Employer Statements Protected by Qualified Privilege
How much may an employer disclose about the reason for an employee's
discipline or discharge without being subject to liability for defamation? A
recent decision held that statements to the local media about a hospital offical's
discharge for billing fraud were protected by the employer's qualified
privilege.
Although an employer may be liable for inaccurate communications that are
damaging to an employee's reputation, otherwise defamatory statements are
protected by a "qualified privilege" when made in good faith to
persons sharing a common interest. To qualify for the privilege, the
communication must be made for a proper purpose and the employer must have
reasonable grounds to believe the statement is true. If the employer's
communication is entitled to the qualified privilege, then the employee cannot
prevail in a defamation suit unless he or she can prove the employer abused the
privilege, either by acting out of ill will or with disregard for the truth of
the statement.
In Palmisano v. Allina Health Systems (8th Cir. 1999), a federal appeals
court upheld the dismissal of a defamation suit brought by a former vice
president of a health care facility. In response to questions by the local
media, the employer confirmed that an investigation determined there were
improprieties in Medicare and Medicaid billing practices, that the matter had
been turned over to federal prosecutors and that the vice president had been
terminated as a result of the investigation. The court found the statements were
protected because the employer needed to provide accurate information about a
federal investigation that could have a wide-ranging impact on thousands of
employees and consumers.
The court rejected Palmisano's contention that the employer exceeded its
privilege by spreading its statement through the local press. The court defended
the employer's communication to the local media because the subject matter is
of public importance and the employer needed to assure that the information
conveyed by the press was accurate.
Further, the court relied on the thoroughness of the employer's
investigation in rejecting Palmisano's charge that the statement was made in
bad faith. In fact, the communications followed a three-month investigation
involving dozens of employee interviews and extensive analysis of billing
records and reports. Palmisano demonstrates the importance of monitoring
communications to assure that they are accurate and supported by a thorough
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