Texas Supreme Court: Reporting Illegal Activity to a Supervisor Does Not Satisfy the Whistleblower Statute

The Texas Supreme Court decided two cases today that address whistleblower rights under the Texas Whistleblower Act.  The Act provides protections for whistleblowers who work for the state government.  Normally, a suit against a state government entity would be barred by sovereign immunity.  The Act provides an exemption from sovereign immunity and allows a whistleblower suit, but only if the specific requirements of the Act are satisfied.

The specific issue before the Supreme Court was whether reporting illegal conduct to a supervisor, rather than to law enforcement, triggers protections under the Texas Whistleblower Act.  The Supreme Court answered the question in the negative.

I

The first case is University of Texas Southwestern Medical Center at Dallas v. Gentilello, No, 10-0582 (Tex. Feb. 22, 2013).  Dr. Larry Gentilello was a professor at the UT Southwestern Medical Center in Dallas.  He reported Medicare and Medicaid violations to his supervisor at the hospital.  The supervisor in question was responsible for internal compliance with Medicare and Medicaid.  Dr. Gentilello was then demoted, allegedly in retaliation for reporting the Medicare and Medicaid violations.  He subsequently filed a whistleblower suit.

The question before the court was whether Dr. Gentilello reported the Medicare and Medicaid violations to "an appropriate law enforcement authority."  Section 554.002 of the Texas Government Code states:

(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.                 

The Supreme Court framed the question as follows: "Did Gentilello make a good-faith report to an appropriate law-enforcement authority under the Act when he reported alleged violations of law to a supervisory faculty member who oversees internal compliance with myriad Medicare/Medicaid requirements at a state medical school?"  The court noted that other states allow whistleblower claims based on reports to supervisors, but that the Texas Whistleblower Act is different.  Under Texas law, a whistleblower must believe in good faith that the supervisor is authorized to "regulate under or enforce the law" or "investigate or prosecute a violation of criminal law."  The court had previously held that "good faith" has an objective element: the whistleblower's belief must be reasonable in light of his or her training and experience. 

Applying that standard, the court rejected Dr. Gentilello's claim.  The court found that, "Given his training and expertise, [Dr. Gentilello] should have known that his supervisor's purely internal authority was not law enforcement but law compliance--in other words, [the supervisor] was only capable of ensuring that UTSW followed federal directives.  The bare power to urge compliance or purge noncompliance does not transform [the supervisor] into an 'appropriate law enforcement authority' as defined in the Act."  The court noted that "complying does not equal compelling" and that "UTSW is itself subject to regulation but does not subject others to regulation."

The court specified that it was not holding that "a Whistleblower Act report can never be made internally."  However, the internal report must be to a law enforcement authority.  For example, a police department employee could report a violation to his or her supervisor, who is also a police officer and therefore a law enforcement authority.  Aside from that narrow exception, however, reports to supervisors will not satisfy the Texas Whistleblower Act.

The Supreme Court also rejected two other arguments:

1. The court held that the ability of an entity to internally discipline its employees does not make the entity a law enforcement authority.  The mere fact that Dr. Gentilello's supervisor had authority to take steps internally to remedy the Medicare and Medicaid violations was not relevant to whether Dr. Gentilello had complied with the requirements of the Act.

2. The court held that UTSW's internal rules prohibiting retaliation against employees who reported compliance issues were irrelevant to a whistleblower claim.  In other words, UTSW's promise not to retaliate did not give its employees any protection.

II

The second case is Texas A&M University - Kingsville v. Gertrud Moreno, No. 11-0469 (Tex. Feb. 22, 2013).  Ms. Moreno was an assistant vice president of the university.  She believed that the daughter of her supervisor (Saban) had received in-state tuition in violation of state law.  She reported this to the president of the university.  Saban then fired her.  Ms. Moreno sued under the Texas Whistleblower Act.

The Supreme Court applied its analysis from Gentilello and ordered the dismissal of Ms. Moreno's case.  The Court held that the president of the university was not a law enforcement authority.  The fact that the president could enforce internal compliance was not sufficient to make him a law enforcement authority.

III

These cases are yet another illustration of the restrictive interpretation that the Texas courts have given to the Texas Whistleblower Act.  In other states, these claims would have gone forward.  In Texas, however, a complaint to a supervisor is not going to be sufficient.

If an employee wants to be protected, then the employee must report the violation of law to the police, to the FBI, or to some other external entity that has the power to enforce the law against the employer.  It is reasonable to ask whether this is good public policy.  Shouldn't we be encouraging government employees to report violations of the law to the supervisors?  Should we force government employees to bring in the police over minor violations of law that could be handled efficiently through internal processes?  However, the Texas Supreme Court felt constrained to follow the specific language of the Act.  Given that the legislature has had many opportunities to expand the scope of the Act, the court's reasoning is sensible.

It should be noted, however, that a complaint to a supervisor is sufficient to establish many other kinds of retaliation claims, such as claims under Title VII and under statutes that apply to private employers.  As a general rule, claims against government entities under Title VII and Chapter 21 of the Texas Labor Code are not subject to sovereign immunity.  For example, if an employee of UTSW or Texas A&M-Kingsville had complained to her supervisor about sexual harassment, and had then been terminated, her claim for retaliation would not be subject to sovereign immunity.

David C. Holmes is a Houston employment lawyer with The Law Offices of David C. Holmes

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