Honest Beliefs and Employer Investigations

For some time now, the Sixth Circuit has waged a debate over what has become known as the "honest belief" rule in discrimination law. (It is no "rule", of course, only legal precedent based upon a number of court decisions. Lawyers tend to label precedent we "like" as a "rule," and if we don't like it, well, we call it something else.)

Last week the Sixth Circuit decided an appeal involving the "honest belief" rule. The case provides Tennessee employers with more or less a "how to" guide on getting a discrimination claim dismissed. A hospital in Kentucky fired two employees after one took home x-rays of a patient. The patient in question happened to be the grand-daughter of one of the employees. The employee other aided grandma. There was no family dispute here; the grand-daughter hurt her arm and had x-rays done where grandma worked. Mom then forgot to take the x-rays with her (to give to another doctor) so she did what we all do, she called grandma. Grandma, however, knew the hospital had to have a signed permission form from mom to release the x-rays and forged, so the hospital concluded, mom's name on the permission slip. The hospital's concluded that the employees had violated the hospital's HIPAA rules by not having written permission.

The employees tried to argue they neither violated HIPAA nor the hospital's policies. The key point, the court said, was that the employer honestly believed the employees had violated hospital policy. The "rule" in the Sixth Circuit is confused but the general consensus is that a belief is honest if the employer can point to the specific facts it relied upon to make the decision and show it reasonably relied on those facts. (Saying the reliance has to be "reasonable" sounds suspiciously like saying the decision must be "fair" as opposed to nondiscriminatory but that is a topic for another day.)

Where the hospital won this case was during its investigation. Firing grandma for taking a grand-daughter's x-rays when grandma has mom's oral permission was pretty radical. But the investigation showed grandma and her co-worker knew they had to have written permission (they were so told when grandma asked for the x-rays) and then grandma "signed" mom's name to the permission slip. The hospital also met with both employees to hear their side of the story but ultimately decided that their justifications did not excuse the misconduct. (And smart hospitals take their HIPAA obligations seriously.)

The important point here is that when taking a serious employment action, the more effort that goes into the investigation, the more chance the employer has of winning a later lawsuit. Take this case. During the investigation, the hospital was apparently confronted with differing versions of events. It interviewed the employees but rejected their assertions. The hospital thus decided what it "believed" before it implemented any decision. Even though the court said the hospital's privacy policy could have been better defined, it still tossed their claims because disagreeing with what the investigation found was not enough. The employees had to show the investigation was dishonest.

Now, in theory, even if the employer had not conducted an investigation, it shouldn't have made a difference legally. Honest beliefs, after all, are not discriminatory even if they are stupid or ill-founded. In practice, however, it is difficult to convince a judge, much less a jury, that you are being honest when you don't even try.