Even in good times, employers can feel that their every personnel decision is fraught with legal risk. Of course, in times of crisis, employers must often act decisively to protect their businesses and reputations. Here is a cautionary tale about decisive action and one type of legal risk: defamation claims.
Steward Carney Hospital (“hospital”) operated an adolescent psychiatric unit. In April 2011, there were four incidents of patient abuse or neglect in the unit. The hospital immediately notified the Massachusetts Department of Mental Health (“DMH”) which licensed the Hospital to operate the unit. An investigation was commenced, admissions were halted, employees were placed on administrative leave. In addition, DMH considered revoking the license for the hospital to operate the unit.
The hospital hired an outside lawyer, a former state Attorney General, to investigate, recommend remedial actions, and represent it in dealings with state agencies. The lawyer ultimately recommended to the president of the hospital that all of the unit’s staff be replaced due to a “code of silence” among them. The hospital president took that advice.
After he notified each of the affected employees, including the plaintiff nurses, the hospital president sent an all-hospital staff email which included this passage:
“Recently, I have become aware of the alleged incidents where a number of [hospital] staff have not demonstrated this steadfast commitment to patient care. I have thoroughly investigated these allegations and have determined that these individual employees have not been acting in the best interest of their patients, the hospital, or the community we serve. As a result, I have terminated the employment of each of these individuals.”
In a Boston Globe article two days after the firings, the hospital president was quoted as saying that the investigator recommended that he “start over on the unit” and that his “goal [was] to make it the best unit in the state.” Approximately one month later, the Boston Globe published another article on the incidents at the hospital, quoting the hospital president as stating that “[t]he [investigator’s] report indicated it wasn’t a safe situation” and stating that the report “underscored his decision to fire the entire staff of the unit.”
DMH’s investigative reports on each of the four incidents concluded that there had been wrongdoing by only a single mental health counselor as to three of the incidents, while the fourth report concluded that unspecified staff on duty during the incident had acted improperly.
Several of the fired nurses filed a defamation suit against the hospital over its president’s all-staff email and his statements in the two Boston Globe articles. The hospital immediately sought to dismiss the suit contending that it was an illegal “SLAPP” suit under G.L.c. 231, §59H, because it was a meritless claim brought to quell the hospital’s exercise of legitimate petitioning activity and thus it was entitled to a special motion to dismiss under the statute. The court denied the motion, finding that neither the email nor president’s statements to The Globe constituted protected petitioning activity.
The hospital appealed to the Massachusetts Appeals Court and then the Supreme Judicial Court (“SJC”), which ruled that the president’s e-mail to hospital staff was not petitioning activity protected by the SLAPP statute. The case was sent back to the Superior Court for a decision consistent with the SJC’s ruling. Based on the SJC’s clarification of the SLAPP law, the Superior Court Judge ruled that the nurses’ defamation claim over the Globe comments should be allowed to proceed because their primary purpose in suing the defendants for defamation appeared to be for redress for harm they alleged and not to impair protected petitioning activity.
The Case for Disclosure
It’s worth noting that employers may have a whole host of valid reasons for wanting to disclose why they have terminated or disciplined a worker. Those include:
- Closing the loop on an investigation that might have involved numerous employees;
- Deterring future misconduct; and
- Reassurring co-workers’ about their own job security concerns.
Depending on the situation, these reasons may or may not outweigh the risk of defamation claims brought by disciplined employees. Keep in mind that this case does not change the general rule that if an employer’s statements are true and reasonably related to the company’s business interest — and not made with actual malice — the company should prevail in a defamation claim.
Think long and hard about mass emails or media comments about personnel actions taken in times of crisis. In either forum it can be too easy for details to get lost in translation. An employer should be thoughtful in its decision to disclose its reasons for disciplining an employee and make sure that the legitimate business interests override the risk of litigation. As this case illustrates, the risk of defamation claims are real when personnel actions “go public.” The hospital may ultimately win this case. To do that, however, will take a lot of time and money. Many employers cannot afford to squander either.
The case is Blanchard, et al. v. Steward Carney Hospital, Inc., et al. (Suffolk Superior Court, December 7, 2017).
Author’s Note: From a strictly legal standpoint, this case turns on our anti-SLAPP statute. The history of this case involves separate decisions by the Massachusetts Appeals Court and the Supreme Judicial Court. This article, however, focuses on the practical pointers for our non-lawyer readers rather than on the finer points of legal analysis from our courts.