Appeals court tosses suit against nurses who blew whistle on ex-employer

Three former case managers for a home health care service provider won a reversal from the Indiana Court of Appeals after it concluded that reports they made to the Health Department against their employer are protected by absolute privilege because they initiated a quasi-judicial proceeding.

While working for home health care service provider Individual Support Home Health Agency, Tiffany Abbot, Cathie Barnes and Chandra Gray made reports to the Indiana State Department of Health claiming that other employees had forged their signatures on patient care documents.

The women, who are licensed nurses, served as case managers for the company’s patients. But Home Health alleged that the reports were false and that Abbot, Barnes and Gray acted out of malice after receiving poor performance reviews. An investigation by the ISDH ultimately found the forgery reports were not substantiated, but Home Health further asserted that the women encouraged other employees to make similar false reports against it.

When Abbot, Barnes and Gray quit their jobs, they induced other Home Health employees to join them, prompting the company to sue the women for defamation, tortious interference with a contract, and tortious interference with a business relationship.

Although the women filed a motion to dismiss arguing that their reports were absolutely privileged, the Henry Circuit Court denied the motion.

The Indiana Court of Appeals however, reversed for the women in an interlocutory appeal after finding that their reports were protected by absolute privilege. Specifically, it noted that like in the case of Hartman v. Keri, 883 N.E.2d 774, 777 (Ind. 2008), the women’s reports to the ISDH initiated an investigation of Home Health, and therefore, quasi-judicial proceedings.

“We must protect vulnerable individuals suffering from an illness or disability who require assistance from healthcare professionals. If a report made by a healthcare professional is not absolutely privileged, it could have a chilling effect on such reports. Extending absolute privilege to reports made to the ISDH protects healthcare professionals against the fear of retaliatory litigation,” Judge Paul Mathias wrote for the appellate court, ultimately concluding that the women’s reports were protected.

Additionally, it found that Home Health’s claim that the women made false reports to the ISDH were integral to Home Health’s tortious interference claims.

In a footnote, the appellate panel noted that with regard to the tortious interference with a contract claim, Home Health in its complaint “did not allege that any actual breach of contract occurred or that a breach of contract caused any damages.”

Thus, it concluded that Home Health’s tortious inference claims must also be dismissed in Tiffany Abbott, Cathie Barnes, and Chandra Gray v. Individual Support Home Health Agency, Inc.,19A-PL-2367.

The appellate court therefore remanded to the trial court with instructions to dismiss Home Health’s complaint.