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Health Facilities and Agencies Face Liability for Terminating or Dismissing Employees Who Report Malpractice

dismissing employees who report malpracticeA recent decision by the Michigan Court of Appeals holds that a health facility or agency can be sued for taking or threatening disciplinary action against an employee for reporting or intending to report malpractice by a health professional. Employers should carefully review existing policies and practices, or if necessary, adopt appropriate policies, to protect against potential wrongful termination lawsuits.

In Landin v Healthsource Saginaw, Inc., a nurse alleged he was unlawfully terminated from employment with the hospital after reporting negligence by a co-worker to a supervisor. The Court of Appeals held that Michigan allows a cause of action for wrongful termination under MCL 333.20176a of the Public Health Code. The statute prohibits the actual or threatened discharge or discipline of an employee who reports or intends to report malpractice or a violation of the Public Health Code by a health professional. The statute protects employees who would otherwise be subject to at-will termination.

The prohibition against retaliatory disciplinary action applies to all health facilities and agencies, including hospitals, nursing homes, clinical laboratories, hospices, outpatient surgical facilities, and HMOs.

Under the statute, an employee who reports or intends to report that a licensed health professional committed malpractice or violated the Public Health Code or regulations is protected against disciplinary action. The subject of the report does not have to be employed by the health facility or agency. For example, a report about malpractice by a non-employed physician with staff privileges would suffice.

The statute does not specify to whom the report must be made. In Landin, the report was made to a supervisor. A report to a state or federal agency would certainly be protected. It is unclear whether a report to the patient, a family member, or a plaintiff’s malpractice attorney would qualify.

A wrongful termination action can be brought even if the employee does not actually make a report. A good faith intent to report is enough. Similarly, an employer does not have to actually discipline the employee. Threatening to take adverse action can result in liability.

The statute also protects employees who act as expert witnesses in malpractice actions or licensing cases.

In addition to civil liability, a violation of MCL 333.20176a is itself a violation of the Public Health Code, exposing the health facility or agency to licensing action and administrative fines.

For more information, please contact Richard Kraus at (517) 371-8104 or rkraus@fosterswift.com.

Categories: Compliance, Employment, Providers

Posted by: Rachel Gizicki (Summer Associate)

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Best Lawyers® 2021

Congratulations to the attorneys of the Health Care practice group at Foster Swift Collins & Smith, PC for their inclusion in the Best Lawyers in America 2021 edition. Firm-wide, 44 lawyers were listed. Best Lawyers lists are compiled based on an exhaustive peer-review evaluation and as lawyers are not required or allowed to pay a fee to be listed; inclusion in Best Lawyers is considered a singular honor. Health Care practice group members listed in Best Lawyers are as follows:

To see the full list of Foster Swift attorneys listed in Best Lawyers 2021, click here.