Court Opinion

ID: 4533807
Source: CourtListenerOpinion
Date Created: 2020-05-13 15:03:33.150548+00
Date Added: 2024-06-11T09:27:21.172981
License: Public Domain

FILED
                                                                     May 13 2020, 6:38 am

                                                                          CLERK
                                                                      Indiana Supreme Court
                                                                         Court of Appeals
                                                                           and Tax Court

ATTORNEY FOR APPELLANTS                                    ATTORNEY FOR APPELLEE
Ryan P. Sink                                               Mark J. Crandley
Fox, Williams & Sink, LLC                                  Barnes & Thornburg, LLP
Indianapolis, Indiana                                      Indianapolis, Indiana
ATTORNEYS FOR AMICUS CURIAE
STATE OF INDIANA
Curtis T. Hill, Jr.
Attorney General of Indiana
Thomas M. Fisher
Solicitor General
Aaron T. Craft
Section Chief, Civil Appeals
Kian J. Hudson
Deputy Solicitor General
Julia C. Payne
Sarah J. Shores
Deputy Attorneys General
Indianapolis, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

Court of Appeals of Indiana | Opinion 19A-PL-2367 | May 13, 2020                              Page 1 of 13
      Tiffany Abbott, Cathie Barnes,                              May 13, 2020
      and Chandra Gray,1                                          Court of Appeals Case No.
      Appellants-Defendants,                                      19A-PL-2367
                                                                  Interlocutory Appeal from the
              v.                                                  Henry Circuit Court
                                                                  The Honorable Kit C. Dean Crane,
      Individual Support Home Health                              Judge
      Agency, Inc.,                                               Trial Court Cause No.
      Appellee-Plaintiff.                                         33C02-1904-PL-34

      Mathias, Judge.

[1]   Tiffany Abbot, Cathie Barnes, and Chandra Gray (collectively “the

      Appellants”) have filed an interlocutory appeal of the Henry Circuit Court’s

      order denying the motion to dismiss the complaint filed by their former

      employer, Individual Support Home Health Agency, Inc. (“Home Health”).

      The Appellants argue that reports they made to the Indiana State Department

      of Health (“the ISDH”) are protected by absolute privilege and cannot serve as

      a basis for any civil lawsuit.

[2]   Concluding that the Appellants’ reports are protected by absolute privilege, we

      reverse.

      1
        Ashley McCartney and Angie Benefiel were also defendants below, but neither filed an appearance or
      otherwise participates on appeal. However, pursuant to Ind. Appellate Rule 17(A), “[a] party of record in the
      trial court . . . shall be a party on appeal.”

      Court of Appeals of Indiana | Opinion 19A-PL-2367 | May 13, 2020                                 Page 2 of 13
                                  Facts and Procedural History
[3]   Home Health provides healthcare services to homebound patients, and its

      services are regulated by the ISDH. Home Health employed the Appellants,

      who are licensed nurses, to serve as case managers for the company’s patients.

[4]   In 2017, the Appellants made reports to the ISDH claiming that Home Health

      employees forged the Appellants’ signatures on documents related to patient

      care. Home Health alleged that the reports were false, and the Appellants acted

      out of malice after receiving poor performance reviews. The ISDH investigated

      the Appellants’ reports and concluded that the forgery reports were not

      substantiated.

[5]   Home Health claims the Appellants also encouraged other employees to make

      false reports to the ISDH. After Appellants terminated their employment with

      Home Health, they induced other Home Health employees to terminate their

      employment.

[6]   On April 29, 2019, Home Health filed a complaint against the Appellants for

      defamation, tortious interference with a contract, and tortious interference with

      a business relationship. On June 25, 2019, the Appellants filed a motion to

      dismiss the complaint and argued that their statements to the ISDH were

      absolutely privileged. The trial court denied the Appellants’ motion to dismiss,

      and at the Appellants’ request, the court certified its order for interlocutory

      appeal. Our court accepted jurisdiction over the appeal on November 8, 2019.

      Court of Appeals of Indiana | Opinion 19A-PL-2367 | May 13, 2020           Page 3 of 13
                                          Standard of Review
[7]   The trial court denied the Appellants’ Trial Rule 12(B)(6) motion to dismiss.

      We review a trial court’s ruling on a 12(B)(6) motion using a de novo standard,

      meaning no deference is given to the trial court’s decision. Lei Shi v. Cecilia Yi,

      921 N.E.2d 31, 36 (Ind. Ct. App. 2010). “The grant or denial of a motion to

      dismiss turns only on the legal sufficiency of the claim and does not require

      determinations of fact.” Id. at 36–37. “A motion to dismiss under Rule 12(B)(6)

      tests the legal sufficiency of a complaint: that is, whether the allegations in the

      complaint establish any set of circumstances under which a plaintiff would be

      entitled to relief.” Id. at 37. We consider the pleadings and reasonable

      inferences in the light most favorable to the nonmoving party. Id.

                                      Discussion and Decision
[8]   The Appellants filed a motion to dismiss Home Health’s complaint arguing that

      their reports to the ISDH are cloaked with absolute privilege and cannot serve

      as the basis for any civil suit.

                                               I. Absolute Privilege

[9]   “Indiana law has long recognized an absolute privilege that protects all relevant

      statements made in the course of a judicial proceeding, regardless of the truth or

      motive behind the statements.” Hartman v. Keri, 883 N.E.2d 774, 777 (Ind.

      2008) (citations omitted). “The reason upon which the rule is founded is the

      necessity of preserving the due administration of justice . . . by providing actors

      Court of Appeals of Indiana | Opinion 19A-PL-2367 | May 13, 2020            Page 4 of 13
       in judicial proceedings with the freedom to participate without fear of future

       defamation claims.” Id. (citations and quotations omitted).

[10]   Historically, absolute privilege was only recognized in formal judicial

       proceedings. But, in Hartman, our supreme court considered whether

       complaints of sexual harassment made by Purdue University graduate students

       against a professor were protected by absolute privilege. The students filed

       formal complaints alleging sexual harassment with the Purdue Affirmative

       Action Office. The professor was notified of the complaints and was permitted

       to respond. An investigation ensued, and the investigator found that the

       professor had harassed one student and had created a hostile educational

       environment. The investigator’s findings were reviewed by a three-person

       panel, and the panel adopted her recommendation to immediately remove the

       professor from his teaching responsibilities. The professor appealed the

       determination to Purdue’s president, who upheld the panel’s decision.

[11]   The professor filed a complaint in Allen Superior Court against the students

       alleging libel, slander, and malicious interference with his employment

       contract. The students moved for summary judgment and argued that their

       complaints made pursuant to Purdue policy were protected by an absolute

       privilege.

[12]   This issue was ultimately resolved in the students’ favor by our supreme court.

       The court observed:

       Court of Appeals of Indiana | Opinion 19A-PL-2367 | May 13, 2020           Page 5 of 13
               [The students] acted under the procedure Purdue established.
               Protecting their complaints with anything less than an absolute
               privilege could chill some legitimate complaints for fear of
               retaliatory litigation. Other faculty-student disputes would result
               in traditional litigation rather than academic resolution to avoid
               any risk of loss of the absolute privilege accorded statements in
               judicial proceedings. A university should be given the latitude to
               tailor its processes to the educational environment without
               degrading the protection the law gives to complaints of
               misconduct in the educational setting.
Id. at 778.

[13]   The court noted that as a deterrent to false reporting, enrolled Purdue students

       are subject to academic discipline for abuse of process. Id. “[T]he need for

       protection is greater in the educational setting because the subject of the

       complaint—the educator—is in a position of authority over the student, so fear

       of retaliation presents a potential obstacle to open airing of grievances.” Id.

       Importantly, the Hartman court extended absolute privilege to statements made

       during quasi-judicial proceedings. Id.

                                  II. The Appellants’ Reports to the ISDH

[14]   The ISDH is responsible for licensing and regulating home-healthcare agencies.

       Ind. Code §§ 16-27-1-7, 16-27-1-8, 16-27-1-12. Indiana Code section 16-27-1-7

       requires the ISDH to “adopt rules” to “[p]rotect the health, safety, and welfare

       of patients” and “[g]overn the procedure for issuing, renewing, denying, or

       revoking an annual license to a home health agency[.]”

       Court of Appeals of Indiana | Opinion 19A-PL-2367 | May 13, 2020              Page 6 of 13
[15]   The ISDH relies on employee reports to regulate home-healthcare agencies and

       to protect the vulnerable patients those agencies serve. See 848 Ind. Admin

       Code 2-2-2(11), 2-2-3(13). In its Amicus Curiae Brief, the State argues that

       “chilling the report of substandard care could have disastrous, even fatal,

       consequences.” Amicus Curiae Br. at 10.

[16]   Home Health repeatedly argues that our courts have not extended absolute

       privilege to “a false report of wrongful conduct” made to a regulatory agency.

       Appellee’s Br. at 9–10. However, the veracity of the Appellants’ reports to the

       ISDH is irrelevant to our inquiry. 2 Our inquiry is whether the reports were

       made in the context of a judicial or quasi-judicial proceeding.

       2
         The ISDH did not find that Appellants’ reports of forgery were false, just that they were not substantiated.
       This finding equates to lack of proof of the report, not that the report was necessarily false. See Merriam-
       Webster Online Dictionary (defining “substantiate” as “to establish by proof or competent evidence”),
       https://www.merriam-webster.com/dictionary/substantiate (last visited April 29, 2020)
       [https://perma.cc/8GBB-VFNK].
                Reports of substandard care have led to the revocation of Home Health’s license, which is currently
       pending judicial review. Home Health complains that the Appellants should not have included the
       administrative law judge’s order in their appendix because the order was not included in the trial court’s
       record in these proceedings and was issued after the trial court denied the Appellants’ motion to dismiss.
       Home Health’s argument is well-taken; however, the fact that Home Health has filed a petition for judicial
       review in Henry Circuit Court of the administrative law judge’s order revoking its license is a matter of public
       record. Pleadings and actions are obtainable from Odyssey, the statewide electronic case management
       system. In Horton v. State, 51 N.E.3d 1154, 1160–61 (Ind. 2016), our Supreme Court observed that Evidence
       Rule 201(b)(5) “now permits courts to take judicial notice of ‘records of a court of this state’” and that such
       records are presumptively sources of facts “that cannot reasonably be questioned.”
                 In publicly filed pleadings in cause number 33C01-2002-MI-19, the judicial review proceeding, the
       ISDH alleges that a wheelchair-bound patient died after an aide failed to attend the patient during an evening
       visit, because the aide was not feeling well. The ISDH also alleges that a home health aide was performing
       unsupervised catheterizations for another patient, which she failed to document, and only nurses have
       authority to perform catheterizations unless that duty is delegated to the aide under the nurse’s supervision.

       Court of Appeals of Indiana | Opinion 19A-PL-2367 | May 13, 2020                                   Page 7 of 13
[17]   Home Health asserts the Appellants did not make their reports to the ISDH in a

       judicial or quasi-judicial proceeding. Home Health attempts to analogize the

       statements made by the Appellants in this case to communications made to law

       enforcement reporting criminal activity, which are afforded only qualified

       privilege. See e.g. Williams v. Tharp, 914 N.E.2d 756, 763 (Ind. 2009).

[18]   In Hartman, our supreme court addressed a similar argument and noted that “it

       may seem anomalous to grant a higher degree of protection to complaints made

       in the educational setting.” 883 N.E.2d at 778. The court observed that there

       were substantial deterrents to the students submitting false reports concerning

       faculty conduct. And “the need for protection is greater in the educational

       setting because the subject of the complaint—the educator—is in a position of

       authority over the student, so fear of retaliation presents a potential obstacle to

       open airing of grievances.” Id. The Hartman court concluded that “there is both

       a diminished need to deter false reporting and a greater need to encourage

       reporting than exists outside the educational environment.” Id.

[19]   Here, there are also substantial deterrents to false reporting. Licensed health

       care professionals are expressly prohibited from “engag[ing] in fraud or material

       deception in the course of professional services or activities[.]” Ind. Code § 25-

       1-9-4(b). Sanctions for engaging in fraud or deception include revoking or

       suspending a practitioner’s license or imposing a fine. I.C. § 25-1-9-9. In

       addition, false reporting will likely impact the health care professional’s current

       employment and possibly his or her future employment as well. And Home

       Court of Appeals of Indiana | Opinion 19A-PL-2367 | May 13, 2020           Page 8 of 13
       Health, the employer, is unquestionably in a position of power over the

       Appellants.

[20]   Moreover, and even more compelling than the circumstances in Hartman, the

       Appellants are obligated to report substandard care to the ISDH. Failing to do

       so can result in sanctions, including the revocation of their licenses. See 848

       I.A.C. §§ 2-2-2(1)(11); 2-2-3(6)(13).

[21]   The United States District Court for the Northern District of Indiana relied on

       Hartman to conclude that reports of a patient injury to the ISDH were made in

       the context of a quasi-judicial proceeding covered by absolute privilege. Doswell

       v. Trace, 2016 WL 3685119 (N.D. Ind. 2016). In that case, Tanglewood Trace,

       an assisted living facility, reported injuries suffered by a resident patient while

       in a nursing assistant’s care. Doswell, the nursing assistant, was employed by

       Maxim, a temporary staffing agency. As a result of the neglect report, Doswell’s

       license was temporarily suspended. An administrative law judge eventually

       determined that Doswell was not negligent in her care of the resident patient.

[22]   Doswell filed a complaint against Maxim and Tanglewood Trace for libel and

       slander alleging that the entities maliciously started the license-revocation

       proceeding and made false statements about Doswell. The defendants argued

       that they had a legal obligation to report the injury to the Department of Health

       and that their statements were immune under the absolute privilege for

       statements made in quasi-judicial proceedings. Doswell conceded that the

       defendants had a legal obligation to report the injury to the resident patient.

       Court of Appeals of Indiana | Opinion 19A-PL-2367 | May 13, 2020            Page 9 of 13
[23]   The District Court determined that the report and investigation by the ISDH

       was a quasi-judicial proceeding.

               The proceeding was governed by the Administrative Orders and
               Procedures Act, IC 4-21.5. The reporting of the incident resulted
               in an investigation by the Indiana Department of Health
               pursuant to 42 C.F.R. § 483.156, findings, a right to appeal, a
               hearing before an Administrative Law Judge where evidence was
               presented, and an issuance by the Administrative Law Judge of
               findings of fact and conclusions of law.
Id. at *4. And after reiterating the defendants’ legal obligation to report the

       patient’s injury, the court concluded that “any communication with the Indiana

       Department of Health was made in the course of a judicial or quasi-judicial

       proceeding, and is covered by an absolute privilege.” Id.

[24]   Reports of patient injury or substandard care to the ISDH, which result in a

       “survey” or investigation by the ISDH, are governed by procedures that the

       ISDH has established pursuant to the Administrative Orders and Procedures

       Act, IC 4-21.5, as mandated by our General Assembly. See Ind. Code § 16-27-1-

       7. Therefore, we conclude that such proceedings constitute quasi-judicial

       proceedings.

[25]   Home Health also argues that the Appellant’s reports were not made in an

       ongoing quasi-judicial proceeding. However, the cases Home Health cites in

       support of its argument do not involve reports to a quasi-judicial entity charged

       Court of Appeals of Indiana | Opinion 19A-PL-2367 | May 13, 2020          Page 10 of 13
       with investigating reports of misconduct.3 Like the students’ complaints in

       Hartman, here, the Appellants’ reports to the ISDH initiated a “survey,” i.e. an

       investigation of Home Health. The Appellants’ reports initiated the quasi-

       judicial proceedings at issue in this case.

[26]   We must protect vulnerable individuals suffering from an illness or disability

       who require assistance from healthcare professionals. If a report made by a

       healthcare professional is not absolutely privileged, it could have a chilling

       effect on such reports. Extending absolute privilege to reports made to the

       ISDH protects healthcare professionals against the fear of retaliatory litigation.

[27]   For all of these reasons, we conclude that the Appellants’ reports to the ISDH

       are protected by absolute privilege.

                                      III. Tortious Interference Claims

[28]   Home Health argues that its tortious interference with a contract and tortious

       interference with a business relationship claims should not be dismissed even if

       the Appellants’ reports are protected by absolute privilege because the

       Appellants induced Home Health employees to terminate their employment.

       But our court has held that “[o]ther torts related to defamation, or relying upon

       defamatory statements as proof of wrongdoing, may also be barred by the

       3
         For example, Home Health relies on Eckerle v. Katz & Korin, P.C., 81 N.E.3d 272, 282 (Ind. Ct. App. 2017),
       which discussed whether statements made prior to a proposed judicial proceeding were privileged, and Britt
       Interactive LLC v. A3 Media LLC, 2017 WL 2118513 (S.D.Ind. May 15, 2017), which addressed statements
       made between private parties prior to any litigation. We are unpersuaded by Home Health’s reliance on these
       cases involving easily distinguishable circumstances.

       Court of Appeals of Indiana | Opinion 19A-PL-2367 | May 13, 2020                              Page 11 of 13
       absolute privilege.” Estate of Mayer v. Lax, Inc., 998 N.E.2d 238, 249 (Ind. Ct.

       App. 2013) (citing Hartman, 883 N.E.2d at 776–77) (concluding that “the

       absolute privilege bars Lax and Lasco’s actions for defamation, negligent

       supervision and retention, tortious interference with a business relationship, and

       tortious interference with a contract”), trans. denied.

[29]   Home Health’s claim that the Appellants’ made false reports to the ISDH are

       integral to its tortious interference claims.4 See e.g. Appellants’ App. pp. 15–16

       (“By making the False Reports, the Defendants intentionally induced patients

       to breach their contracts with” Home Health and “[t]he Defendants were aware

       of the existence of these contracts, including at the time they made the False

       Reports and induced [Home Health] employees to leave their employment with

       the company”). For this reason, Home Health’s tortious inference claims must

       also be dismissed.

       4
        The Appellants counter that encouraging employees to resign falls significantly short of meeting numerous
       necessary elements for any tortious interference claim. For example, a plaintiff must prove “some
       independent illegal action” to prevail on his claim of tortious interference with a business relationship. See
       Brazauskas v. Fort Wayne-South Bend Diocese, Inc., 796 N.E.2d 286, 291 (Ind. 2003). And defamation “does not
       constitute illegal conduct for the purpose of determining whether one tortiously interfered with the business
       relationship of another.” Miller v. Cent. Ind. Cmty. Found., Inc., 11 N.E.3d 944, 961 (Ind. Ct. App. 2014), trans.
       denied. In its complaint, Home Health did not allege that the Appellants engaged in any independent illegal
       action.
       With regard to the tortious interference with a contract claim, in its complaint, Home Health did not allege
       that any actual breach of contract occurred or that a breach of contract caused any damages. See Allison v.
       Union Hosp., Inc., 883 N.E.2d 113, 118 (Ind. Ct. App. 2008) (“A plaintiff alleging tortious interference with a
       contractual relationship must establish five elements: (1) the existence of a valid and enforceable contract; (2)
       the defendant's knowledge of the existence of the contract; (3) the defendant's intentional inducement of the
       breach of the contract; (4) the absence of justification; and (5) damages resulting from the defendant's
       wrongful inducement of the breach.”).

       Court of Appeals of Indiana | Opinion 19A-PL-2367 | May 13, 2020                                    Page 12 of 13
                                                  Conclusion
[30]   The Appellants’ reports to the ISDH are protected by absolute privilege because

       the reports initiated a quasi-judicial proceeding. Therefore, the trial court erred

       when it denied the Appellants’ motion to dismiss Home Health’s complaint.

       We therefore reverse and remand this case to the trial court with instructions to

       dismiss Home Health’s complaint.

[31]   Reversed and remanded for proceedings consistent with this opinion.

       Riley, J., and Tavitas, J., concur.

       Court of Appeals of Indiana | Opinion 19A-PL-2367 | May 13, 2020          Page 13 of 13