Whistleblower or wrongfully terminated employee? California Supreme Court says: ‎whistleblower

There’s often a fine line between being a bona fide whistleblower and being just an angry plaintiff suing for wrongful termination.  The plaintiff’s allegations of whistleblowing conduct can often be very similar to the conduct that gave rise to him or her being fired – setting up something of a Rorschach blot test for the court that is trying to figure out what’s really going on. 

That’s the position doctor Mark Fahlen found himself in.  Doctor Fahlen was fired by his employer, a group of doctors working at a hospital in California.  The doctor said he was fired, in part, because he complained – as a whistleblower – about nurses in the hospital failing to provide adequate care for his patients because they failed to follow his instructions.  The group of doctors fired Fahlen after the hospital revoked his privileges (apparently a necessary part of being a member of the group) because it said Fahlen had angry fights with those same nurses – and, therefore, he was fired because he wasn’t a suitable employee.  So, essentially the same factual allegations could be whistleblowing or a basis for termination.  

Legally, though, it makes a difference what those allegations mean.  If Dr. Fahlen was a bona fide whistleblower, then under California law, he’d have a right to sue the hospital that fired him without going through the hospital’s internal processes to review his firing, otherwise known as “exhausting administrative remedies.” If he wasn’t blowing the whistle, then under California law, he’d have to go through the hospital’s process first.  Last week, the California Supreme Court held that Dr. Fahlen’s allegations were closer to whistleblower than terminated employee, and it held – affirming the trial court and a lower appellate court – that his suit against the hospital could proceed, and can’t be dismissed for his failure to go through the hospital’s internal procedures. 

In its decision, the court had to balance Dr. Fahlen’s factual arguments between two distinct points of California law.  On the one hand, California courts have long held that before a doctor can sue a hospital for firing him or terminating his staff privileges, he needs to go through the hospital’s internal processes to try and have the decision overturned.  This is based on an common law (or court-made) principle, recognized in California, that members who have a grievance against an association of which they are a member must first exhaust the association’s remedies for grievances before resorting to the courts.  The idea is that requiring exhaustion will promote simple, inexpensive resolutions of most disputes between members and associations.   On the other hand, a California statute expressly encourages hospital staff to report “suspected unsafe patient care and conditions,” and provides that they may not be terminated for doing so. 

In this case, the California legislature beat out common law: the state’s highest court held that it clearly wanted to encourage whistleblowing about bad care.  Holding the other way – requiring Dr. Fahlen, to the extent he was alleging substandard practices, to go through the hospital’s process first – would “seriously undermine the Legislature’s purpose to afford a whistleblower on the hospital staff the right to sue.”

The issue the California court wrestled with in Dr. Fahlen’s case –whistleblower or angry, discharged employee – comes up frequently in a variety of contexts, and suggests that careful analysis of state law – which may often lead to different paths and outcomes – is something discharged employees with potential whistleblower claims need to consider carefully. 

• Whistleblowers
• Wrongful Termination