Sexual Harassment and Negligent Hiring, Can Same Conduct Justify Two Claims: Quirky Question # 152
One of our employees complained of sexual harassment. We investigated, though admittedly not as promptly as we should have. We discovered that the harasser had engaged in some seriously problematic conduct. Our investigation also revealed that the harasser had engaged in similar conduct at a prior employer and previously, at our company, with a different employee who had elected not to report.
The victim of the harassment is now threatening to sue us and demanding settlement compensation. Her lawyer suggests that if we do not settle, he will sue us for multiple claims, including both sexual harassment and negligent hiring. (Apparently, his investigation also revealed the past problems.) Is this legit? Can we be sued for multiple claims based on the same conduct?
Negligent Credentialing, Quirky Question # 121
Quirky Question # 121:
Our organization is responsible for evaluating the credentials for employees at certain medical facilities. I have reason to believe that one or more of the individuals we have referred out may have been less qualified than we were led to believe. Does that present any risks for our organization?
Roy’s Analysis:
Great question, the answer to which the answer is “Yes, there are risks for your organization.” Your question squarely explores the issue of the legal theory known as “negligent credentialing.” This is an offshoot of the doctrine of negligent hiring or retention, which is recognized in most jurisdictions. (For a discussion of this legal theory, see Quirky Question # 26, which is accessible through the “View By Topic” bar to the upper left. Just scroll down to the topic of “Negligent Hiring,” and you will find that analysis.) Simply stated, the negligent hiring doctrine is a common law theory that imposes an appropriate standard of care on those making hiring decisions, when considering the totality of the circumstances (e.g., the nature of the job, the risk to co-workers or the public, the employee’s employment history and skills, etc.). Often, negligent hiring cases arise in contexts where an employee with a discoverable, but undiscovered, propensity for violence or dishonesty, commits a crime that injures a member of the public or a co-worker.
The negligent credentialing theory is an offshoot of the negligent hiring doctrine. In essence, it holds those responsible for making credentialing determinations responsible to the injured third-party if they fail to meet the standard of care that would be expected of someone making these determinations.
You stated in your question that you were responsible for evaluating credentials for employees at certain medical facilities. By way of extreme (and admittedly unlikely) example, if your organization had to ensure that brain surgeons were adequately qualified to receive nuero-surgery credentials and you instead provided “credentials” to individuals who had no training whatsoever in brain surgery, resulting in injuries to patients, you would have a problem.
The Minnesota Supreme Court first recognized a cause of action for negligent credentialing two years ago in the case of Larson v. Wasemiller, No. A05-1698 (Minn. S. Ct. 2007), a case that arose in the medical credentialing context. In Larson, a medical malpractice case involving a botched gastric bypass operation, the plaintiff sued the physicians who performed the surgery, and the St. Francis Medical Center, which had granted the physicians’ hospital privileges, on a negligent credentialing theory. The medical center moved to dismiss the case, but the District Court rejected that motion. The trial court, however, certified the question to the Minnesota Court of Appeals, which reversed, finding that Minnesota does not recognize that legal theory. The Minnesota Supreme Court reversed again, holding that a claim of negligent credentialing exists in Minnesota.
When assessing whether to recognize this legal theory, Minnesota’s high court pointed out that whenever it has the responsibility for evaluating a new common law tort, it assesses four factors: a) whether the tort is inherent in, or the natural extension of, a well-established common law right; b) whether the tort has been recognized in other states; c) whether recognizing the tort will create tension with other applicable laws; and d) whether such tension is outweighed by the importance of the additional protections the new legal theory would provide to injured persons.
Despite considerable opposition from not just the defendant medical center but various amici groups (e.g., the Minnesota Hospital Association, the Minnesota Defense Lawyers Association), the Supreme Court found that the negligent credentialing theory was a natural extension of other recognized rights. For example, the court pointed to the decisions holding that hospitals have an obligation to protect patients from other intoxicated patients, and that hospitals have the obligation to retain a sufficient number of attendants to ensure patient safety. Moreover, the court noted that the negligent credentialing theory is closely analogous to the doctrines of negligent hiring and negligent selection of an independent contractor.
The Minnesota court then examined the question of whether the legal theory had been recognized in other states, noting that only two states that have considered the claim have rejected it. The plaintiff argued that “this broad recognition of the claim evidences a national consensus that hospitals owe a common law duty to patients to exercise reasonable care when making privileging decision[s].” After reviewing the analyses of other jurisdictions, Minnesota’s high court found this argument persuasive.
Turning to the third factor in the analysis, the court explored whether recognizing the tort would create tension with other applicable laws. The defendant medical center argued that this cause of action would conflict with Minnesota’s Peer Review Statute, which contains both confidentiality and limited liability provisions. The defendant argued that because it is precluded by statute from revealing the information relied upon in making its credentialing decisions, it would not be possible to defend against this type of claim. The court rejected this argument, noting that some of the same information upon which the credentialing committee relied may be available through original sources. (The court also noted that both Ohio and Wyoming had considered that argument and found it unpersuasive.) Minnesota’s Supreme Court acknowledged that the confidentiality provisions of the statute may complicate the underlying trial on a negligent credentialing claim but felt that that burden would fall more heavily on the plaintiffs than the defendants.
With regard to the fourth factor, the court found that the importance of recognizing this new legal theory and providing additional protections to patients outweighed the problems associated with resolving the tensions created by the inherent conflicts between the tort theory and the proscriptions of the Peer Review Statute. The court left for another day the potential problems associated with the need for a bifurcated trial and the scope of both the confidentiality and immunity provisions of the Peer Review Statute, finding that those issues could best be addressed by the trial court as part of its trial management responsibilities. The Minnesota Supreme Court concluded, “We therefore hold that a claim of negligent credentialing does exist in Minnesota, and is not precluded by Minnesota’s peer review statute.”
Applying this decision to your situation raises a number of points you may wish to explore. First, is your company located in Minnesota? If so, the Larson case will be dispositive of the question you raised. If not, you will want to explore carefully whether your state has addressed this issue in the context of medical facilities and medical credentialing committees. Second, if your medical center or hospital is not located in Minnesota, you should carefully examine the peer review statute of the state (or states) where you are operating. Those statutes may be similar or dissimilar to the statutes in Minnesota, and may afford your organization new or different arguments. Third, even if your facility is located in Minnesota, there likely will be difficult issues, reserved by the Larson court, that may be outcome determinative in your situation.
The bottom line, however, is that in many jurisdictions, courts have recognized a cause of action for negligent credentialing. Recognition of this theory heightens the obligations on all credentialing committees (hospital or otherwise) to ensure that credentials only are being offered to those who are qualified to perform the job responsibilities for which the credentials have been granted. Particularly if those credentials are granted to individuals who are physicians or others working with vulnerable members of the public, it is critical that the credentialing committee perform its tasks carefully and responsibly, exercising the reasonable care that would be expected of them. Keep in mind that your work will be judged from a “knew or should have known” standard, and that the underlying atmospherics will be a patient or another member of the public who has suffered injuries allegedly because of the failure of your credentialing committee to do its job effectively.
My last observation is that now that you have independently reached the determination that you may have “credentialed” undeserving parties, as you state in your question, you should act. In my view, even if your initial decision to credential someone may have been defensible, now that you know you based your decision on erroneous information, you need to take action. It would be very difficult for you to explain to a party injured in the future that despite your recently acquired knowledge, you remained silent. Presumably, those facts would come out during the discovery phase of a negligent credentialing lawsuit and they would be difficult to defend. Of course, how you go about communicating your recently discovered information and how you do so without creating separate problems for your organization, such as a defamation action, would have to be carefully and thoughtfully examined before you proceed.
Background Checks, Quirky Question # 26
Quirky Question # 26:
We are desperately trying to hire someone for a position we have had open for far too long. Perhaps our standards have been too high because we haven’t been able to find the right candidate. I recently interviewed a very impressive candidate and would like to extend him an offer. I have not been successful in tracking down some of his references. Moreover, there appear to be a few gaps in his employment history. My intuition tells me to slow down but I do not want to lose this applicant. How important is it to pin down all of the relevant background information?
Roy’s Analysis:
I’d answer your question with one of my own: What’s your tolerance for risk?
A few other questions flow from my first inquiry. Would you be putting any members of the public at risk if you hired this applicant and he did not turn out to be the person you expected? For example, will he be operating dangerous machinery? Or, alternatively, will he, in his role as your employee, have unsupervised contact with the public? Yet a third example – will he have access to your customers’ financial data or manage any customer funds? As these questions are intended to demonstrate, there are many different types of jobs that potentially expose the public, and correspondingly, your company, to risk.
Putting aside for a moment the public interest, a corollary inquiry is whether you would be putting the company at risk if he engaged in any wrongful conduct? For example, will the employee have access to corporate funds? Will he be a spokesperson for the company? Will he have independent authority to enter into contractual agreements that legally bind the company? Will he be entrusted with serving any of the company’s critical accounts? Again, I ask these questions to illustrate that there are a variety of different types of positions where non-performance (or worse, misfeasance) could jeopardize important corporate interests.
Lastly, thinking solely of your selfish interests, what would be the ramifications for you personally of a problematic hiring decision? Would your job be at risk if it turned out that he was not the person he represented on his resume? Would your job be at risk if he injured a member of the public, or a co-worker? Would your job be on the line if he damaged an important customer relationship?
If your answers to any of these questions increase your anxiety, I’d suggest you rely on your intuition, hold off on this hiring decision, and wait until you are able to get additional information. Worst case scenario – you lose a talented applicant whose resume checks out and a position that has been open for some time (admittedly longer than you would like) remains unfilled. Best case scenario – your company avoids a disaster.
The legal theory that you need to be attuned to is a claim for negligent hiring. The basic notion behind this theory is that companies are obligated to exercise an appropriate standard of care when making hiring decisions. The appropriate standard will depend on the nature of the position and the risks the individual poses to members of the public or co-employees. To use a fanciful example, if you were hiring a person with the responsibility for guarding weapons-grade uranium, your due diligence better be damn thorough. Conversely, if you are hiring someone to cut the lawn in front of your company headquarters, perhaps your background checks could be a bit less rigorous.
The seminal Minnesota case on this subject, Ponticas vs. K.M.S. Investments, 331 N.W.2d 907 (Minn. 1983), was decided 25 years ago. The fact pattern of Ponticas was troubling. A company was hiring someone for the job of resident manager for an apartment complex. The person hired for that job would receive a master key for approximately 200 apartments. The company hired someone without making any effort to check the references he listed on his resume. As it turned out, the references he listed were family members (mother and sister). In addition, the company making the hiring decision failed to explore the multi-year “gaps” in the applicant’s employment. As it turned out, the gaps reflected time the applicant spent in prison.
Without any of this information, the company hired Dennis Grafice, a 25-year old with a troubled past, including sporadic employment, criminal convictions for multiple offenses, and incarceration. Not long after he had been hired, Grafice used the master key he had been given to access a tenant’s apartment and sexually assaulted a woman whose husband was out of town on business. She sued the company on the ground that it had been negligent in hiring this individual. The Minnesota Supreme Court accepted the plaintiff’s legal theory, stating “an employer has a duty to exercise reasonable care in view of all the circumstances in hiring individuals who, because of their employment, may pose a threat of injury to members of the public.” The court emphasized that companies needed to perform “reasonable investigations” into an applicant’s background, a concept that took into consideration the nature of the position and the risk to the public.
Although negligent hiring cases decided since Ponticas, whether in Minnesota or other jurisdictions, often have involved hiring decisions that have placed dangerous individuals in contact with the public, these are not the only contexts where this legal theory has been accepted. For example, one case involved a hospital’s retention of an individual to coordinate a kidney transplant unit. This individual, who could not read medical charts, was unaware that one of the kidneys implanted in a patient was cancerous, ultimately leading to the death of the recipient. Another case involved an individual who kept loaded weapons at a Boy Scout camp, one of which was fired and accidentally struck a child. Other cases involve situations involving ex-felons who were entrusted with customer funds, only to later embezzle those monies. Moreover, we now live in a time when technological advancements can exacerbate risks, as the $7 Billion loss at the French Bank, Societe Generale, in January 2008, all attributable to the deception of one rogue trader, dramatically illustrates.
So, trust your intuition. Speak with the references the applicant has listed on his resume. Find out their relationship to the applicant. Determine what the applicant was doing during the “gaps” on his resume. Maybe there is an innocent explanation for these breaks in his employment history – perhaps he was a very happy and successful stay-at-home dad. You need to find out whether the explanation is innocent or something else. Until then, don’t make the offer. There will always be another qualified candidate for the position you are trying to fill.
Racist Ideas, Quirky Question # 16
I am both disappointed and embarrassed to report that one of our employees is an outspoken White Supremacist. His views are abhorrent to me personally, as well as to nearly all of our company’s employees, both minority and non-minority. The organization to which our employee belongs advocates violent conduct toward minorities. Given that fact, should we take any action? Can we fire this idiot? (That’s my preference but I admit he has never engaged in any violent conduct in the workplace.) If he ever engaged in any violent conduct in the workplace, as espoused by the organization to which he belongs, could the company be held liable?
I would strongly recommend against the “Do Nothing” approach. Although the risks of physical violence to members of your workforce may be extremely low, the potential consequences of violent behavior by this individual are extremely serious, especially since the company is on notice of his racist beliefs. On the other hand, I certainly understand that your company may be reluctant to discharge an employee solely because of the organization to which he belongs, no matter how unpalatable the belief system advanced by the organization.
At a minimum, however, the situation should be monitored very carefully. If the employee articulates his hateful beliefs in the workplace, discharge him. If he brings literature into the workplace advocating violence toward minorities, discharge him. If his conduct toward minorities is antagonistic or belligerent, discharge him. In all of these contexts, the company’s discharge position will be easily defended, inasmuch as the employee undoubtedly would be violating your company’s proscriptions against discriminatory conduct and would be creating a hostile and offensive working environment for your employees.
The tougher call is whether you should fire the employee in the absence of any violent conduct (and you stated that he has not exhibited any to date) and in the absence of specific conduct at the worksite that would warrant a discharge (as described above). [I wonder, however, how you know the employee is a member of the White Supremacist organization? Did he share his beliefs with his co-workers? Did he attempt to interest others in the organization? Did he exhibit behaviors in the workplace that led others to question him? If those questions are answered affirmatively, go back to the preceding paragraph for the solution.]
Even if he is not a manager and has no supervisory or hiring/firing authority, does he have to work with other employees? To the extent that the employee must interact regularly with others, if his perspectives and attitudes are well known to his co-workers, allowing him to continue working may be very disruptive. It would be difficult to establish a collegial, professional and productive working environment for a diverse workforce when one member of the group holds views deeply offensive to others. Given that fact, it may be appropriate to terminate the employee even in the absence of specific threatening conduct or workplace proselytizing.
Another reason to consider discharge is that if the company allows the employee to continue working and a tragedy ensues, the company may be at risk. This is the situation in which Lockheed Martin found itself several years ago. In the case of Tanks v. Lockheed Martin, a former Lockheed Martin employee who belonged to a racist organization that advocated violence toward minorities came to work and murdered and wounded several African American and Caucasian co-workers before killing himself. According to the Complaint, there had been numerous incidents over many years that put the company on notice of the employee’s violent proclivities and his racist beliefs, including specific threats of violence toward minority co-workers. The question presented was whether the company could be held liable for this tragic event under various common law theories. The federal District Court rejected the Lockheed Martin’s summary judgment motion, seeking dismissal of the case based on the exclusivity provisions of the Mississippi Workers’ Compensation Act. Although the District Court rejected the company’s arguments, it did certify an interlocutory appeal to the Fifth Circuit Court of Appeals. Somewhat surprisingly, the appellate court reversed, finding that the actions of the murderer fell within the exclusivity provisions of the Workers’ Compensation statute. See, Tanks v. Lockheed Martin Corp., 417 F.3d 456 (5th Cir. 2005). The resolution of the Tanks case (and other related cases) from that point forward is unclear.
Putting aside the question of whether the applicable workers’ compensation statute may provide the exclusive remedy for violent workplace conduct, the cases involving violence by one employee toward another often turn on the issue of whether the company knew or should have known of the violent propensities of the employee who caused the injuries to a co-worker, or at times, a member of the public. These types of cases implicate issues of negligent hiring, supervision and retention. These issues, however, will be addressed in future Quirky Question analyses.
In a brief, unpublished, per curiam, decision, announced just last week, the Fifth Circuit affirmed the summary judgment dismissal of the claims of all of the other plaintiffs injured by the “deranged employee who went on a violent rampage at work.” The appellate court found that the Tanks case was “factually and legally indistinguishable from the case here.” Therefore, the court held that the claims of all of the other plaintiffs were “exclusively compensable by state workers’ compensation laws.” See, Bailey, et al. vs. Lockheed Martin Corp., et al., No. 07-60399 (5th Cir. January 17, 2008). Barring further appeal, this ruling seemingly has brought the litigation to an end.
Follow
