Cases and Comments on Contracts

Part 7: More Torts Attendant to Breach of Contract: Wrongful Termination

by Robert V. West, MD JD FAAEM

Absent a provision specifying the term or length of an employment relationship, neither party to the contract has any legally enforceable claims for breach of the contract. Without a term contract, most state and federal courts adhere to the"employment at will "doctrine as the rule in analyzing employment disputes. The underlying premise here is that when there is no term of employment specified and it is left to the discretion of either party (employer or employee), then either party may terminate the arrangement at will. That means an employer can terminate an employee for a good reason, a bad reason, or for no reason at all. The only legal restriction is that if there is a reason that can be detected for the termination, it cannot be an illegal reason.

Termination for failure to participate in an illegal activity or a retaliatory discharge for reporting an illegal activity is considered wrongful termination and is actionable under federal and/or state laws. Such protections exist under the Social Security Act and Title VII of the 1964 Civil Rights Act. These federal laws control issues such as reimbursement for health care claims administered by HCFA and employment discrimination. Physicians should be aware of this protection and the intricacies of properly invoking "whistleblower" protection before raising objections to what they may perceive to be an illegal scheme. The downside is that you may have a full time job one month, and find yourself off the schedule the next, with the intention of righting the wrongs of your previous place of employment but no way to prove that is why you are off the schedule. This brings us to an illustrative case that came out of the Texas Supreme Court, underscoring this connection between the illegal action and the retaliatory discharge.

In what seems like a simple fact situation, a deckhand on a pilot barge was told to pump the bilges on his tugboat into a natural waterway. This was clearly illegal due to environmental concerns. The deckhand was fired for refusing to pollute the Sabine River. The Texas Supreme Court ruled that because he was fired solely for refusing to participate in an illegal act, the employer was liable for wrongful termination. Accordingly, the employee was awarded damages which included lost wages, retirement benefits, and punitive damages (Sabine Pilot Service Inc. v. Hauck, 687 S.W. 2d 733, Tex. 1985). The one big stipulation is that this remedy is available only in the situation where an employee can prove that the sole reason for discharge was the refusal to perform an illegal act.

This creates a documentation problem which must be met before blowing the whistle. Most employers are not going to memorialize their illegal scheme and your refusal to participate as a reason for discharge. They will point instead to a patient complaint or some subjective objection someone had to your practice style. That puts the burden on the whistleblower to intercept communiques from hospital management to their agents which document this nexus between your termination and the illegal acts of another. A common sense approach is to remember you have to overcome the defense that your refusal to participate in an illegal scheme was not a factor in your termination but the real reason was another issue that had been raised in your employment folder.