Sunday, November 24, 2019

West Virginia: No Cause Of Action For Law Firm Employee Who Reports Suspected Billing Fraud

The West Virginia Supreme Court of Appeals answers a certified question from federal court in the negative

Ms. Blanda was an accounts receivable clerk employed by Martin & Seibert, L.C. and was tasked with billing clients for the hours worked by the firm’s employees and attorneys. Ms. Blanda alleges that she began noticing irregularities such as billing clients for paralegal and secretary services at the attorney’s hourly rate. She decided in 2013 that the firm was engaging in illegal billing practices. Ms. Blanda began persistently voicing her concerns to others at the law firm, including the individual Respondents. The law firm never took formal disciplinary action against Ms. Blanda for her complaints, and she did not threaten to report its activities to an outside law enforcement agency or elsewhere. But, Ms. Blanda believed that actions taken by the law firm showed an intent to discharge her in retaliation for voicing her concerns.

Then

on January 23, 2015, Ms. Blanda noticed that the law firm had posted her job for hiring. Ms. Blanda immediately contacted one of the law firm’s attorneys, Lisa Green, who had become aware of the billing irregularities. According to the facts presented by the District Court, Ms. Green suspected that the law firm may be setting up Ms. Blanda to take the blame for them. Ms. Green confirmed her suspicions and immediately contacted attorney Michael Callaghan, former Assistant United States Attorney and chief of the Criminal Division in the Southern District of West Virginia, for advice on reporting Respondents’ conduct to the West Virginia State Bar and the Federal Bureau of Investigations (FBI). According to Ms. Green, Mr. Callaghan contacted the FBI that day; in turn, Ms. Green advised Ms. Blanda to contact Mr. Callaghan for advice.

She then began to gather evidence and

After she was fired, Ms. Blanda also took paper files from the law firm. Ultimately, the FBI “raided” the law firm based, in part, on information Ms. Blanda provided to them after her discharge. It has since disbanded as a result. Ms. Blanda later applied for unemployment benefits stating that she was discharged for emailing timesheets to herself in violation of firm policy. She reiterated the same during her deposition.

She filed a whistleblower complaint in federal court, which sent a certified question to the West Virginia high court.

The court majority holds that no substantial public policy under state law creates liability

we hold that West Virginia Code § 61-3-24 does not constitute a substantial public policy under Harless v. First National Bank, 162 W. Va. 116, 246 S.E.2d 270 (1978), and its progeny, to protect an employee of a non-public employer who reported suspected criminal conduct to the appropriate authority and claims to have been retaliated against as a result.

Justice Workman dissented

In light of the egregious facts pled here, this Court should have taken the opportunity to recognize a public-policy exception to at-will employment when an employee is terminated for reporting her employer’s alleged theft of client funds by overbilling for legal services to the proper authorities. West Virginia’s criminal statutes reflect myriad expressions of the public policy to encourage the reporting of crimes and correction of activities harmful to our citizenry.

...this Court should have answered the certified question in the affirmative and held: an alleged violation of West Virginia Code § 61-3-24 constitutes a substantial public policy of the State of West Virginia and may support a Harless claim when an employee reports the alleged criminal conduct to an appropriate government authority under penalty of perjury. This ruling would recognize the long-established proposition that substantial public policy encourages citizens to report crimes.

Bottom line

The majority’s failure to expand Harless to the facts presented here constitutes neither judicial restraint nor neutrality, but rather an active participation in perpetuating injustice. This is particularly true when the judiciary can craft a narrow exception that protects the interests of responsible, law-abiding employers while holding accountable those whose activities threaten the public interest. Society can never eradicate wrongdoing, but this Court should shield from retaliation those citizens who, urged on by their integrity and social responsibility, speak out to protect the public.

Herald-Mail Media reported on the firm's demise.

Martin & Seibert L.C., a general-practice law firm in Martinsburg that dates back to 1908, is winding down business and will be closing Saturday.

"I can confirm that, regrettably, the firm is dissolving at the end of 2016," Morgantown, W.Va., attorney Richard M. "Rick" Wallace said in an email Thursday.

The firm's office in Charleston, W.Va., also is closing, Wallace said.

Nikki Gress, the firm's chief operating officer, deferred inquiry regarding the firm's status to Wallace on Thursday.

The move comes a little more than a year after FBI agents searched the firm's Martinsburg offices at 1453 Winchester Ave.

No criminal charges have been filed, and Wallace, who is representing the law firm in a civil lawsuit, indicated that Martin & Seibert's business was damaged significantly by a former employee who claimed she was fired after reporting alleged wrongdoing.

"It's reprehensible that the malicious and unfounded actions of a disgruntled former employee can have such a deleterious impact on a well-respected firm and the livelihoods of hundreds of individuals," Wallace said.

On Nov. 17, 2015, Martin & Seibert said in a statement that FBI agents "aggressively seized property and detained personnel" at the law firm's headquarters on Winchester Avenue, but noted that it was cooperating fully with the government's investigation.

On Jan. 28, Martin & Seibert, along with shareholders and Gress, were named as defendants in a federal lawsuit by former employee Christine Blanda.

Blanda claimed she is one of the professionals who brought alleged mail and wire fraud to the FBI's attention.

The law firm has denied the allegations and countered that Blanda was discharged "solely because she engaged in highly unprofessional conduct which violated Martin & Seibert policy and potentially federal and/or state law by misappropriating confidential, proprietary and trade secret information of Martin & Seibert," according to court records.

The firm filed a counterclaim against Blanda, claiming she knowingly provided false statements to public officials, including FBI agents, that alleged improper billing practices by the law firm, records said.

Blanda has denied the allegations of the counterclaim, and her attorneys told the court in a joint report filed in September that the assistant U.S. attorney in charge of the government's investigation advised it would not be completed "anytime in the foreseeable future" due to a lack of adequate staffing.

"We know nothing different," attorney Michael O. Callaghan said Thursday when asked about the status of the case.

Wallace told the court in the September joint report that more than 500,000 pages of documents had been seized by the government, records said.

Ashley Lough, spokesperson for U.S. Attorney William J. Ihlenfeld II's office, said the government was unable to comment Thursday about the status of the probe.

(Mike Frisch)

https://lawprofessors.typepad.com/legal_profession/2019/11/the-west-virginia-supreme-court-of-appeals-ms-blanda-was-an-accounts-receivable-clerk-employed-by-martin-seibert-lc-and.html

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