Texas Supreme Court holds OIG attorney’s report to OIG supervisor is a report to a proper law enforcement authority under Whistleblower Act


This is a Texas Whistleblower Act case where the Texas Supreme Court remanded the case back to the trial court holding McMillem made a report to a  proper law enforcement authority – his own.

Michael McMillen, an attorney, served as Deputy Counsel for the Commission’s Office of the Inspector General (“OIG”). McMillen was asked to research the legality of the Commission’s practice of obtaining payments from certain recipients of Medicaid benefits. McMillen prepared a memorandum concluding the Commission’s actions lacked legal justification. His memorandum, however, cited neither statutes nor case law.  He submitted the memo to an OIG supervisor as well as the OIG Internal Affairs Division and the Commission’s Executive Commissioner. Several months later McMillien was terminated. He brought suit under the Texas Whistleblower Act. The Commission filed a plea to the jurisdiction which the trial court denied but the Court of Appeals reversed holding McMillien did not report to a proper law enforcement authority.

To be a report in “good faith,” an employee’s belief about the reported-to authority’s powers must be “reasonable in light of the employee’s training and experience.” Tex. Dep’t of Transp. v. Needham, 82 S.W.3d 314, 321 (Tex. 2002). An authority’s power to discipline its own or investigate internally does not support a good-faith belief.  To qualify the authority must have outward-looking powers. Under 42 U.S.C. § 1396p(b)(1) it prohibits any “adjustment or recovery of any medical assistance correctly paid on behalf of an individual under the State plan,” with limited exceptions under which “the State shall seek adjustment or recovery.” Based on the record, the Court held the report qualifies as a report under this section. And since the Commission, “through [its] office of inspector general, is responsible for the investigation of fraud and abuse in the provision of health and human services and the enforcement of state law relating to the provision of those services”  McMillen’s report was to the property law enforcement agency. This authority extends far beyond the Commission itself.  If someone is to make such a report, it would be to the OIG. To the extent other Texas agencies violate §1396p(b), the OIG also has power to enforce the law. The fact it was an internal investigation does not change the fact the OIG is the proper authority to make any such report and the OIG is the agency with power to enforce such laws.

If you would like to read this opinion click here. Per Curiam opinion. The attorneys listed for McMillen are  Manuel Quinto-Pozos  and Philip Durst.  The attornes listed for THHSC are David G. Halpern and  Shelley Nieto Dahlberg.

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