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Whistle-Blower Can’t Pursue Medical School

DALLAS (CN) - The flagship medical school of the University of Texas System is protected from a whistleblowing surgeon's retaliation claim involving his demotion after he reported billing fraud, a Texas appeals court ruled.

Dr. Larry Gentilello sued the University of Texas Southwestern Health Systems and the University of Texas Southwestern Medical Center at Dallas in 2007.

Gentilello is former chairman of the school's Burns, Trauma and Critical Care Division. He reported that Parkland Health & Hospital System - the school's teaching hospital - fraudulently "upcoded" Medicare and Medicaid claims for teaching-physician-related items between 2004 and 2007: that it falsely represented teaching physicians properly supervised surgical residents at Parkland.

The reports led to the hospital paying more than $1.4 million in 2011 to state and federal authorities to settle False Claims Act and Texas Medicaid Fraud Prevention Act claims.

A three-judge panel with the 5th District Court of Appeals in Dallas this week affirmed a trial court's dismissal of Gentilello's claim due to sovereign immunity.

Writing for the panel, Justice Ada Brown disagreed with Gentilello's argument that the school waived its immunity, in reaching the billing fraud settlement and through its "egregious" conduct.

"Even if we assume that Gentilello's allegations regarding UT Southwestern's conduct are true and if we assume UT Southwestern's conduct was egregious, we are not prepared to conclude that a state entity can waive sovereign immunity by its conduct," the 9-page opinion states. "Despite Gentilello's assertion to the contrary, Texas law does not clearly support this concept."

The Texas Supreme Court has never ruled on such a "doctrine of waiver of sovereign immunity by conduct," Brown wrote.

"When it has mentioned the possibility of waiver by conduct, it has been in breach of contract cases," the opinion states. "In its most recent opinion on the subject, it declined to create a waiver-by-conduct exception."

In February 2013, the Texas Supreme Court dealt Gentilello a blow in a separate claim. The court ruled that Gentilello could not sue the medical school for retaliation under the Texas Whistleblower Act because his supervisor does not qualify as "an appropriate law enforcement authority under the act."

An appropriate authority under the act is defined as someone the employee "in good faith believes" can "regulate under or enforce" the law allegedly violated or "investigate or prosecute a violation of criminal law," the high court's opinion stated.

"We hold, consistent with our prior cases, that the act's constricted definition of a law-enforcement authority requires that a plaintiff's belief be objectively reasonable," Justice Don Willett wrote. "Other states' whistleblower laws accommodate internal reports to supervisors; Texas law does not."

"Under our act, the jurisdictional evidence must show more than a supervisor charged with internal compliance or anti-retaliation language in a policy manual urging employees to report violations internally," he added. "For a plaintiff to satisfy the act's good-faith belief provision, the plaintiff must reasonably believe the reported-to authority possesses what the statute requires: the power to (1) regulate under or enforce the laws purportedly violated, or (2) investigate or prosecute suspected criminal wrongdoing."

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