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Law firm employee who reported suspected overbilling can't sue for wrongful discharge, court says

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An accounts receivable clerk who was fired from her law firm job after reporting suspected overbilling can’t sue for wrongful discharge, according to West Virginia’s top court.

The West Virginia Supreme Court of Appeals ruled that at-will private employees, such as plaintiff Christine Blanda, aren’t entitled to protection from retaliation for reporting suspected criminal conduct.

Bloomberg Law covered the Nov. 22 opinion, which was also noted by the Legal Profession Blog.

Blanda worked at Martin & Seibert. The firm disbanded at the end of 2016—a little more than a year after the FBI raided the law firm, Herald-Mail Media reported at the time. The raid was based, at least in part, on information supplied by Blanda, according to allegations summarized by the West Virginia Supreme Court of Appeals.

Blanda’s job at the law firm was to bill clients. She says she began to notice irregularities—which included billing clients at attorney rates for paralegal and secretary services. She decided in 2013 “that the firm was engaging in illegal billing practices,” and she began to voice her concerns to others at the firm.

In January 2015, Blanda noticed that the law firm had posted her job for hiring. She spoke with one of the law firm’s attorneys, who suspected that the law firm was setting up Blanda to take the blame for the billing irregularities, according to Blanda. The lawyer contacted a former U.S. attorney for advice and also told Blanda to speak with him. The former U.S. attorney contacted the FBI.

After speaking with the former U.S. attorney, Blanda decided to gather evidence to protect herself. She emailed herself 227 attachments of raw billable hour data that were picked up by the law firm’s monitoring system. Blanda was fired for violating law firm policy that prohibited the disclosure of confidential information.

West Virginia courts have recognized a public policy exception to the general rule allowing the firing of at-will employees when an employee is fired for refusing to engage in illegal activity, the West Virginia Supreme Court of Appeals said. That exception does not apply, however, when employees report suspected wrongdoing, the court concluded.

The court also said Blanda was not entitled to whistleblower protections given public employees under a state whistleblower law. Any extensions of that law should be made by the legislature, not the court, the court said.

A dissenting judge said the majority “should have taken the opportunity to recognize a public-policy exception to at-will employment when an employee is terminated for reporting her employer’s alleged theft of client funds by overbilling for legal services to the proper authorities.”

The West Virginia Supreme Court of Appeals ruled in response to a certified question by a federal court considering Blanda’s federal whistleblower suit. The federal whistleblower claim was no longer viable following a February 2018 Supreme Court decision that required reporting to the U.S. Securities and Exchange Commission, according to the West Virginia opinion.

Martin & Seibert had filed a federal counterclaim against Blanda that alleges that she provided false statements about improper billing to the FBI.

Richard M. “Rick” Wallace, a lawyer at the law firm, told the Herald-Mail Media that the law firm’s demise was tied to Blanda’s allegations.

“It’s reprehensible that the malicious and unfounded actions of a disgruntled former employee can have such a deleterious impact on a well-respected firm and the livelihoods of hundreds of individuals,” he said.

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