Abbott v. Individual Support Home Health Agency, Inc.

148 N.E.3d 1091

Tiffany ABBOTT, Cathie Barnes, and Chandra Gray,¹ Appellants-Defendants,

v.INDIVIDUAL SUPPORT HOME HEALTH AGENCY, INC., Appellee-Plaintiff.

Court of Appeals Case No. 19A-PL-2367

Court of Appeals of Indiana.

FILED May 13, 2020

Attorney for Appellants: Ryan P. Sink, Fox, Williams & Sink, LLC, Indianapolis, Indiana

Attorneys for Amicus Curiae State of Indiana: Curtis T. Hill, Jr., Attorney General of Indiana, Thomas M. Fisher, Solicitor General, Aaron T. Craft, Section Chief, Civil Appeals, Kian J. Hudson, Deputy Solicitor General, Julia C. Payne, Sarah J. Shores, Deputy Attorneys General, Indianapolis, Indiana

Attorney for Appellee: Mark J. Crandley, Barnes & Thornburg, LLP, Indianapolis, Indiana

Mathias, Judge.

[1] Tiffany Abbot, Cathie Barnes, and Chandra Gray (collectively "the Appellants") have filed an interlocutory appeal of the Henry Circuit Court's order denying the motion to dismiss the complaint filed by their former employer, Individual Support Home Health Agency, Inc. ("Home Health"). The Appellants argue that reports they made to the Indiana State Department of Health ("the ISDH") are protected by absolute privilege and cannot serve as a basis for any civil lawsuit.

[2] Concluding that the Appellants' reports are protected by absolute privilege, we reverse.

Facts and Procedural History

[3] Home Health provides healthcare services to homebound patients, and its services are regulated by the ISDH. Home Health employed the Appellants, who are licensed nurses, to serve as case managers for the company's patients.

[4] In 2017, the Appellants made reports to the ISDH claiming that Home Health employees forged the Appellants' signatures on documents related to patient care. Home Health alleged that the reports were false, and the Appellants acted out of malice after receiving poor performance reviews. The ISDH investigated the Appellants' reports and concluded that the forgery reports were not substantiated.

[5] Home Health claims the Appellants also encouraged other employees to make false reports to the ISDH. After Appellants terminated their employment with Home Health, they induced other Home Health employees to terminate their employment.

[6] On April 29, 2019, Home Health filed a complaint against the Appellants for defamation, tortious interference with a contract, and tortious interference with a business relationship. On June 25, 2019, the Appellants filed a motion to dismiss the complaint and argued that their statements to the ISDH were absolutely privileged. The trial court denied the Appellants' motion to dismiss, and at the Appellants' request, the court certified its order for interlocutory appeal. Our court accepted jurisdiction over the appeal on November 8, 2019.

Standard of Review

[7] The trial court denied the Appellants' Trial Rule 12(B)(6) motion to dismiss. We review a trial court's ruling on a 12(B)(6) motion using a de novo standard, meaning no deference is given to the trial court's decision. Lei Shi v. Cecilia Yi , 921 N.E.2d 31, 36 (Ind. Ct. App. 2010). "The grant or denial of a motion to dismiss turns only on the legal sufficiency of the claim and does not require determinations of fact." Id. at 36–37. "A motion to dismiss under Rule 12(B)(6) tests the legal sufficiency of a complaint: that is, whether the allegations in the complaint establish any set of circumstances under which a plaintiff would be entitled to relief." Id . at 37. We consider the pleadings and reasonable inferences in the light most favorable to the nonmoving party. Id .

Discussion and Decision

[8] The Appellants filed a motion to dismiss Home Health's complaint arguing that their reports to the ISDH are cloaked with absolute privilege and cannot serve as the basis for any civil suit.

I. Absolute Privilege

[9] "Indiana law has long recognized an absolute privilege that protects all relevant statements made in the course of a judicial proceeding, regardless of the truth or motive behind the statements." Hartman v. Keri, 883 N.E.2d 774, 777 (Ind. 2008) (citations omitted). "The reason upon which the rule is founded is the necessity of preserving the due administration of justice ... by providing actors in judicial proceedings with the freedom to participate without fear of future defamation claims." Id . (citations and quotations omitted).

[10] Historically, absolute privilege was only recognized in formal judicial proceedings. But, in Hartman , our supreme court considered whether complaints of sexual harassment made by Purdue University graduate students against a professor were protected by absolute privilege. The students filed formal complaints alleging sexual harassment with the Purdue Affirmative Action Office. The professor was notified of the complaints and was permitted to respond. An investigation ensued, and the investigator found that the professor had harassed one student and had created a hostile educational environment. The investigator's findings were reviewed by a three-person panel, and the panel adopted her recommendation to immediately remove the professor from his teaching responsibilities. The professor appealed the determination to Purdue's president, who upheld the panel's decision.

[11] The professor filed a complaint in Allen Superior Court against the students alleging libel, slander, and malicious interference with his employment contract. The students moved for summary judgment and argued that their complaints made pursuant to Purdue policy were protected by an absolute privilege.

[12] This issue was ultimately resolved in the students' favor by our supreme court. The court observed:

[The students] acted under the procedure Purdue established. Protecting their complaints with anything less than an absolute privilege could chill some legitimate complaints for fear of retaliatory litigation. Other faculty-student disputes would result in traditional litigation rather than academic resolution to avoid any risk of loss of the absolute privilege accorded statements in judicial proceedings. A university should be given the latitude to tailor its processes to the educational environment without degrading the protection the law gives to complaints of misconduct in the educational setting.

Id. at 778.

[13] The court noted that as a deterrent to false reporting, enrolled Purdue students are subject to academic discipline for abuse of process. Id. "[T]he need for protection is greater in the educational setting because the subject of the complaint—the educator—is in a position of authority over the student, so fear of retaliation presents a potential obstacle to open airing of grievances." Id Importantly, the Hartman court extended absolute privilege to statements made during quasi-judicial proceedings. Id.

II. The Appellants' Reports to the ISDH

[14] The ISDH is responsible for licensing and regulating home-healthcare agencies. Ind. Code §§ 16-27-1-7, 16-27-1-8, 16-27-1-12. Indiana Code section 16-27-1-7 requires the ISDH to "adopt rules" to "[p]rotect the health, safety, and welfare of patients" and "[g]overn the procedure for issuing, renewing, denying, or revoking an annual license to a home health agency[.]"

[15] The ISDH relies on employee reports to regulate home-healthcare agencies and to protect the vulnerable patients those agencies serve. See 848 Ind. Admin Code 2-2-2(11), 2-2-3(13). In its Amicus Curiae Brief, the State argues that "chilling the report of substandard care could have disastrous, even fatal, consequences." Amicus Curiae Br. at 10.

[16] Home Health repeatedly argues that our courts have not extended absolute privilege to "a false report of wrongful conduct" made to a regulatory agency. Appellee's Br. at 9–10. However, the veracity of the Appellants' reports to the ISDH is irrelevant to our inquiry.² Our inquiry is whether the reports were made in the context of a judicial or quasi-judicial proceeding.

[17] Home Health asserts the Appellants did not make their reports to the ISDH in a judicial or quasi-judicial proceeding. Home Health attempts to analogize the statements made by the Appellants in this case to communications made to law enforcement reporting criminal activity, which are afforded only qualified privilege. See e.g. Williams v. Tharp , 914 N.E.2d 756, 763 (Ind. 2009).

[18] In Hartman , our supreme court addressed a similar argument and noted that "it may seem anomalous to grant a higher degree of protection to complaints made in the educational setting." 883 N.E.2d at 778. The court observed that there were substantial deterrents to the students submitting false reports concerning faculty conduct. And "the need for protection is greater in the educational setting because the subject of the complaint—the educator—is in a position of authority over the student, so fear of retaliation presents a potential obstacle to open airing of grievances." Id. The Hartman court concluded that "there is both a diminished need to deter false reporting and a greater need to encourage reporting than exists outside the educational environment." Id .

[19] Here, there are also substantial deterrents to false reporting. Licensed health care professionals are expressly prohibited from "engag[ing] in fraud or material deception in the course of professional services or activities[.]" Ind. Code § 25-1-9-4(b). Sanctions for engaging in fraud or deception include revoking or suspending a practitioner's license or imposing a fine. I.C. § 25-1-9-9. In addition, false reporting will likely impact the health care professional's current employment and possibly his or her future employment as well. And Home Health, the employer, is unquestionably in a position of power over the Appellants.

[20] Moreover, and even more compelling than the circumstances in Hartman , the Appellants are obligated to report substandard care to the ISDH. Failing to do so can result in sanctions, including the revocation of their licenses. See 848 I.A.C. §§ 2-2-2(1)(11) ; 2-2-3(6)(13).

[21] The United States District...