Lawyer with OIG did not report to an “appropriate law enforcement authority” when he alleged Medicaid violation to his supervisors

Texas Health and Human Services Commission et al., v. F. Michael McMillen, 03-13-00303-CV (Tex. App. – Austin, January 8, 2015).

This is an interlocutory appeal from the denial of a plea to the jurisdiction in a Texas Whistleblower and free speech case. The 3rd Court of Appeals reversed and dismissed all of McMillen’s claims.

McMillen was an attorney employed by the Texas Health and Human Services Commission (“THHS”) in the Office of Inspector General (“OIG”). He asserted he was terminated for a memorandum he submitted pursuant to his supervisor’s direction. McMillen was to research and determine whether the THHS could continue or was prohibited from accepting Medicaid payments under a particular program. McMillen’s memo stated he did not find a basis to support the acceptance and recommended ceasing the practice. He provided copies to the OIG deputies and to the OIG Internal Affairs for improper acceptance in the past.  The IA division conducted an investigation and determined his allegations of wrongdoing were unsubstantiated. After his termination he sued for Whistleblower and free speech under the Texas Constitution. THHS countered he was fired for poor performance. THHS filed a plea to the jurisdiction, supported by evidence, which the trial court denied.

The court first noted McMillen did not report to an appropriate law enforcement authority and could not have reasonably believed he did. In his memorandum, McMillen did not identify any law that he alleged was being violated and his response to the plea only listed sections of the Human Resources Code and General Appropriates Act.  The General Appropriations Act is not a “law” which prohibited the conduct alleged and the Health and Human Resources sections only listed the authority to monitor services, not prohibit the conduct alleged. Further, the criminal conduct reported must be within the investigatory powers of the authority receiving the allegations. The only “law” which actually prohibits conduct was the federal civil Medicaid law. McMillen’s supervisors were not authorized to “regulate under or enforce” this civil enforcement federal law as the Texas Supreme Court recently held only the U.S. Secretary of Health and Human Services have that authority. University of Tex. Sw. Med. Ctr. at Dallas v. Gentilello, 398 S.W.3d 680, 685 (Tex. 2013). McMillen also did not have an objective good faith belief he was reporting to the proper authority and the court did not need to look any further than the official statements of the OIG’s purpose and powers from its website. McMillen is a lawyer with over twenty years of experience and could not have objectively reasonable good faith belief any of the recipients of his report were appropriate law enforcement authorities for the Medicaid issues.  Finally, as to his free speech claims, the memo was part of his assigned duties as an employee so he was not speaking as a citizen about a matter of public concern.   As a result, the plea should have been granted.

If you would like to read this opinion click here. Panel: Chief Justice Rose, Justice Puryear, and Justice Goodwin. Memorandum Opinion by Justice Goodwin. The attorneys listed for McMillen are Philip Durst and Manuel Quinto-Pozos.  The attorneys listed for the Commission are Ms. Shelley N. Dahlberg and Mr. David G. Halpern