Jane Cavanaugh, Appellant, Mary Cadieux, Plaintiff, vs. Concentra Managed Care, Inc., et al., Respondents.

STATE OF MINNESOTA
IN COURT OF APPEALS
C3-98-2330

Jane Cavanaugh,
Appellant,

Mary Cadieux,
Plaintiff,

vs.

Concentra Managed Care, Inc., et al.,
Respondents.

 Filed June 29, 1999
 Affirmed in part, reversed in part, and remanded
 Peterson, Judge

Hennepin County District Court
File No. 9812147

Kelley V. Rea, Legal & Security Services, 1958 Penn Avenue South, Minneapolis, MN 55405-2219 (for appellant)

Kathleen M. Mahoney, David M. Wilk, Oppenheimer Wolff & Donnelly LLP, 1700 First Bank Building, St. Paul, MN 55101 (for respondents)

Considered and decided by Short, Presiding Judge, Peterson, Judge, and Shumaker, Judge.

U N P U B L I S H E D   O P I N I O N

 PETERSON, Judge

Jane Cavanaugh appeals from a summary judgment in favor of her employer on whistleblower and defamation claims. We affirm in part, reverse in part, and remand.

FACTS

Appellant Jane Cavanaugh was employed as a case manager, a nurse who monitors the progress of medical patients throughout their course of treatment, for respondent Concentra Managed Care, Inc. Before some services are provided to patients, a case manager performs a utilization review to determine the medical necessity for the service. Cavanaugh also performed retrospective reviews to determine whether a service that had already been provided was medically necessary.

Cavanaugh and another Concentra employee, Mary Cadieux, submitted affidavits stating that Concentra engaged in several illegal practices. First, they stated that Concentra falsely represented in letters to insurance carriers that it was accredited by the Utilization Review Accreditation Commission (URAC). Second, they stated that a clerk conducted utilization reviews and signed the names of two registered nurses on them. Third, they stated that Concentra conducted retrospective reviews without required peer or physician review.

Cavanaugh did not claim that she was personally involved in any illegal acts. However, she did state that, on two occasions, her supervisor, respondent Sharon Henderson, instructed her to do retrospective reviews on chiropractic care without making a chiropractic adviser available to Cavanaugh. Cadieux's affidavit does not indicate that she was personally involved in illegal practices.

Cavanaugh and Cadieux stated that they reported the allegedly illegal practices to Henderson, branch manager Nancy Caven, regional vice president for human relations Ginger Nicholas, and regional manager Chris Delich. Cavanaugh stated that she and Cadieux suffered negative consequences as a result of reporting the allegedly illegal practices.

Cavanaugh alleges that Henderson communicated several false statements about her to other employees. First, Henderson stated that Cavanaugh had not done her job during the week in May 1998 when Cadieux was on vacation. Second, Henderson stated that Cavanaugh was unprofessional, provided poor customer service, and was abrupt and confrontational on the telephone. Third, Henderson described Cavanaugh's dress and demeanor as slovenly and unprofessional. Fourth, Henderson stated that Cavanaugh had productivity problems and was going to be disciplined for insubordination.

As a result of Henderson's statements, other employees questioned Cavanaugh about her productivity issues and whether she was going to be disciplined for insubordination. Cavanaugh stated that she felt she had to work harder and more efficiently than other employees to maintain professional respect and approval. Cavanaugh claims that Henderson's conduct caused her physical and mental health problems and ultimately resulted in her resignation from Concentra.

D E C I S I O N

On appeal from a summary judgment, this court must review the record to determine whether any genuine issues of material fact exist and whether the district court erred in applying the law. Offerdahl v. University of Minn. Hosps. & Clinics, 426 N.W.2d 425, 427 (Minn. 1988). This court must view the evidence in the light most favorable to the nonmoving party. Id. The nonmoving party, however,

cannot rely on the pleadings alone to defeat a summary judgment motion but instead must produce specific facts which establish the existence of a genuine issue for trial.

 Krogness v. Best Buy Co., Inc., 524 N.W.2d 282, 285 (Minn. App. 1994), review denied (Minn. Jan. 25, 1995).

[S]ummary judgment on a claim is mandatory against a party who fails to establish an essential element of that claim, if that party has the burden of proof, because this failure renders all other facts immaterial.

 Lloyd v. In Home Health, Inc., 523 N.W.2d 2, 3 (Minn. App. 1994).

1. Statutory interpretation is a question of law subject to de novo review. Metropolitan Sports Facilities Comm'n v. County of Hennepin, 561 N.W.2d 513, 515 (Minn. 1997).

The whistleblower statute provides:

An employer shall not discharge, discipline, threaten, otherwise discriminate against, or penalize an employee regarding the employee's compensation, terms, conditions, location, or privileges of employment because:

(a) the employee * * * in good faith, reports a violation or suspected violation of any federal or state law or rule adopted pursuant to law to an employer or to any governmental body or law enforcement official; [or]

* * * *

(c) the employee refuses an employer's order to perform an action that the employee has an objective basis in fact to believe violates any state or federal law or rule or regulation adopted pursuant to law, and the employee informs the employer that the order is being refused for that reason.

Minn. Stat. § 181.932, subd. 1(a), (c) (1998).

Minnesota courts apply the three-step, burden-shifting procedure set forth in McDonnell Douglas to whistleblower claims. McGrath v. TCF Bank Sav., FSB, 502 N.W.2d 801, 805 (Minn. App. 1993), aff'd as modified, 509 N.W.2d 365 (Minn. 1993). The McDonnell Douglas burden shifting procedure consists of a prima facie case, an answer, and a rebuttal. McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802-04, 93 S. Ct. 1817, 1824-25 (1973). To establish a prima facie case under the whistleblower act, one of the elements that an employee must prove is that she engaged in statutorily protected conduct. Rothmeier v. Investment Advisers, Inc., 556 N.W.2d 590, 592 (Minn. App. 1996), review denied (Minn. Feb. 26, 1997).

The district court concluded that the statements in Cavanaugh and Cadieux's affidavits regarding illegal practices by Concentra were conclusory statements lacking factual support and that Cavanaugh "presented no evidence that Concentra knowingly deceived insurance companies nor attempted to engage in any illegal practice." We agree.

Evidence presented to defeat a summary judgment motion must be such evidence as would be admissible at trial. Hopkins by LaFontaine v. Empire Fire and Marine Ins. Co., 474 N.W.2d 209, 212 (Minn. App. 1991).

A witness may not testify to a matter unless evidence is introduced sufficient to support a finding that the witness has personal knowledge of the matter.

Minn. R. Evid. 602. A record kept in the course of regularly conducted business activity may be admissible under Minn. R. Evid. 803(6).

Cavanaugh and Cadieux stated that Concentra falsely represented in letters to insurance carriers that it was accredited by URAC. Cavanaugh did not present any business records or other evidence substantiating the assertion that Concentra misrepresented its URAC accreditation status, and neither Cavanaugh nor Cadieux claimed any personal involvement in the practice. Absent any personal involvement, Cavanaugh's and Cadieux's mere assertions that Concentra misrepresented its URAC accreditation status to insurance carriers are inadmissible and, thus, insufficient to withstand summary judgment. Moreover, Cavanaugh failed to cite any statute or regulation that the alleged misrepresentation violates. See Hedglin v. City of Willmar, 582 N.W.2d 897, 902 (Minn. 1998) (conduct that did not violate a statute or regulation could not support a whistleblower claim).

Cavanaugh also argues that Concentra conducted some utilization reviews in a manner that violated the utilization review act. First, Cavanaugh and Cadieux stated that a clerk conducted utilization reviews and signed the names of two registered nurses on them when those nurses had not conducted the reviews. See Minn. Stat. §§ 62M.09, subds. 1, 2 (1998) (staff criteria and licensure requirements); 62M.02, subd. 20 (1998) (definition of utilization review). As with her previous allegation of improper conduct, Cavanaugh failed to present any business records or other evidence substantiating this assertion, and neither Cavanaugh nor Cadieux claimed any personal involvement in the practice.

Second, Cavanaugh asserts that Concentra acted illegally by conducting retrospective reviews without required peer or physician review. Pursuant to Minn. Stat. § 62M.09, subds. 3, 5, a physician or chiropractor must review "all cases in which the utilization review organization has concluded that a determination not to certify for clinical reasons is appropriate." Minn. Stat. § 62M.02, subd. 5, defines certification as

a determination by a utilization review organization that an admission, extension of stay, or other health care service has been reviewed and that it, based on the information provided, meets the utilization review requirements of the applicable health plan and the health carrier will then pay for the covered benefit, provided the preexisting limitation provisions, the general exclusion provisions, and any deductible, copayment, coinsurance, or other policy requirements have been met.

Under the definition of certification, a determination not to certify occurs when a utilization review organization determines that a health care service does not meet a health plan's requirements and recommends against payment. Minn. Stat. § 62M.09, subds. 3, 5, require review by a physician or chiropractor only in cases in which a determination not to certify is made.

Cavanaugh identified by CRA number eleven cases in which allegedly illegal retrospective reviews had been conducted but did not present any business records substantiating her allegation. Cavanaugh did not claim that she was personally involved in committing any illegal acts but did state that, on two occasions, Henderson instructed her to do retrospective reviews on chiropractic care without making a chiropractic adviser available to Cavanaugh. Cavanaugh, however, failed to present evidence that these cases involved a recommendation against payment. Absent such evidence, the evidence was insufficient to show that Concentra acted improperly in failing to make a chiropractic adviser available to Cavanaugh. Cavanaugh's mere assertion that Concentra conducted other reviews in an illegal manner is inadmissible and insufficient to withstand summary judgment.

The district court did not err in granting summary judgment on Cavanaugh's whistleblower claims.

2. The elements of a defamation claim are (1) a false statement; (2) communication to a third party; and (3) resulting harm to the plaintiff's reputation and standing in the community. Stuempges v. Parke, Davis & Co., 297 N.W.2d 252, 255 (Minn. 1980). False statements about a person's business, trade, or professional conduct are defamatory per se, and actual harm need not be proved. Id. at 255; Becker v. Alloy Hardfacing & Eng'g Co., 401 N.W.2d 655, 661 (Minn. 1987). But

Minnesota recognizes a qualified privilege which exempts an employer from liability for defamatory statements about an employee so long as the statements are made in good faith and for a legitimate purpose.

 Brooks v. Doherty, Rumble & Butler, 481 N.W.2d 120, 124-25 (Minn. App. 1992), review denied (Minn. Apr. 29, 1992).

The law is that a communication, to be privileged, must be made upon a proper occasion, from a proper motive, and must be based upon reasonable or probable cause.

 Id. (quoting Stuempges, 297 N.W.2d at 256-57). The initial determination of whether a statement is privileged is a question of law for the district court to determine and is subject to de novo review; whether the privilege was abused is a fact question for the jury to determine. Lewis v. Equitable Life Assurance Soc'y, 389 N.W.2d 876, 890 (Minn. 1986).

Cavanaugh alleges that Henderson made the following statements about her to other employees. First, Henderson stated that Cavanaugh had not done her job during the week in May 1998 when Cadieux was on vacation. Second, Henderson stated that Cavanaugh was unprofessional, provided poor customer service, and was abrupt and confrontational on the telephone. Third, Henderson described Cavanaugh's dress and demeanor as slovenly and unprofessional. Fourth, Henderson stated that Cavanaugh had productivity problems and was going to be disciplined for insubordination.

Concentra argues that Henderson's statements cannot support a defamation action because they were statements of opinion, not fact.

In Milkovich v. Lorain Journal Co., 497 U.S. 1, 110 S. Ct. 2695, 111 L. Ed. 2d 1 (1990), the Supreme Court made clear that not all opinions were protected and that the distinction between fact and opinion employed by the lower courts was artificial. The Court held that only statements about matters of public concern not capable of being proven true or false and statements that cannot be interpreted reasonably as stating facts are protected from defamation actions under the First Amendment. This court has stated, however, that the pre-Milkovich test and case law are still instructive to determine if a statement is actionable pursuant to Milkovich. The four-factor test examines the statement's (1) specificity and precision, (2) verifiability, (3) literary and social context in which it was made, and (4) public context. Whether a statement can be interpreted as stating facts or can be proven false is a question of law.

 Geraci v. Eckankar, 526 N.W.2d 391, 397 (Minn. App. 1995) (citations omitted), review denied (Minn. Mar. 14, 1995).

The second and third statements were not precise or specific enough to be verifiable and were, therefore, unactionable opinion, review denied (Minn. Dec. 24, 1991). See Huyen v. Driscoll, 479 N.W.2d 76, 80 (Minn. App. 1991) (statements regarding level of accountability and uneven use of authority unactionable opinion); Lund v. Chicago & Northwestern Transp. Co., 467 N.W.2d 366, 369 (Minn. App. 1991) (memo posted in workplace using terms "move ups," "brown nose," and "favoritism" not actionable), review denied (Minn. June 19, 1991); Schibursky v. International Business Machines Corp., 820 F. Supp. 1169, 1181-82 (D. Minn. 1993) (statements that plaintiff was "hard to work with" and "rude" too imprecise to be actionable).

The first and fourth statements were sufficiently specific to be verifiable as true or false, and a fact question exists regarding the truth of the statements. Cavanaugh presented evidence that Henderson communicated these statements to other employees, and the record does not indicate that the other employees were involved in supervising or reviewing Cavanaugh's work. A fact question, therefore, exists as to whether Henderson abused the employer's qualified privilege in making these statements. The district court erred in granting summary judgment on Cavanaugh's claims that Henderson defamed her by stating to other employees that Cavanaugh had not done her job during the week in May 1998 when Cadieux was on vacation and that Cavanaugh had productivity problems and was going to be disciplined for insubordination.

Affirmed in part, reversed in part, and remanded.