Director of IT is fired after refusing to sign false declaration. $1.6M. Los Angeles County.

Summary

IT manager loses his job and is replaced by the spouse of the company manager that he had accused of a HIPPA-related violation.

The Case

  • Case Name: Matthew Flanigan v. Rheumatology Diagnostics Laboratory, Inc.
  • Court and Case Number: Los Angeles Superior Court / BC688804
  • Date of Verdict or Judgment: Thursday, October 21, 2021
  • Date Action was Filed: Friday, January 05, 2018
  • Type of Action: Whistleblower, Wrongful Termination
  • Judge or Arbitrator(s): Hon. Terry Green
  • Plaintiffs:
    Matthew Flanigan
  • Defendants:
    Rheumatology Diagnostics Laboratory, Inc.
  • Type of Result: Jury Verdict

The Result

  • Gross Verdict or Award: $1,680,000
  • Award as to each Defendant:

    $1,080,000 plus $600,000 punitive damages plus attorneys fees, interest and costs TBD.

  • Contributory/Comparative Negligence: None.
  • Economic Damages:

    $500,000

  • Non-Economic Damages:

    $580,000

  • Punitive Damages:

    $600,000

  • Trial or Arbitration Time: 13 days
  • Jury Deliberation Time: 3 days

The Attorneys

  • Attorney for the Plaintiff:
    Law Offices of Edward Y. Lee, APC by Edward Young Lee, Los Angeles.

    Christopher P. Fields Law Corporation by Christopher Fields, Los Angeles.
  • Attorney for the Defendant:

    Schlichter & Shonack, LLP by Jamie Keeton, El Segundo.

    Safarian Choi & Bolstad, LLP by David Bolstad, Los Angeles.

The Experts

  • Plaintiff's Technical Expert(s):

    Mark McLaughlin, information technology and digital forensics.

    Chris Apgar, HIPAA.

    Phillip Sidlow, vocational economics and rehabilitation.

  • Defendant's Technical Expert(s):

    Thomas Plunkett, information technology and computer forensics.

    Jules Kamin, economics.

Facts and Background

  • Facts and Background:

    In April 2017, plaintiff was the Director of Information Technology (IT) for Rheumatology Diagnostics Laboratory, Inc., (RDL) when he allegedly discovered that a compliance manager had introduced tens of thousands of patients' HIPAA-protected information from her former employer into the RDL IT network. Flanigan reported it but claimed that, due to an ongoing RDL shareholder dispute, nothing was done (what he reported was disputed).

    Later, on August 28, 2017, the shareholder dispute became a lawsuit and the majority shareholders asked Flanigan to sign a declaration in their favor regarding the compliance manager's actions. Flanigan claimed that he refused to sign the majority shareholder's false declaration but did sign the minority shareholder's truthful declaration. Flanigan was put on investigative leave the next day, August 29, 2017.

    On August 30, 2017, RDL brought in the compliance manager's spouse, an IT professional, to take over the RDL IT network.  Days thereafter, the IT manager reported to RDL that Flanigan, while on investigative leave, did remotely enter the RDL IT network and deleted thousands of RDL files, hundreds of them business-related. RDL hired a third party company, Pegasus Squire, to substantiate that someone using Flanigan's username and password deleted RDL documents. After confirmation by Pegasus, on September 12, 2017, RDL terminated Flanigan. It was later determined that, among the deleted documents were the HIPAA-protected documents that plaintiff claimed the compliance manager had imported into the RDL network.

  • Plaintiff's Contentions:

    That plaintiff was wrongfully terminated in September of 2017 after reporting an April 2017 HIPPA violation  and later refusing to sign a declaration denying that such HIPPA violation ever happened.

    That amidst the RDL shareholder dispute, Flanigan reported the compliance manager's actions but nothing was done. Flanigan was thereafter put on investigative leave and then terminated after a sham investigation by the newly hired spouse of the compliance manager which investigation included the unfounded accusation that Flanigan remotely entered the RDL network to delete files, including the HIPAA-protected documents. 

    It was plaintiff's contention that the newly hired IT manager, using Flanigan's username and password, deleted the files to cover up his wife's misdeeds and, thereafter, blamed Flanigan, creating the pretext for Flanigan's termination.

  • Defendant's Contentions:

    That plaintiff decided to choose sides in a business dispute, knowingly disclosing confidential information obtained in his role as an officer of defendant RDL to third parties hostile to RDL.

    For his breach. plaintiff was placed on investigative leave with strict instructions not to access RDL's servers and proprietary information. However, third-party investigation revealed that, during his investigative leave, plaintiff accessed RDL's servers remotely, and downloaded or deleted thousands of proprietary and confidential files.

    RDL thus terminated plaintiff from his at-will employment at RDL for breaching the terms of the investigative leave. Plaintiff's claims are based on his speculation that he was fired in retaliation for signing a declaration in support of RDL in a suit brought by former RDL employees/shareholders. Further, that the evidence establishes RDL terminated plaintiff solely because of his multiple breaches of his duties to the company.

Injuries and Other Damages

  • Emotional distress.

Special Damages

  • Special Damages Claimed - Past Lost Earnings: $515,014
  • Special Damages Claimed - Future Lost Earnings: 1,382,381.00

Additional Notes

Demands and offers:

Plaintiff
June 5, 2019 - 998 Offer to Compromise for $599,999
December 4, 2020 - 998 Offer to Compromise for $1,000,000
January 8, 2021 - 998 Offer to Compromise for $1,499,999
 
Defendant
June 5, 2019 - 998 Offer to Compromise for $30,000
 
The parties engaged in two mediations. At the first mediation (April 17, 2019), plaintiff demanded $750,000 and Defendant offered $2,500. 
 
At the second mediation (June 24, 2021), plaintiff demanded $1,500,000 and defendant made a vague offer of the remaining amount of a claimed diminishing policy in an amount less than $300,000.
 

Disclaimer

This is not an official court document. While the publisher believes the information to be accurate, the publisher does not guarantee it and the reader is advised not to rely upon it without consulting the official court documents or the attorneys of record in this matter who are listed above.

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