Blanca Nieto v. Permian Basin Community Centers for MHMR ( 2014 )

Opinion filed January 30, 2014
In The
Eleventh Court of Appeals
__________
No. 11-13-00012-CV
__________
BLANCA NIETO, Appellant
V.
PERMIAN BASIN COMMUNITY CENTERS
FOR MHMR, Appellee
On Appeal from the 358th District Court
Ector County, Texas
Trial Court Cause No. D-129810
MEMORANDUM OPINION
In this interlocutory appeal, Blanca Nieto appeals the trial court’s grant of
the Permian Basin Community Centers for MHMR’s plea to the jurisdiction. We
affirm.
The Permian Basin Community Centers for MHMR (PBCC) is a
governmental entity that provides mental health and mental retardation services for
Ector, Midland, Brewster, Culberson, Hudspeth, Jeff Davis, Pecos, and Presidio
Counties. Nieto began working for PBCC’s Odessa clinic in May 2007 as an
intake/screening coordinator. In February 2010, Nieto sent an e-mail to Larry
Carroll, PBCC’s executive director, and reported that she had observed several
incidents of fraud. Specifically, Nieto told Carroll that she and another employee
had been instructed to backdate the date of service for a consumer so that the
consumer would qualify for a rehabilitation bed through MHMR; that the director
of the Odessa clinic told caseworkers to have consumers sign treatment plans
ahead of time, sometimes three at a time, in the event that the caseworker could not
meet with the consumer to update paperwork; that a case manager had reported
that she had met with consumers on dates and at times when either she or the
consumer would not have been able to meet; and that her team leader, and
immediate supervisor, had instructed caseworkers to report that they had met with
consumers longer than they had actually met so that they would not have to meet
with consumers as often in order to meet quota. Carroll forwarded Nieto’s e-mail
to Julie Mayes, PBCC’s compliance officer.
Mayes conducted a fraud investigation and, as part of her investigation,
audited two caseworkers. Mayes confirmed that a case manager had reported that
she had met with consumers on dates and at times when neither she nor the
consumer would have been able to meet. As a result of the investigation, Mayes
directed PBCC personnel to reimburse Medicaid for one of the charges. However,
Mayes determined that there was no evidence of fraud. Instead, she concluded that
the errors were the result of incompetence. Both caseworkers were told the
importance of accurately reporting times and dates on their time sheets as well as
on their service reports.
During the investigation, Nieto felt like her supervisors and coworkers were
retaliating against her by assigning her a specific time for lunch when other
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employees were allowed to take lunch at their discretion; by not providing an
employee to cover for her during lunch so that she was in effect not able to take a
lunch; by ignoring her and treating her in a hostile manner; by requiring her to take
every intake phone call, including calling her out of the restroom to take a call; by
subjecting her to a higher level of scrutiny than other employees; by questioning
her actions even though they were consistent with previous practice; and by
attempting to intimidate her. Nieto reported the retaliation to Carroll and Mayes.
Carroll encouraged her to file a complaint in accordance with PBCC’s Employee
Complaint Policy #5.24 and also told her not to resign. Whether she filed a
complaint under #5.24 is disputed.
Nieto did not feel that she could take the retaliation any longer and
submitted a letter of resignation on March 30, 2010. In that letter, she gave two
weeks’ notice. Her last day was scheduled for April 16; however, because Nieto
continued to feel ostracized, criticized, and humiliated, she quit on April 12. Nieto
retained counsel and sent PBCC a letter in which she requested a grievance hearing
and in which she notified PBCC that she intended to file suit against PBCC for its
violation of the Texas Whistleblower Act under Chapter 554 of the Texas
Government Code.1 PBCC did not have a post-employment grievance policy and
did not conduct the requested hearing.
Nieto filed suit against PBCC under the Texas Whistleblower Act. She
alleged that she was constructively discharged due to retaliation after she reported
the fraud. PBCC filed a plea to the jurisdiction in which it claimed that Nieto had
failed to plead the minimum jurisdictional elements for a claim under the
Whistleblower Act and that, thus, the trial court lacked subject-matter jurisdiction.
The trial court sustained the plea and dismissed Nieto’s petition.
1
TEX. GOV’T CODE ANN. ch. 554 (West 2012).
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Nieto presents four issues on appeal. In her first issue, Nieto argues that the
trial court erred when it sustained PBCC’s plea to the jurisdiction because her pre-
suit request for a grievance hearing was sufficient to give PBCC notice of her
claim when PBCC did not have a post-employment grievance policy. In Issues
Two, Three, and Four, Nieto asserts that the trial court erred when it sustained
PBCC’s plea to the jurisdiction because she alleged sufficient facts to show that
she was constructively discharged, that she had a reasonable belief that the conduct
she reported was fraud, and that she had a reasonable belief that she reported the
violation to an appropriate law enforcement authority.
We review a trial court’s ruling on a plea to the jurisdiction de novo. Tex.
Natural Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d 849, 855 (Tex. 2002).
In reviewing a plea to the jurisdiction, we are not required to look solely at the
pleadings but may consider evidence relevant to the jurisdictional issue. Bland
Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 555 (Tex. 2000). We construe the
pleadings liberally in favor of the plaintiff and take as true all evidence favorable
to the plaintiff. Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226–
28 (Tex. 2004).
The State is afforded sovereign immunity both as to suit and as to liability
unless the legislature expressly waives it. State v. Lueck, 290 S.W.3d 876, 880
(Tex. 2009). Sovereign immunity from suit deprives a trial court of subject-matter
jurisdiction in lawsuits against the State unless the State has consented to the suit.
Miranda, 133 S.W.3d at 224. On the other hand, sovereign immunity from
liability is not jurisdictional but, rather, is an affirmative defense. Id. Although
often used interchangeably, sovereign immunity should not be confused with
governmental immunity; they represent distinct concepts. Tex. Tech Univ. Health
Sci. Ctr. v. Buford, 334 S.W.3d 334, 336 (Tex. App.—Eastland 2010, no pet.).
Sovereign immunity is a term applied to the State and to divisions of state
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government, including boards, hospitals, and universities. Id. Governmental
immunity is the correct term to apply to situations involving immunity for political
subdivisions such as counties, cities, and school districts. Id. PBCC is a political
subdivision.
A plea to the jurisdiction is the proper vehicle for a governmental entity,
such as PBCC, to assert immunity. Miranda, 133 S.W.3d at 225–26. The burden
is on the plaintiff to establish that immunity has been waived. Tex. Dep’t of
Transp. v. Jones, 8 S.W.3d 636, 638 (Tex. 1999). The legislature has waived
immunity for lawsuits in which a public employee sufficiently alleges that a
governmental entity has violated the Texas Whistleblower Act. TEX. GOV’T CODE
ANN. § 554.0035 (West 2012); Lueck, 290 S.W.3d at 881.
We will first address whether Nieto has sufficiently alleged that she reported
a violation to an appropriate law enforcement authority under the Act. Section
554.002 of the Texas Whistleblower Act provides:
(a) A state or local governmental entity may not suspend or
terminate the employment of, or take other adverse personnel action
against, a public employee who in good faith reports a violation of
law by the employing governmental entity or another public employee
to an appropriate law enforcement authority.
(b) In this section, a report is made to an appropriate law
enforcement authority if the authority is a part of a state or local
governmental entity or of the federal government that the employee in
good faith believes is authorized to:
(1) regulate under or enforce the law alleged to be
violated in the report; or
(2) investigate or prosecute a violation of criminal
law.
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An employee’s good faith belief that she reported to an appropriate law
enforcement authority means that “(1) the employee believed the governmental
entity was authorized to (a) regulate under or enforce the law alleged to be violated
in the report, or (b) investigate or prosecute a violation of criminal law; and (2) the
employee’s belief was reasonable in light of the employee’s training and
experience.” Tex. Dep’t of Transp. v. Needham, 82 S.W.3d 314, 321 (Tex. 2002).
The employee’s belief must be objectively reasonable, meaning a reasonably
prudent employee in similar circumstances would have thought the reported-to
entity was an appropriate law enforcement authority under the Act. Univ. of Tex.
Sw. Med. Ctr. at Dallas v. Gentilello, 398 S.W.3d 680, 683 (Tex. 2013).
In Gentilello, the supreme court held that Dr. Gentilello did not have an
objectively reasonable belief that his supervisor was an appropriate law
enforcement authority because, “[g]iven his training and expertise, he should have
known that his supervisor’s purely internal authority was not law enforcement but
law compliance.” Id. at 684. Dr. Gentilello pointed to the hospital’s internal
guidelines regarding Medicare/Medicaid compliance for support that he had a good
faith belief that his supervisor was an appropriate law enforcement authority. Id. at
688. The hospital’s compliance program provided that Dr. Gentilello’s supervisor
was responsible for ensuring the hospital complied with Medicare/Medicaid laws.
Id.
The supreme court held that the jurisdictional evidence must show more than
internal reporting policies and anti-retaliation language in an employee manual. Id.
at 682. “Merely overseeing adherence, including urging employees to report
violations internally, is insufficient under the Texas Whistleblower Act.” Id. at
689. The supreme court also explained that, as a legal matter, only the United
States Secretary of Health and Human Services can regulate or enforce
Medicare/Medicaid rules. Id. at 685.
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Like Dr. Gentilello, Nieto claims that her belief that Carroll was an
appropriate law enforcement authority was reasonable based on her training and
experience because of PBCC’s directives for reporting violations of the
compliance program or applicable law. PBCC encouraged employees to report
violations, such as acts of fraud observed by Nieto. PBCC’s Compliance Plan
contains a “reporting ladder” that instructs employees to report first to their
immediate supervisor, second to higher level management, and third to the
compliance officer. PBCC’s Administrative Policy governing fraud and abuse
compliance directs employees to report violations directly to the compliance
officer. The Administrative Policy also provides that concerns of possible
retaliation or harassment are to be reported to the executive director or compliance
officer. Compliance Officer Mayes testified in her deposition that she believed
that Carroll was an appropriate person to whom to report fraud.
Nieto contends that Dr. Gentilello was a more educated and sophisticated
person than she was and, thus, should have been held to a higher standard. She
points out that he was a medical doctor, a professor of surgery, a department chair,
and a chaired faculty member. At the time of her resignation, she was twenty-nine
years old and had graduated from the University of Texas of the Permian Basin
with a major in biology and psychology. She argues that, based on her training and
experience, her belief was objectively reasonable. We disagree.
To determine whether her belief was objectively reasonable, we look to
whether a reasonably prudent employee in similar circumstances would have
thought the reported-to entity was an appropriate law enforcement authority under
the Act. Id. at 683. We cannot say that a 29-year-old with an undergraduate
degree would believe that the executive director or the compliance officer at PBCC
regulated or enforced Medicaid/Medicare rules outside of PBCC. Nothing in the
Compliance Plan or the Administrative Policy governing fraud and abuse
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compliance suggests that the executive director or the compliance officer can
regulate, enforce, investigate, or prosecute violations. The plan and policy
specifically relate to PBCC’s goal of complying with the laws and regulations that
apply to PBCC. Under the Administrative Policy, the compliance officer is
required to maintain a log of each reported violation in order to improve the quality
of healthcare provided by PBCC. The log is treated as a confidential document
and is only accessible to certain PBCC employees. The compliance officer is also
required to notify the appropriate supervisor of the compliance issue, and the
supervisor is responsible for the development of a corrective action plan.
Corrective action may require external disclosure to the appropriate oversight
body. A reasonably prudent employee who had been provided with these PBCC
documents could not objectively believe that the compliance officer or the
executive director was an appropriate law enforcement authority as defined under
the Act. An appropriate law enforcement authority must actually be responsible
for regulating or enforcing the law allegedly violated, not merely responsible for
ensuring internal compliance with the law. Id. at 685; see also Ysleta Indep. Sch.
Dist. v. Franco, No. 13-0072, 2013 WL 6509471, at *2 (Tex. Dec. 13, 2013)
(holding evidence that school district officials were responsible for internal
compliance does not support objective, good faith belief that plaintiff reported
violation to appropriate law enforcement authority); Canutillo Indep. Sch. Dist. v.
Farran, 409 S.W.3d 653, 655 (Tex. 2013) (holding same). 2
Nieto points out that the supreme court did not hold that an internal report
can never give rise to a claim under the Whistleblower Act. Id. at 686. However,
the supreme court’s example of when an internal report might be sufficient under
2
In a letter brief, Nieto also contends that Franco and Farran are distinguishable because she was
considerably less sophisticated than Franco and Farran; Franco and Farran were managers, and she was a
rank-and-file employee. For the same reasons that we find this case to be indistinguishable from
Gentilello, we find it to be indistinguishable from Franco and Farran.
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the Whistleblower Act was when an employee of a police department reported to
her supervisor that her police partner was dealing narcotics. Id. Therefore, in a
situation where an employee works for a governmental entity that regulates or
enforces the law that the employee is alleging has been violated, an internal report
may meet the jurisdictional requirements of the Whistleblower Act. That is not the
situation here.
We hold that Nieto failed to sufficiently allege that she reported a violation
of law to an appropriate law enforcement authority as defined under the Act. The
trial court did not err when it sustained PBCC’s plea to the jurisdiction. We
overrule Nieto’s fourth issue.
Because we have found that the trial court did not err when it sustained
PBCC’s plea to the jurisdiction on the ground that Nieto failed to allege sufficient
facts to show that she reported a violation of law to an appropriate law
enforcement authority, it is not necessary for us to determine whether the trial
court erred when it sustained PBCC’s plea on the grounds Nieto raises in her first
three issues. See TEX. R. APP. P. 47.1.
We affirm the order of the trial court.
JIM R. WRIGHT
CHIEF JUSTICE
January 30, 2014
Panel consists of: Wright, C.J.,
Bailey, J., and McCall. 3
Willson, J., not participating.
3
Terry McCall, Former Justice, Court of Appeals, 11th District of Texas at Eastland, sitting by
assignment.
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