Employment Matters: How NJ Healthcare Employers Can Navigate the Whistleblower Act

New Jersey businesses are governed by some of the most comprehensive employment laws in the country. Employers in regulated sectors must pay even more attention to their actions to avoid allegations of wrongdoing by their employees.  Employers must have an intimate understanding of these laws and how they apply to their employees, for even the most well-intentioned business owners, HR professionals, and even in-house counsel frequently find themselves defending an employment lawsuit at some point in their careers. One common law is the New Jersey Conscientious Employee Protection Act, (“CEPA”), also known as the Whistleblower Act. According to the New Jersey Supreme Court, the goal of CEPA is “not to make lawyers out of conscientious employees but rather to prevent retaliation against those employees who object to employer conduct that they reasonably believe to be unlawful or indisputably dangerous to the public health, safety or welfare.”

CEPA prohibits all employers from retaliating against their employees who threaten to disclose, refuse to participate in, or disclose certain employer actions that the employee reasonably believes is either illegal, fraudulent, or in violation of some public policy, including certain employee complaints about the “improper quality of patient care.” This conduct is called whistle-blowing activity. An employee can still prevail on a whistleblower claim so long as the employee reasonably believes that the subject of their complaint was illegal, fraudulent, or in violation of some public policy. Therefore, it is important for employers to listen and respond to employee complaints.

An employer can be held liable for the employee’s damages if the employer, in response to the employee’s complaints, retaliates by discharging (terminating), suspending, demoting, or taking any other adverse action against the employee in the terms and conditions of employment. In practice, this includes a layoff, furlough, pay cut, reduction in hours, reassignment (even lateral), transfer, or reduction in benefits.  In New Jersey, employer-defendants risk liability  for damages for emotional distress, reinstatement, lost wages and benefits, punitive damages, and attorneys’ fees if they are found to have retaliated against an employee.

An employee or former employee can succeed on a CEPA lawsuit by proving (1) the employee engaged in whistle-blowing activity; (2) the employer took an adverse employment action against the employee; and (3) the adverse employment action and whistle-blowing activity are casually connected. It is then up to the employer to establish a non-retaliatory basis for the adverse employment action. Contemporaneous documentation of employee issues may be the most compelling basis to meet this burden. Engaging in employee performance evaluations and investigating employee complaints are necessary to document good faith efforts of the employer and to ward off improper allegations of retaliation. 

What special considerations should employers in healthcare be aware of?

 CEPA broadly defines an employee’s good faith belief of “improper quality of patient care” as “any practice, procedure, action or failure to act of an employer that is a health care provider which violates any law or any rule, regulation or declaratory ruling adopted pursuant to law, or any professional code of ethics.” Again, the employee need not be correct about the merits of the complaint or show that the employer actually violated a law or clear mandate of public policy. Instead, a prevailing CEPA litigant need only show that he or she “reasonably believed” that to be the case.

Healthcare employers such as hospitals, medical practices, dentists, pharmacies, labs, and ambulance companies must understand that complaints about their regulated activities may be subject to complaints.  Healthcare providers must comply with (and therefore cautiously entertain whistle-blowing activity related to) a plethora of laws and regulations, such as Stark, Anti-Kickback Law, billing and coding rules, controlled substances acts and REMS, HIPAA, and the False Claims Act, among many others. Allegations of improper quality of patient care, improper billing, and other regulated issues are the most common allegations against healthcare employers. Worse yet, when faced with such a challenge by an employee, employers sometimes react by terminating or taking other adverse action against the offending employee. In fact, this is the worst action an employer can take. The best action is to seek the advice of counsel before taking any action.

A common question business owners and HR professionals ask is, why does CEPA appear so employee-biased? Why does an employee need only a reasonable belief in the merits of their whistle-blowing conduct? Because CEPA was designed by the legislature to be remedial in nature.

How Frier Levitt Can Help

Frier Levitt’s skilled attorneys appreciate that the needs of healthcare organizations are unique, the stakes are high, and require a deep understanding of the industry, the regulations and their individual practice.

Our employment attorneys zealously advocate for our clients in the courtroom. But just as importantly, we counsel our clients in proactive litigation avoidance whenever possible. Whatever the services or strategy, the product we provide our clients is individually tailored to advance their goals at the best value possible.

Frier Levitt’s employment attorneys are available to help employers work out the complexities and navigate employment issues, including CEPA exposure. Whether your business has been sued by an employee, or wants proactive guidance on employee matters, contact us today to speak to an attorney.

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