In one of the most dramatic and convoluted scenarios ever seen in a whistle-blower case, a doctor has been disciplined by a medical board; a hospital administrator has been jailed; two nurses have been fired, criminally charged, acquitted, and then awarded $750,000; and a local sheriff has been removed from office and sentenced to jail, with a subsequent lengthy felony-probation.   Employers who do not believe that recent legislative changes related to whistle-blower claims (Dodd-Frank Act, Sarbanes-Oxley, and state-based whistle-blower statutes) have begun to change the landscape of employment-related cases should take the time to read this story.

In April of 2009, two nurses in a county-owned hospital in Kermit, Texas filed an anonymous complaint with the Texas Medical Board, expressing concerns related to patient care being provided by Dr. Rolando Arafiles, Jr.  Based on the information in the complaint, the Board issued formal charges against Arafiles.

After receiving notice of that complaint, Arafiles approached his friend, Winkler County Sheriff Robert L. Roberts, Jr., asking for his help to determine who had made the report.  Roberts then used the power of his office to launch an investigation, and ultimately determined the identity of the two nurses.  Soon after that, the county hospital administrator fired both women, each of whom had been employed at the hospital for over 20 years.  In addition, in June 2009, the two women were indicted by the County Attorney on charges of “misusing official information,” a criminal felony carrying a penalty of up to 10 years in prison and up to $10,000 in fines.

In August 2009, the two women filed a civil action in federal court against Dr. Arafiles, Sheriff Roberts, the hospital administrator, the hospital itself, the County Attorney, and Winkler County, claiming constitutional violations, malicious prosecution, and violations of laws related to whistle blowers.  In February 2010, while that civil case was pending, a trial was held on the criminal charges against the nurses.  One of the women was dropped from the prosecution, and the other was found not guilty.  Although the jury was out for an hour before rendering the not-guilty verdict, the foreman has said that the actual decision took less than 5 minutes – but that since the lawyers had worked “so hard” during the trial, the jurors felt that it would be more courteous to wait for a little while before going back with the verdict.  Hear a more detailed explanation of this incident and of other aspects of the situation in an archived installment of the “This American Life” radio program at http://www.thisamericanlife.org/radio-archives/episode/437/old-boys-netw.

In January 2010, a grand jury returned indictments against Dr. Arafiles, Sheriff Roberts, the county attorney, and the hospital administrator, charging that each of them misused his power to retaliate against the nurses.  In February, the county settled the civil case brought by the nurses, agreeing to pay them $750,000.  In March, the hospital administrator acknowledged that he improperly terminated the nurses’ employment, and pled guilty to charges against him.  He was sentenced to 30 days in the county jail. 

The trial against Sheriff Roberts, which was moved to a location outside of Dallas rather than proceeding locally, went forward this month on two sets of charges (one set for each nurse).  Each set of charges was made up of two felony charge - retaliation and misuse of official information - and a misdemeanor charge.  That trial ended this week with a conviction against Roberts on all counts.  In an agreement reached at the close of the trial’s penalty phase, Roberts was sentenced to 100 days in prison on the felony counts, with a four year felony probation to follow that.  He also will pay fines of $6,000.  Charges against Dr. Arafiles and the County Attorney still are pending.

While this case presents an extreme version of the consequences of an employer’s reaction to whistle-blower activity, it certainly provides a template of how not to react to these situations.  Most employers are taking the time to get up to speed on the new developments in federal laws related to such circumstances, and all employers should be aware of the applicable laws within the states in which they do business, to avoid unanticipated consequences.