KIM MADERA v. HORIZON BLUE CROSS BLUE SHIELD OF NEW JERSEY

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

 

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4813-09T4

KIM MADERA AND

TED MADERA,

Plaintiffs-Appellants,

v.

HORIZON BLUE CROSS BLUE SHIELD

OF NEW JERSEY, PATRICK GERAGHTY,

individually and as Senior Vice

President of Service Division of

HORIZON BLUE CROSS BLUE SHIELD

OF NEW JERSEY; LINDA WELLS,

individually and as Director of

Process Improvement of Service

Division of HORIZON BLUE CROSS

BLUE SHIELD OF NEW JERSEY; ROSE

BACZEWSKI, individually and as a

Director in several positions in

the Service Division of HORIZON

BLUE CROSS BLUE SHIELD OF NEW JERSEY,

Defendants-Respondents.

______________________________________

Telephonically Argued January 14, 2011 - Decided April 25, 2011

 

Before Judges Axelrad, R. B. Coleman and Lihotz.

 

On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-2441-06.

 

Richard J. Simon, argued the cause for appellants (Richard J. Simon, LLC, attorney; Mr. Simon, of counsel and on the briefs; Jeffrey Zajac, on the briefs).

 

Joseph D. Guarino argued the cause for respondents (Epstein Becker & Green, P.C., attorneys; Mr. Guarino, of counsel and on the brief; Denise Merna Dadika, on the brief).

 

PER CURIAM

Plaintiff1 Kim Madera appeals from the summary judgment dismissal of her complaint, alleging her employer Horizon Blue Cross Blue Shield of New Jersey (Horizon), along with the individual defendant supervisors, violated the New Jersey Conscientious Employee Protection Act (CEPA), N.J.S.A. 34:19-1 to -8. Plaintiff also appeals from the denial of her subsequent motion for reconsideration.

Plaintiff maintains her termination was in retaliation for her refusal to alter her reported findings regarding conduct by Horizon's Service Division. The motion judge concluded plaintiff's firing was not because of her refusal to modify the internal reports, but resulted from her failure to supervise her direct employee, who was operating a travel business from his office. The trial court concluded plaintiff failed to present evidence to support a CEPA claim. We affirm.

I.

We view the facts of record in a light most favorable to plaintiffs. Estate of Hanges v. Metro. Prop. & Cas. Ins. Co., 202 N.J. 369, 374 (2010); Hodges v. Sasil Corp., 189 N.J. 210, 215 (2007).

Horizon provides healthcare insurance for over 3.6 million New Jersey members. Plaintiff's employment with Horizon began on March 13, 1985, when she was hired as a technical claims analyst. Subsequently, plaintiff was repeatedly promoted, reaching the position of Director of Compliance (DOC) in Horizon's Service Division, the title she held upon her termination on June 27, 2005. Plaintiff served at the will of Horizon and could be terminated at any time.

Defendant Patrick Geraghty was the Senior Vice President of Horizon's Service Division, which included approximately 2500 employees. Linda Wells was the Director of Process Improvement of the Service Division. Wells was responsible for overseeing quality, training, project management, compliance, complaints and appeals. She reported directly to Geraghty and was plaintiff's immediate supervisor.

One of plaintiff's responsibilities as Horizon's DOC was to forecast prompt pay penalties, which are interest payments assessed on claims when Horizon failed to satisfy the insurance obligation within the defined period set forth in N.J.S.A. 17B:30-32.2 The Service Division had direct responsibility for prompt pay penalties and any payments came out of the Service Division's budget. Additionally, all paid assessments were reported to the New Jersey Department of Banking and Insurance (DOBI) in compliance with N.J.S.A. 17B:30-30.

Plaintiff was responsible for producing, signing and submitting reports to the DOBI regarding Horizon's prompt pay assessments. Additionally, each month she prepared forecasts and analyzed the cause of the prompt pay penalties, reporting her findings to, among others, Geraghty and Wells. These reports were for internal use only and were not submitted to the DOBI or any other entity outside Horizon. Geraghty's request that plaintiff alter these internal reports is the underlying basis for her CEPA claims.

Plaintiff related occasions, in 2004 and 2005, when Geraghty asked her to adjust her forecasted results because he felt her projections of increasing penalties was unfavorable to the Service Division. During this time period, plaintiff stated Wells made five similar requests. Each time, plaintiff informed Geraghty and Wells she was uncomfortable making the requested changes; however, she and her staff reexamined the analyses and made changes when appropriate. Plaintiff stated she had lowered her projections as suggested by Geraghty, but when the actual expenses were known, they were much closer to plaintiff's original projection rather than the lowered reported projection.

In May 2005, plaintiff and her staff, as requested by Horizon's CEO, prepared a report for internal use, which analyzed the "root cause" of "executive complaints" received in the first quarter of 2005. Plaintiff described an executive complaint as any complaint from a customer or healthcare provider, addressed to a Horizon officer, about their experience with Horizon. The purpose of the report was to analyze why customers were contacting Horizon's executives to complain regarding the service received or difficulties with a claim. Plaintiff's report also was to focus on "understand[ing] the reasons for the complaints and try to minimize them."

In her report plaintiff concluded that most, if not all, of the executive complaints were attributable to the actions or omissions of Horizon's Service Division. Further, she concluded the Service Division was responsible for 80% of the prompt pay assessments. Plaintiff claimed Geraghty became upset after reviewing her results, insisted she was wrong, and instructed her to "go back and re-examine the findings [] because he was sure that [the executive complaints] were not [S]ervice [D]ivision related." Plaintiff testified she was instructed to "take the findings and make it as though the [S]ervice [D]ivision was not the cause of those executive complaints. [Geraghty] didn't care what I had to do, but I had to make those reports appear as though those results did not happen as a result of [] [S]ervice [D]ivision inefficiencies." Wells later repeated Geraghty's instruction to "kind of spread out the results so that it's . . . not so glaring about service." Plaintiff reviewed her findings but made no adjustments. Thereafter, plaintiff did not recall speaking to Geraghty, but stated she "probably complained to [Wells] about it." Plaintiff had no idea what became of her report.

From the time plaintiff submitted her executive complaint report until the time she was fired on June 27, 2005, plaintiff's job responsibilities did not change. However, she perceived Geraghty and Wells were "curt" with her after her report was submitted. Plaintiff reported no other acts of retaliation prior to her termination.

Geraghty denied telling plaintiff to manipulate her reports or root cause analysis and countered these allegations, explaining plaintiff's firing was prompted by her failure to supervise Dave Morton, a Horizon employee who directly reported to her, who was operating a travel agency from his desk at Horizon. After plaintiff provided a written statement regarding her knowledge of Morton's travel-business-related activities, Wells discharged Morton and plaintiff.

Although plaintiff conceded she utilized Morton's travel services to book four trips, three of which were personal vacations, and she acknowledged she communicated with Morton about these trips during work hours via her office computer, she contested the use of these incidents as justification for her termination. Plaintiff asserted she had cautioned Morton not to conduct activities relating to his enterprise during work hours. Further, she maintained many Horizon employees, including some in upper management, utilized Morton's services. Finally, plaintiff suggested that throughout her twenty years with Horizon, she was unaware of another employee who was terminated for similar conduct without first being afforded "progressive discipline."3

Following discovery, defendants moved for summary judgment. The court granted the motion in an oral opinion. Judge Innes reviewed the undisputed facts and found Horizon s submissions to the DOBI accurately reflected the company's prompt payment penalties. Additionally, he found plaintiff s reports were internal documents, and therefore, their suggested alteration did not "demonstrate illegal or fraudulent activity[,] which harmed the public." Because the complained of activity had no public ramifications, but was instead a private dispute between employer and employee, Judge Innes concluded plaintiff failed to establish a prima facie case under CEPA and dismissed plaintiff's complaint.4

Plaintiff moved for reconsideration, seeking to introduce additional evidence that her firing was pretextual. Plaintiff introduced documents relating to other Horizon employees use of Morton s travel agency services. Plaintiff acknowledged she had this evidence at the time she opposed defendants' motion for summary judgment, but argued the interests of justice nonetheless warranted consideration of the information because Horizon's conduct was incompatible with the mandate of public policy. The trial court rejected this argument, concluding the complained-of conduct did not implicate any public policy or interest. Plaintiff's appeal from the denial of reconsideration followed.

Prior to our discussion, we pause to note plaintiff did not timely appeal from the summary judgment dismissal. Summary judgment was filed on February 5, 2010. She moved for reconsideration on March 2, 2010. This motion too appears untimely, see R. 4:49-2 (requiring motions for reconsideration to be filed within twenty days of entry of order), however, we presume the court relaxed the limitations period, R. 1:1-2, as it considered the plaintiff's application on April 16, 2010. An appeal must be taken within forty five days of entry of final judgment. R. 2:4-1(a). Running of the time allotted is tolled by pending review of a motion for reconsideration. R. 2:4-3(e). The trial court denied her motion on April 16, 2010, extending the appeal deadline to May 7, 2010. Plaintiff's appeal was filed on June 1, 2010, making her challenge to the summary judgment dismissal untimely. Plaintiff's appeal of the denial of reconsideration was timely. As it is necessary to understand the context of the motion judge's decision to deny reconsideration, in this opinion we will discuss the claims made challenging the summary judgment dismissal of plaintiff's CEPA complaint.

II.

We first review the standards governing actions for retaliatory discharge under CEPA. "[T]he purpose of CEPA is 'to protect and encourage employees to report illegal or unethical workplace activities and to discourage public and private sector employers from engaging in such conduct.'" Mehlman v. Mobil Oil Corp., 153 N.J. 163, 179 (1998) (quoting Abbamont v. Piscataway Bd. of Educ., 138 N.J. 405, 431 (1994)); Donelson v. Dupont Chambers Works, 412 N.J. Super. 17, 29 (App. Div.), certif. granted, 203 N.J. 95 (2010). As remedial legislation, CEPA must be liberally construed to effectuate its goal. Abbamont, supra, 138 N.J. at 431.

CEPA prohibits an employer from taking any retaliatory action against an employee who

[o]bjects to, or refuses to participate in any activity, policy or practice which the employee reasonably believes:

 

. . . .

 

(2) is fraudulent or criminal, including any activity, policy or practice of deception or misrepresentation which the employee reasonably believes may defraud any shareholder, investor, client, patient, customer, employee, former employee, retiree or pensioner of the employer or any governmental entity; or

 

(3) is incompatible with a clear mandate of public policy concerning the public health, safety or welfare or protection of the environment.

 

[N.J.S.A. 34:19-3(c).]

 

Prohibited retaliatory action includes an employee's suspension from or termination of his or her employment. N.J.S.A. 34:19-2(e); Donelson, supra, 412 N.J. Super. at 30.

Plaintiff's appeal contains assertions that she satisfactorily presented a prima facie cause of action pursuant to subsections (2) and (3) of N.J.S.A. 34:19-3(c).5 We provide an overview of the elements of proof necessary to succeed under each section.

A plaintiff who brings a cause of action pursuant to N.J.S.A. 34:19-3(c)(2) must demonstrate: (1) he or she reasonably believed his or her employer's conduct was fraudulent or criminal; (2) he or she performed a "whistle-blowing" activity described in N.J.S.A. 34:19-3(c); (3) an adverse employment action was taken against him or her; and (4) a causal connection exists between the whistle-blowing activity and the adverse employment action. Maimone v. City of Atl. City, 188 N.J. 221, 230 (2006). If a plaintiff establishes these four elements, the defendants must assert a "legitimate, nondiscriminatory reason" for the adverse employment decision. If the defendants do so, "plaintiff must then raise a genuine issue of material fact that the employer's proffered explanation is pretextual." Klein v. Univ. of Med. & Dentistry of N.J., 377 N.J. Super. 28, 38-39 (App. Div.), certif. denied, 185 N.J. 39 (2005).

A plaintiff who brings a claim pursuant to N.J.S.A. 34:19-3(c)(2) is not required to show that his or her employer's conduct was actually fraudulent. Rather, "the plaintiff simply must show that he or she 'reasonably believes' that to be the case." Dzwonar v. McDevitt, 177 N.J. 451, 462 (2003). Further, a claim under this subsection need not make the additional showing required for (c)(3) actions that their employer's conduct involved a matter of public interest. See Estate of Roach v. TRW, Inc., 164 N.J. 598, 609 (2000).

The elements of a plaintiff's prima facie case pursuant to N.J.S.A. 34:19-3(c)(3) are nearly identical to those for a (c)(2) claim. Maimone, supra, 188 N.J. at 230. The difference in a (c)(3) action is the need to establish an employer's retaliatory discharge resulting from the employee's decision not to perform an act which he or she believes involves a violation of "a clear mandate of public policy." Ibid. A determination of whether a plaintiff has "established the existence of a clear mandate of public policy is an issue of law" to be resolved by the court. Mehlman, supra, 153 N.J. at 187. Accordingly, "because the sources and parameters of public policy are not susceptible to hard and fast rules, 'the judiciary must define the cause of action in case-by-case determinations.'" Ibid. (quoting Pierce v. Ortho Pharm. Corp., 84 N.J. 58, 72 (1980)).

On this issue, the Court has instructed:

[T]he core value that infuses CEPA is the legislative determination to protect from retaliatory discharge those employees who, "believing that the public interest overrides the interest of the organization [they] serve[], publicly 'blow[] the whistle' [because] the organization is involved in corrupt, illegal, fraudulent or harmful activity." Ralph Nader et al., Whistleblowing: The Report of the Conference on Professional Responsibility (1972). We look generally to the federal and state constitutions, statutes, administrative rules and decisions, judicial decisions, and professional codes of ethics to inform our determination whether specific corrupt, illegal, fraudulent or harmful activity violates a clear mandate of public policy, but those sources are not necessarily exclusive. A salutary limiting principle is that the offensive activity must pose a threat of public harm, not merely private harm or harm only to the aggrieved employee.

 

[Id. at 187-88.]

 

Even though a plaintiff need not actually prove the employer's conduct violated public policy, a claim pursuant to (c)(3) "must identify a statute, regulation, rule or public policy that closely relates to the complained-of conduct." Dzwonar, supra, 177 N.J. at 463. Complaints of a private harm do not trigger CEPA's protections. Maw v. Advanced Clinical Commc'ns, Inc., 179 N.J. 439, 443-46 (2004); Mehlman, supra, 153 N.J. at 188.

III.

Guided by these principles, we examine plaintiff's arguments presented in this appeal. Specifically, plaintiff urges reversal stating the motion judge erred (1) in failing to find "the fraud element" of subsection (c)(3); (2) in finding there was no implication of state public policy as plaintiff's reasonable belief was that state public policy would be violated; and (3) in finding no causal connection between plaintiff's refusal to participate in the fraudulent activity and her termination. Plaintiff additionally argues the court erred in denying her motion for reconsideration, which was supported by newly submitted evidence.

A.

Plaintiff argues the "trial court failed to properly apply the appropriate section of CEPA which applies to the instant case, namely, the fraud element contained in subsection (c)(2)[.]" She urges reversal, asserting her firing was a direct result of "whistle blower" activity defined in N.J.S.A. 34:19-3(c)(2), noting she refused to comply with her supervisors' demands to include "fraudulent or misrepresent[ative]" findings in her reports.

As we stated above, this claim has not been timely presented. For completeness, however, we review plaintiff's contentions, which we reject.

Plaintiff has not proven her employer's alleged conduct was fraudulent or designated how it would defraud those parties set forth in the statute. Absent proof of these facts, plaintiff's claim is fatally flawed.

First, contrary to plaintiff's assertion, it is incorrect that she need prove only what amounts to a misrepresentation. The clear statutory mandate requires proof of fraudulent activity.

Second, plaintiff alleges she was asked to modify her findings to downplay the inefficiencies of the Service Department, or reallocate responsibility for executive complaints elsewhere. Deposition testimony discussing plaintiff's findings suggests her reports, in part, contained subjective conclusions. Plaintiff fails to explain how Geraghty's and Wells' disagreement with her conclusions is tantamount to fraud. Even if Geraghty and Wells told plaintiff to alter her report, we cannot conclude plaintiff's refusal was a protected activity under CEPA, as the employers' putative conduct was not "violative of a law, regulation, public policy, fraudulent or criminal." Gerard v. Camden Cnty. Health Serv's. Center, 348 N.J. Super. 516, 521 (App. Div.), certif. denied, 174 N.J. 40 (2002).

Third, assuming, arguendo, Geraghty's requests to alter plaintiff's reported findings can be characterized as fraudulent, she also must show how she reasonably believed that modification of a report would "defraud any shareholder, investor, client, patient, customer, employee, former employee, retiree or pensioner of the employer or any governmental entity[.]" N.J.S.A. 34:19-3(c)(3). The record reflects plaintiff's reports were solely for internal use, likely to improve efficiency and customer service by reducing executive complaints and prompt pay penalties. Plaintiff herself stated she did not know what happened to her reports. The absence of any public ramifications defeats plaintiff's claim of a prima facie CEPA case. Maw, supra, 179 N.J. at 446.

B.

Plaintiff next argues she has satisfied the requisites of N.J.S.A. 34:19-3(c)(3), and the complained of conduct was "incompatible with a clear mandate of public policy." We disagree.

The statute's reference to a "'clear mandate of public policy' conveys a legislative preference for a readily discernible course of action that is recognized to be in the public interest." Maw, supra, 179 N.J. at 444. Accordingly, "the complained[-]of activity must have public ramifications[.]" Ibid. Plaintiff must show more than a "vague, controversial, unsettled, and otherwise problematic public policy[.]" Mehlman, supra, 153 N.J. at 181 (citing MacDougall v. Weichert, 144 N.J. 380, 391-92 (1996)). To survive a request for summary judgment, a court must be able to discern whether "a substantial nexus between the complained-of conduct and the . . . public policy identified by the court or the plaintiff" has been shown. Klein, supra, 377 N.J. Super. at 41.

Plaintiff's public policy argument is linked to the "Prompt Pay Act," which requires, among other things, that health insurance carriers pay healthcare providers on "clean" claims within "[t]hirty calendar days after receipt of the claim where the claim is submitted by electronic means or . . . [f]orty calendar days after receipt of the claim where the claim is submitted by other than electronic means." N.J.A.C. 11:22-1.5(a)(1), (2). Failure to pay claims within this time period requires a carrier to pay "simple interest on the claim amount at the rate of 10 percent per year . . . ." N.J.A.C. 11:22-1.6(c). Carriers must maintain, and submit to the DOBI on a quarterly basis, records of the number of claims to which an interest penalty paid attached and relate the reason for late claim payment. N.J.A.C. 11:22-1.9.

Nothing in this record shows false or fraudulent information was disseminated to the DOBI or any other public entity. Although, plaintiff's supervisors requested she modify her conclusions, she determined not to do so. Moreover, all of the reports in question were for internal use by Horizon. We find plaintiff's assertions -- that Horizon will be unable to improve its service or prevent the late payment of claims because of the manipulated data or Horizon's insureds' premiums will be affected by the manipulation of these reports -- amount to nothing more than mere speculation. So too, no evidence is offered to sustain plaintiff's belief that manipulation of the reports could lead to higher premiums for Horizon's insureds. See Littman v. Firestone Rubber & Tire Co., 715 F. Supp. 90, 93 (S.D.N.Y. 1989) (reviewing a similar state statute and holding that "the activity plaintiff believed he was exposing fraud directed solely at the company with the shareholding public only indirectly affected is not the type of activity the statute was designed to combat, or whose disclosure the statute was designed to protect").

Plaintiff's arguments are unfounded. Like Judge Innes, we view the complained-of activity as "a dispute between an employee and employer," which is not blanketed by the protections of CEPA.

C.

Plaintiff next argues the motion judge erred in refusing to consider the additional evidence accompanying her motion for reconsideration, which showed many Horizon employees had utilized Morton s travel agency services thus, bolstering her argument that Horizon s proffered reason for termination was pretextual. We disagree.

Reconsideration is a matter left to a trial court's sound discretion, Capital Fin. Co. of Del. Valley, Inc. v. Asterbadi, 398 N.J. Super.299, 310 (App. Div.), certif. denied, 195 N.J. 521 (2008), appropriate only when a litigant demonstrates "1) the [c]ourt has expressed its decision based upon a palpably incorrect or irrational basis, or 2) it is obvious that the [c]ourt either did not consider, or failed to appreciate the significance of probative, competent evidence." D'Atria v. D'Atria, 242 N.J. Super. 392, 401 (Ch. Div. 1990). Reconsideration is not designed to "serve as a vehicle to introduce new evidence in order to cure an inadequacy in the motion record." Asterbadi, supra, 398 N.J. Super at 310. See also Fusco v. Bd. of Educ. of City of Newark, 349 N.J. Super. 455, 463 (App. Div.), certif. denied, 174 N.J. 544 (2002).

Here, the recently attached evidence was in plaintiff's possession at the time the original summary judgment motion was considered. Plaintiff inadequately explains why she failed to include the information in opposition to defendants' request to dismiss. Nevertheless, the additional documentation does not cure the defects in plaintiff's prima facie CEPA case. As outlined above, plaintiff's assertions fail to prove she engaged in a protected activity within the scope of N.J.S.A. 34:19-3(c)(2) or (3). See Klein, supra, 377 N.J. Super. at 38-39 (holding an employer need not assert a legitimate reason for terminating an at-will employee until the plaintiff establishes a prima facie case of retaliatory termination). Also, this previously unconsidered evidence does not aid in supporting plaintiff's contention of a pretextual termination. Plaintiff, as Morton's supervisor, was responsible for maintaining corporate policies for work conduct. Instead she condoned his extracurricular, personal, business activities during company time using company equipment, rather than stopping them. We find no abuse in Judge Innes' exercise of his reasoned discretion and discern no injustice occurs if we refrain from interfering with his order.

Affirmed.

1 The record reflects that plaintiff Ted Madera's cause of action for loss of consortium, which is derivative from the claims of his wife, was abandoned. Consequently, in our opinion, we use plaintiff solely to identify Kim Madera.

2 Insurance trade practices are governed by statutes promulgated in Title 17B. Specifically, L. 1999, c. 155 governs unfair claim settlement practices and mandates reporting requirements of the DOBI. The parties and the record refer to this legislation as the "Prompt Pay Act," which is found at N.J.S.A. 17B:30-26 to -34.

3 Plaintiff claimed her firing violated Horizon's "Personnel Policy F-01," applicable to employees covered by a collective bargaining agreement. Plaintiff, as a management employee, was not covered by these policies. In any event, Personnel Policy F-01 states: "Any employee who fails to maintain the proper rules subjects [her]self to formal correction disciplinary action ranging from warning notices to immediate discharge." Further, the policy recognizes that some offenses warrant bypassing a lesser penalty in favor of discharge.

4 Plaintiff's complaint alleged (1) breach of contract; (2) retaliatory termination in violation CEPA; (3) discrimination on the basis of pregnancy in violation of the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 to -49; (4) intentional infliction of emotional distress; and (5) loss of consortium. On summary judgment the court dismissed all five counts of the complaint. Both on reconsideration and appeal, plaintiff addressed only her CEPA claim and did not brief any other issue.

5 We recognize plaintiff's merits brief states her requested relief is based on fraud under subsection (c)(2), however she repeatedly invoked the suggestion that her employer's conduct violated public policy, blurring the lines with a claim pursuant to subsection (c)(3).