Mariani v. Rocky Mountain Hosp. and Medical Service, s. 93CA0837

• Decision Date: 29 December 1994
• Docket Number: Nos. 93CA0837,93CA1154,s. 93CA0837
• Citation: 902 P.2d 429
• Parties: 10 IER Cases 290 Diana I. MARIANI, Plaintiff-Appellant, v. ROCKY MOUNTAIN HOSPITAL AND MEDICAL SERVICE d/b/a Blue Cross and Blue Shield of Colorado, a Colorado corporation in good standing, and Samuel Weidman, individually, Defendants-Appellees. . V
• Court: Colorado Court of Appeals

Page 429

902 P.2d 429

10 IER Cases 290

Diana I. MARIANI, Plaintiff-Appellant, v. ROCKY MOUNTAIN HOSPITAL AND MEDICAL SERVICE d/b/a Blue Cross and Blue Shield of Colorado, a Colorado corporation in good standing, and Samuel Weidman, individually Defendants-Appellees.

Nos. 93CA0837, 93CA1154.

Colorado Court of Appeals,

Div. V.

Dec. 29, 1994.

Rehearing Denied Feb. 23, 1995.

Certiorari Granted Aug. 28, 1995.

Fowler, Schimberg & Cowman, P.C., Daniel M. Fowler, Catherine A. Tallerico, Denver, for plaintiff-appellant.

Kennedy & Christopher, P.C., Richard B. Caschette, Lisa B. Heintz, Dean A. McConnell, Denver, for defendant-appellee Rocky Mountain Hosp. and Medical Service d/b/a Blue Cross and Blue Shield of Colorado.

No appearance for defendant-appellee Samuel Weidman.

Opinion by Judge RULAND.

In an action to recover damages for termination of her employment, plaintiff, Diana I. Mariani, appeals from the judgment entered on a directed verdict in favor of defendants, Rocky Mountain Hospital and Medical Service and Samuel Weidman. Plaintiff sought recovery based upon both an alleged breach of implied contract and a tort theory of discharge in violation of public policy. She also appeals from a judgment dismissing her promissory estoppel claim. Defendants cross-appeal the trial court's order limiting the award of costs allegedly incurred in this litigation. We affirm in part, reverse in part, vacate in part, and remand for a new trial.

Defendant Rocky Mountain Hospital and Medical Service conducts business under the name of Blue Cross and Blue Shield of Colorado as a non-profit hospital and health care corporation. Plaintiff is licensed in Colorado as a certified public accountant and was employed by Blue Cross as Manager of General Accounting.

Approximately two years after plaintiff was employed, defendant Weidman was employed in the position of Controller and thus became plaintiff's supervisor. At that time, plaintiff was assigned a new position titled Manager of General Accounting and Special Projects. Plaintiff was terminated approximately six months later, ostensibly on the basis that her job was being eliminated.

As pertinent here, plaintiff brought suit claiming that she was wrongfully discharged because of defendants' violation of an implied contractual duty to follow disciplinary procedures in the "You Book," issued to each of the employees as well as the breach of certain other alleged commitments to plaintiff. In the alternative, plaintiff alleged entitlement to recovery based upon the doctrine of promissory estoppel.

Plaintiff also claimed that the termination of her employment was prompted by her reporting of, and objection to, certain illegal acts by Colorado Blue Cross, and thus, she asserted that her discharge violated public policy. Plaintiff finally alleged a claim for damages against Weidman individually based upon outrageous conduct.

Following presentation of plaintiff's evidence, the trial court dismissed all of her claims except the claim against Weidman for outrageous conduct. The jury entered a verdict in favor of Weidman on this claim. Plaintiff does not appeal from the judgment entered on the outrageous conduct verdict.

I

Plaintiff first contends that the trial court erred in directing a verdict upon her claim for wrongful discharge based upon her theory that she was terminated in violation of public policy for her refusal to participate in illegal activities. We agree.

If we view the evidence in the light most favorable to plaintiff, as we must, the record reflects that plaintiff was assigned to work on a proposed "merger" among the Colorado, New Mexico, and Nevada Blue Cross entities. Plaintiff was directed to analyze and project "benefits" that would accrue to Colorado Blue Cross from the merger. She was advised that if she could not do so, she could no longer expect to be employed by Colorado Blue Cross.

In this connection, however, plaintiff testified to discovering, in the course of her accounting duties, that Colorado Blue Cross had built up over $100 million in surplus from subscriber premiums. According to plaintiff, she also discovered that but for loans from Colorado Blue Cross to the New Mexico and Nevada entities, the New Mexico and Nevada entities were insolvent.

According to plaintiff, she reported the lack of statutory reserves for New Mexico and Nevada in a draft of the report for the Commissioner of Insurance and then was directed by a superior to delete these references. The superior also deleted the references in another draft of the report.

Evidence of various other incidents was introduced in support of plaintiff's claim. For example, plaintiff testified that she also discovered that a loan to the New Mexico entity of approximately $13.5 million in 1988 had not been properly reported to the Commissioner of Insurance. She complained to her superior.

According to plaintiff, she also discovered and reported to her supervisor that Colorado Blue Cross was improperly retaining national discount funds in trust which it had previously committed to rebate to certain government and private employers. Next, plaintiff testified that certain tax credits had been claimed which were improper and which represented a tax benefit of approximately $600,000 annually. Upon discovery of this alleged impropriety, plaintiff was directed to submit her work papers to another employee and she was directed not to work on this project.

As one of her other special projects, plaintiff was assigned to evaluate the reporting of certain split dollar life insurance premiums paid by Colorado Blue Cross. She discovered that in 1988, certain premium amounts paid by Colorado Blue Cross for certain employees had not been included on the W-2 or 1099 forms as required under applicable Internal Revenue Service regulations. Plaintiff reported to her superior that the 1989 forms should be amended and was advised that no changes would be made.

On the basis of these and similar incidents, plaintiff claimed that she was terminated and that defendants' contention that her job was eliminated was a pretext for her termination. Plaintiff further contended that the termination was in violation of public policy because she was exercising her independent judgment as a certified public accountant in objecting to defendants' alleged effort to mislead the Commissioner of Insurance and the failure of Colorado Blue Cross to comply with applicable tax regulations. Plaintiff relied upon § 10-16-102, C.R.S. (1994 Repl.Vol. 4A), Colorado State Board of Accountancy Rules of Professional Conduct Rule 7.3, 3 Code Colo.Reg. 705-1, and 18 U.S.C. § 1001 (1988) as evidencing the public policy which supported her actions.

The parties agree that the propriety of the trial court's ruling on this claim is governed by Martin Marietta Corp. v. Lorenz, 823 P.2d 100 (Colo.1992). However, the parties disagree upon the proper interpretation and application of that opinion.

There, the court adopted the elements of a wrongful discharge claim based upon public policy as follows:

that the employer directed the employee to perform an illegal act as part of the employee's work related duties or prohibited the employee from performing a public duty or exercising an important job-related right or privilege; that the action directed by the employer would violate a specific statute relating to the public health, safety, or welfare, or would undermine a clearly expressed public policy relating to the employee's basic responsibility as a citizen or the employee's right or privilege as a worker; and that the employee was terminated as the result of refusing to perform the act directed by the employer.... [and] that the employee present evidence showing that the employer was aware, or reasonably should have been aware, that the employee's refusal to comply with the employer's order or directive was based on the employee's reasonable belief that the action ordered by the employer was illegal, contrary to clearly expressed statutory policy relating to the employee's duty as a citizen, or violative of the employee's legal right or privilege as a worker.

Martin Marietta Corp. v. Lorenz, supra, at 109 (emphasis supplied).

A

Defendants contended and the trial court agreed that plaintiff's evidence failed to establish the second element in Lorenz. We conclude, however, that plaintiff's evidence did satisfy this requirement based upon one of her legal theories. Thus, it is unnecessary to address the other two.

Pursuant to the Colorado State Board of Accountancy Rules of Professional Conduct Rule 7.3, 3 Code Colo.Reg. 705-1, plaintiff was prohibited in the performance of her professional duties from knowingly misrepresenting facts concerning defendants' activities. We agree with plaintiff that this regulation imposed upon her an obligation not to conceal or misrepresent the financial status of the New Mexico and Colorado entities in reports to any governmental agency relative to the proposed merger. It also obligated plaintiff to report and recommend corrective action relative to reports to tax authorities, because the failure to do so, in our view, would violate the rule.

Contrary to defendants' contention, as we read Lorenz, it is unnecessary to establish that the failure accurately to report the foregoing information must always violate a specific statute. To interpret Lorenz in this manner would undermine the principles and public policy governing the obligations of a certified public accountant, which preclude any deception upon either the state or federal government.

B

As alternative support for the trial court's ruling, defendants contend that plaintiff's evidence failed to satisfy the third element of the Lorenz test, namely, that the employee was terminated for refusing to perform an act mandated by the employer. Specifically, defendants claim that plaintiff's supervisors and not plaintiff were the employees ultimately...