example, citing to Center for Disease Control publications, the only evidence put in of the relevant policies was an American Nursing Association Code of Ethics and two internal policies of the nursing home, none of which focused directly on infections.

The court wrote:

[A] pivotal component of a CEPA claim is the plaintiff’s identification of authority in one or more of the categories enumerated in the statute that bears a substantial nexus to his or her claim.  . . . [T]he plaintiff must identify the authority that provides a standard against which the conduct of the defendant may be measured.

While CEPA recognizes “a range of standards that may support a claim,” including professional codes, a claim “cannot proceed unless the plaintiff demonstrates a reasonable belief that the defendant’s patient care is ‘improper,’ measured against an authority recognized by CEPA,” which requires plaintiff to “identify a law, rule, regulation, declaratory ruling adopted pursuant to law or professional code of ethics that applies to and governs the employer in its delivery of patient care.”

That plaintiff hadn’t done, or at least so said the majority. The dissent of Justice Albin disagreed on several counts, but one of which was that the plaintiff had testified about the CDC Guidelines on infection control.  The majority dismissed this on the ground that “Neither the trial court’s prior references to CDC standards in its summary judgment decision, nor plaintiff’s vague references to CDC-recommended precautions in his testimony” provide the detail of what CEPA requires.

Especially given the court that handed it down, Hitesman is a head-scratcher.  Arguably, it’s a sport opinion, whose major impact will be a cautionary tale to attorneys to introduce exhibits citing chapter and verse rather than relying on plaintiff’s testimony and common-sense conclusions.  But it’s possible the case may have more significance, signaling to the lower courts that CEPA has been applied too broadly in the past.

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Seton Hall Law Places First at UM Carey Law’s Health Law Regulatory and Compliance Competition

February 28, 2014 by · Leave a Comment
Filed under: Compliance, Health Law, Seton Hall Law 

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At Seton Hall Law’s website, Victoria Dorum reports that Seton Hall Law students Lindsey Borgeson, Joyce Crawford, and Phillip DeFedele (pictured above, from left), along with alternate Cynthia Frumanek, recently came in first at the University of Maryland Francis King Carey School of Law’s Health Law Regulatory and Compliance Competition.

Dorum writes:

Not only did the team members distinguish themselves among other top schools, they also made a profound impression on the judges. Virginia Rowthorn, Managing Director of the Law & Health Care Program at the University of Maryland School of Law, wrote a note to [Seton Hall Law Professor Tara Adams Ragone] to  commend the team and their teachers for the team’s excellent presentation. She wrote, “One of the judges who heard them told me they knocked it out of the ballpark with their knowledge, and also with the professional way they presented their ‘case’.”

Read Dorum’s full article on the Health Law Regulatory and Compliance Competition here; UM Carey Law’s coverage is here.

This has been a great academic year for Seton Hall Law, which also won the National Health Law Moot Court Competition in November.   Dorum covered that victory as well, here.

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Announcement: Student Scholarships to Attend Seton Hall Law’s Healthcare Compliance Program

October 10, 2013 by · Leave a Comment
Filed under: Compliance, Seton Hall Law 

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  HEALTH LAW STUDENT SCHOLARSHIPS

PURPOSE

This award recognizes promising health law students with an aptitude for and commitment to a career in health law with a focus on the legal and compliance issues facing bio/pharmaceutical and/or medical technology industries.

ELIGIBILITY

Each nominee must qualify under the following criteria:

  • The nominee shall be a second or part-time third year law student currently enrolled in an accredited North American law school* on a full or part-time basis who through his/her law school academic and clinical work and other related activities demonstrates his/her aptitude for and commitment to a legal career in health care law within the bio/pharmaceutical and/or medical technology industries.
  • The nominee must be available to attend the June Healthcare Compliance Certification Program.
  • Multiple nominations per law school may be made.
  • The following materials must be submitted by the nominee (the submission of additional material is discouraged):
  1. A signed letter from the Dean, clinical program director, or law school professor teaching in a related area nominating the candidate and setting forth the basis for the nomination, including a description of the purposes and content of the class or clinical program in which the student is enrolled (PDF copy acceptable).
  2. The nominee’s current resume including most recent GPA (electronic copy required).
  3. A brief personal statement (maximum two (2) typewritten pages) highlighting the nominee’s background, experience, and other relevant information that qualifies him/her for the scholarship (electronic copy required).

JUDGING

All applications will be judged by members of the Seton Hall Law School Faculty. All decisions are final.  Applications will be judged on the strength of the eligibility criteria, letter of nomination and personal statement. No scholarship will be awarded if the faculty members determine that no application meets the scholarship standards.

AWARDS

A maximum of two full scholarships shall be awarded each year. Scholarship recipients will attend the June Healthcare Compliance Certification Program. The scholarship covers program tuition, educational materials, meals during the program, and parking. Please note that transportation and hotel costs are not included.

SUBMISSION DEADLINE:  February 7, 2014.
Entries must be submitted:

  1. Via email to HealthLaw@shu.edu; or
  2. Mailed to:

Center for Health & Pharmaceutical Law
Attn: Catherine Finizio
Seton Hall Law School
One Newark Center
Newark, NJ 07102

QUESTIONS

Please contact Catherine Finizio at healthlaw@shu.edu or 973-642-8871.

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For Compliance Officers Who Blow the Whistle, Legal Protection Varies

September 17, 2013 by · Leave a Comment
Filed under: Compliance, Ethics, New Jersey 

kathleen m. boozangAs trainers of compliance officers, Seton Hall Law faculty emphasize repeatedly the importance of not retaliating against whistleblowers, explaining the various legal risks attendant to punishing the employee who steps forward in good faith to address internal wrong-doing.  But rarely do we talk about who’s got the compliance officer’s back – specifically, whether the law protects the compliance officer from retaliation by her employer for simply doing her job.  Compliance officers who identify serious problems, particularly with product safety, can not only interfere with the company’s potential revenue, but also cost the company millions of dollars if, for example, the company has to self-report to a government agency and pay significant fines or recall a product.  Compliance officers arguably are the most vulnerable targets of retaliation, as their jobs might be characterized as full-time internal whistleblowers.  Both New Jersey and New York have recently answered the question of what legal protection exists for compliance officers, reaching different conclusions in the process.  While a New Jersey appellate decision decided earlier this month found compliance officers to be within the statutory protection afforded to whistleblowers, a 2012 New York case declined such protection.

Like most other workers, most compliance officers are employees at will – that is, they do not have contracts that limit the circumstances under which they may be terminated.  Thus, the question is whether whistleblowers merit an exception from the employment at will doctrine that allows employees to be fired for any or no reason at all.  The New Jersey Conscientious Employee Protection Act (CEPA) is an overarching statute that protects almost all whistleblowers from retaliation; New York has no comparable general statutory protection but does have a series of industry-focused laws that provide some kinds of protection.  Even in states with statutes such as New Jersey’s, however, the question is whether they apply to compliance officers, whose entire job involves being the company “watch dog.”  While states have disagreed about this question, a September 4 decision by the Appellate Division in New Jersey in Lippman v. Ethicon extends New Jersey’s CEPA to compliance officers.

Joel Lippman, M.D. was Ethicon’s Vice President of Clinical Operations and Health Economics and Reimbursement – a new title resulting from what Lippman claims was a retaliatory reorganization designed to reduce his responsibilities – when he was terminated for having a consensual romantic relationship with an employee in a department that reported to him (the employee was not a direct-report).  J&J (Ethicon is a Johnson& Johnson company) has no policy prohibiting such relationships, and the person who terminated Lippman was unable to recall another employee being terminated or disciplined for having such a relationship.

Lippman claimed that he was actually terminated due to accumulated frustration with his consistent advocacy of recalling dangerously defective products.  He alleged that his superiors deemed him “needlessly conservative or naively insensitive to Ethicon’s business and corporate interests.”   When Lippman sued under CEPA, Ethicon argued that CEPA does not apply to an individual whose whistleblowing activities fall within the scope of his job responsibilities.  Rejecting that argument,  the Appellate Division  held that “’[w]atchdog’ employees, like plaintiff, are the most vulnerable to retaliation because they are uniquely positioned to know where the problem areas are and to speak out when corporate profits are put ahead of consumer safety.”  The court defined the term “watchdog employee” to encompass those whose job duties put them in the best position to:

(1)    Know the relevant standard of care; and

(2)    Know when an employer’s proposed plan or course of action would violate or materially deviate from that standard of care.

Unless the case settles, Lippman will have to return to court to establish that he reasonably believed his employer was engaged in activity violating the law or public policy; that he either refused to participate or exhausted all internal means of securing compliance; and that his compliance activities were the cause of his termination.

Compliance officers in New York did not fare as well when the New York Court of Appeals issued its 2012 decision in Sullivan v. Hanisch.  There was no applicable state statute, and, consistent with its general refusal to recognize a cause of action for being fired for opposing conduct in violation of public policy,  the Court rejected an exception to the employment at will doctrine for a hedge fund compliance officer who was fired after confronting a colleague for engaging in “front-running,”  improper trading conduct benefitting his own as well as family accounts ahead of firm clients.  Sullivan unsuccessfully argued that “the legal and ethical duties of a securities firm and its compliance officer justify recognizing a cause of action for damages when the compliance officer is fired for objecting to misconduct.” 

The outcome of Sullivan’s case was in one way predictable and in another surprising.  The Court of Appeals had rejected any public policy tort for decades but Sullivan relied on a 1992 holding in Wieder v. Skala, in which New York had carved out an exception to the employee at will doctrine for a lawyer fired by his law firm following his insistence that the firm adhere to the disciplinary rules requiring it to report professional misconduct by another firm employee.  The Wieder holding rested on the implied understanding that the firm would adhere to the profession’s ethical standards and self-regulate.  While the Sullivan Court left open the possibility of other employment relationships falling within this narrow exception, it decided that a compliance officer at a securities firm is not one of them.

Invoking language from the Wieder case, the Sullivan Court determined that it could not be said that “his regulatory and ethical obligations and duties as an employee ‘were so closely linked as to be incapable of separation.’”  Also, fatal was that Sullivan was not associated in a firm of compliance officers charged with a duty of self-regulation; further, according to the Court, regulatory compliance was not even the “only purpose” or “very core” of Sullivan’s employment – it comprised only a percentage of his responsibilities.  Finally, the court rejected the notion that Sullivan was a whistleblower because he addressed the issue only internally – he did not contact the SEC.  If these elements are indeed essential to qualifying for the whistleblower exception created by the Wieder case, compliance officers have little hope for protection against retaliation under New York law. 

The state of New York law raises the question of whether compliance professionals employed by New York companies should seek adoption of corporate policies protecting them from termination for performing their jobs.  Perhaps even more effective, compliance professionals, at least in senior positions, might demand protective contracts that remove them from employee at will status.  The granting and scope of such protections might be considered by government enforcers when they are called upon to consider just how serious a firm’s compliance efforts are.

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Center for Health & Pharmaceutical Law & Policy Introduces First Edition of Pharmaceutical and Medical Device Compliance Manual

January 16, 2013 by · Leave a Comment
Filed under: Compliance, Health Law 

ahla-pharma-med-devi(2)The Seton Hall Law Center for Health & Pharmaceutical Law & Policy, American Health Lawyers Association (AHLA) and the Food and Drug Law Institute (FDLI) have released the first edition of the Pharmaceutical and Medical Device Compliance Manual. The Manual is a guide to deciphering the intricate web of federal and state laws and the practices of regulatory and enforcement authorities within the healthcare and life sciences arena, while also providing the practical skills needed to implement an effective compliance program.

Designed to aid health law attorneys, compliance professionals and others in the pharmaceutical and medical device field, the Manual explains the law in layman’s terms in addition to providing advice and guidelines on creating, managing, monitoring and auditing an effective compliance program, in essence, marrying legal expectations with the operational demands of business units.

The book was co-edited by Seton Hall Law Associate Dean Kathleen M. Boozang, J.D., LL.M., who founded the school’s Health Law program in 1990, ranked among the top 10 by U.S. News & World Report for the past 16 years; and by Simone Handler-Hutchinson, J.D. ’93, Executive Director of the Center for Health & Pharmaceutical Law & Policy.

Dean Boozang notes: “Over the last two decades the trend in government oversight has resulted in a regulatory environment of increased accountability among organizations across a number of sectors, with the health and life sciences industries being the subject of particular attention – a trend that shows no sign of waning. We produced this manual for compliance officers, health and life sciences lawyers and their clients to enable them to build a framework for creating and sustaining an effective compliance function.”

As co-editor, Ms. Handler-Hutchinson said, “Each chapter was written by a leading regulatory official, practicing attorney, or healthcare consultant who has either shaped the policies as an official and/or counsel in the nation’s regulatory agencies, served as counsel to or built compliance functions within life science corporations. They offer first hand, in-depth compliance insight and actionable advice.”

The Pharmaceutical and Medical Device Compliance Manual is available as a softbound book and a variety of eBook formats; it may be ordered by visiting http://law.shu.edu/compliancemanual.

The Seton Hall Law Center for Health & Pharmaceutical Law & Policy advances scholarship and recommendations for policy on the varied and complex issues that emerge within pharmaceutical and health law. Additionally, the Center is a leader in providing compliance training on the wide-ranging state, national and international mandates that apply to the safety, promotion and sale of drugs and devices. Seton Hall University School of Law, New Jersey’s only private law school and a leading law school in the New York metropolitan area, is dedicated to preparing students for the practice of law through excellence in scholarship and teaching with a strong focus on experiential learning. Founded in 1951, Seton Hall Law School is located in Newark and offers both day and evening degree programs. For more information visit law.shu.edu.

The American Health Lawyers Association (AHLA) is the nation’s largest nonpartisan educational organization devoted to legal issues in the healthcare field. The Association’s 11,000 members practice in a variety of settings in the healthcare community. For information about our resources, publications, and educational offerings, visit www.healthlawyers.org.

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