The ABA/BNA Lawyers’ Manual on Professional Conduct™ is a trusted resource that helps attorneys understand cases and decisions that directly impacts their work, practice ethically, and...
By Joan C. Rogers
A law firm associate has no viable wrongful discharge claim against a firm that allegedly fired him for refusing to take part in what he believed was a suspect referral arrangement with medical providers, the U.S. District Court for the Western District of Kentucky held Dec. 29 (Gadlage v. Winters & Yonker, Attorneys at Law PSC, W.D. Ky., Civ. No. 3:11-CV-354-H, 12/29/11).
Termination of an at-will employee gives rise to a wrongful discharge claim only if the firing violates public policy evidenced in a constitutional or statutory provision, Judge John G. Heyburn II explained. The public policy expressed in legal ethics rules is insufficient to support a wrongful discharge claim, he decided.
In a lawsuit removed to federal court, Anthony Gadlage asserted that while he was working at the personal injury firm Winters & Yonker, it told him to steer clients toward Kentucky Spine and Rehab for medical treatment. Gadlage said he routinely advised his clients to seek treatment elsewhere because he found it more difficult to settle claims for clients treated at Kentucky Spine and Rehab.
Gadlage alleged that Kentucky Spine and Rehab refers hundreds of injured Kentuckians to Winters & Yonker and in return expects an equal number of referrals to its own medical clinics.
He asserted that at one point, the law firm told him that Kentucky Spine and Rehab was displeased with the number of the firm's referrals and that it would stop sending patients to Winters & Yonker if the firm did not boost its referrals to the clinics. According to Gadlage, a spreadsheet showed that he had signed up most of the clients who were not referred to a Kentucky Spine and Rehab clinic.
Gadlage's complaint alleged that he continued to refer clients to other medical clinics, believing it to be in their best interests. He contended that a quid-pro-quo referral arrangement existed between the law firm and Kentucky Spine and Rehab, creating a conflict of interest under Kentucky ethics rules.
The firm terminated his employment because he refused to participate in the referral scheme, the plaintiff asserted.
For purposes of the law firm's motion to dismiss, the court took the facts alleged in the complaint at face value. Even so, Heyburn concluded that the complaint did not state a viable claim against the firm under Kentucky law.
At-will employees generally can be fired with or without cause, Heyburn said. Kentucky recognizes a narrow exception, he added, in cases where an employee's termination violates public policy. The Kentucky Supreme Court has made clear that the public policy supporting a wrongful discharge claim must be evidenced by a constitutional or statutory provision, Heyburn said.
Gadlage argued that his firing violated the public policy against conflicts of interest in lawyer-client relationships expressed in Kentucky Supreme Court rules.
The court decided, however, that in Kentucky, “a public policy from a court rule is insufficient to support a wrongful discharge claim.” The constitutional source of the state supreme court's authority to establish rules does not transform those rules into the equivalent of a constitutional or statutory provision, it said.
“Although it would be reasonable to find public policy in a wider scope of legal material—and other jurisdictions do exactly that—Kentucky has fairly drawn the line at constitutional and statutory provisions,” Heyburn wrote.
The court also tossed out Gadlage's claim for retaliation. The law firm's alleged conduct—firing him for refusing to participate in a quid-pro-quo referral scheme and contesting his claim for unemployment benefits—does not constitute the sort of outrageous and intolerable behavior needed to establish the tort of intentional infliction of mental distress, it found.
In a footnote, the court commented on Gadlage's belated invocation of a Kentucky statute that prohibits lawyers from soliciting clients within 30 days of an injury and forbids knowing acceptance of a client from an attorney referral service in violation of the 30-day rule. Nothing in the complaint suggested that Winters & Yonker was violating that statute or that Gadlage was terminated for conforming to it, Heyburn said.
Heyburn expressed some reluctance about having to dismiss the complaint. His opinion concludes: “This is not a pretty business that Mr. Gadlage has seen and fought against in his own way. Unfortunately, Kentucky does not afford him a legal remedy in these circumstances.”
Garry R. Adams Jr. of Thomas E. Clay PSC and Steven M. Frederick of Clay Frederick Adams, Louisville, Ky., represented Gadlage. James M. Inman and Ronald L. Green of Green & Chestnut, Lexington, Ky., represented Winters & Yonker.
Full text at http://op.bna.com/mopc.nsf/r?Open=kswn-8q8r9j.
Copyright 2012, the American Bar Association and The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)