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A federal court in Minnesota erred in dismissing a psychiatrist’s whistleblower action against her former employer because there is a genuine issue of material fact as to whether she is entitled to damages for emotional distress resulting from Northland Counseling Center’s allegedly retaliatory actions, the 8th U.S. Circuit Court of Appeals ruled July 17 ( Hammond v. Northland Counseling Center Inc., No. 99-1672, 8th Cir.). In addition, the court held that there is a genuine issue of fact as to whether Dr. Marilynn K. Hammond is entitled to litigation costs and reasonable attorney’s fees provided for as “special damages sustained as a result of the discrimination.” QUESTIONS BILLING Hammond was the medical director for Northland from October 1994 to September 1996. According to the court, in January 1996, Hammond began expressing concern that the center was improperly billing day treatment programs to Medicare as a partial hospitalization program resulting in higher billings. In April 1996, after inquiring with other facilities to determine if Northland’s billing practices were appropriate, Hammond rescinded her authorization for Northland to bill partial hospitalization expenses under her license and scheduled a meeting with officials of the U.S. Department of Health and Human Services (HHS). Prior to the meeting, Northland’s chief executive officer, Greg Walker, allegedly told Hammond she “had no right or authority to present her concerns to HHS officials.” She met with them anyway and informed Walker and others about the meeting and that HHS would investigate. In May, Walker notified Hammond that her contract would not be renewed when it expired in September. During the summer, as Hammond continued to meet with HHS officials and representatives of the FBI, she claims she was “virtually excluded from Northland’s administration.” TERMINATION According to the court, at 5:10 p.m. on Sept. 18, 1996, Walker notified Hammond by memorandum that her position at Northland was terminated as of 5:30 p.m. and after that time she would be removed from the property. Hammond had to meet with patients the following day “in the hallways and auditorium of the nearby Itasca Medical Center (IMC).” In October, Hammond became the new medical director of IMC’s Department of Behavioral Health retroactive to Sept. 19 with salary and benefits the same or better than she received from Northland. She worked at IMC until November 1997 and subsequently moved out of the state with her family. Hammond alleges that both before and after she was terminated from Northland, its officials “engaged in a campaign of character assassination against her.” Hammond sued in December 1996, amended in April 1997, alleging a violation of the whistleblower provision of the False Claims Act (FCA) and state law claims for defamation, tortious interference with a business relationship, breach of contract, and violation of the Minnesota Whistleblower Act. DAMAGES In August 1997, Northland moved successfully for summary judgment on the FCA claim and the court dismissed the remaining claims without prejudice. The court found that damages are a necessary element of a whistleblower claim and that Hammond failed to show she was entitled to relief under the FCA. The court found that no compensatory remedies were available because “(1) reinstatement was not an appropriate remedy in the instant case; (2) ’2 times the amount of back pay’ would result in a net pecuniary loss of zero for Hammond, given that her mitigating pay from IMC wholly canceled out lost wages from Northland; (3) interest on back pay was accordingly not applicable; and (4) damages for emotional distress were not warranted.” Hammond appealed. On appeal, the 8th Circuit agreed that “Hammond suffered no pecuniary injury warranting a back pay award as a result of her termination from Northland,” that reinstatement was not an appropriate remedy, and she did not provide sufficient factual support for her alternative claim for prospective relief. However, the court found that Hammond did submit adequate evidence to create an issue of fact on her claim for emotional distress damages. According to the court, “Damages for emotional distress caused by an employer’s retaliatory conduct plainly fall within this category of ‘special damages,’” and Hammond’s testimony that she had suffered from severe emotional distress was sufficient. ‘EXTREME DISTRESS’ For example, the court quoted Hammond’s testimony that “I believe I have extreme distress, which is a normal reaction to having my [Medicare provider] number used fraudulently, to having my career destroyed, having to leave my home, having my husband’s career destroyed, having my children leave their home, their community, their friends, and their state. I think every human being would understand that degree of distress. That’s a normal reaction, both emotional and physiological.” In addition, the court found that Hammond created an issue of fact that she may be eligible for “litigation costs and reasonable attorneys’ fees” and, if not, there is a genuine issue of material fact concerning her eligibility for an award of nominal damages. The court remanded to the U.S. District Court for the District of Minnesota for further proceedings. � Copyright 2000 Mealey Publications, Inc.

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