A Massachusetts jury recently awarded a plaintiff more than $2 million in damages on malicious prosecution and defamation claims in a case that highlights the caution with which employers should engage the police in workplace investigations.
In Moran v. Khalil, et al., a longtime employee came to be suspected by her colleagues of having taken $18,000 in cash and checks that never made it into the company’s coffers.
The defendants — three company officials — argued that when they went to the local police department to report the findings of an internal investigation, they had both the right and a valid reason to do so. After making their initial report to the police, they left the police alone to draw their independent conclusions, they said.
But the plaintiff convinced the jury that not only was the defendants’ report more likely than not false, it was made with an improper, ulterior motive: to shift blame away from themselves for “mismanagement, incompetence, and dereliction of duty.”
On Dec. 13, a unanimous eight-member jury found that the plaintiff had proved both her malicious prosecution and defamation claims, and awarded $515,000 for economic harm, $1 million for emotional harm, and an additional $500,000 for harm to her reputation.
While working for Pentucket Medical Associates from 2008 to 2017, plaintiff Susan Moran was promoted several times, given added responsibilities and corresponding salary increases and bonuses.
In 2016 and 2017, she served as clerical manager at PMA. By spring of 2016, understaffing at PMA had created difficult working conditions, and Moran began looking for a new job.
In late January 2017, Moran notified her supervisor that she had accepted a position at Tufts Medical Center. She initially gave PMA four weeks’ notice but agreed to stay longer to train her replacement.
One of Moran’s many duties was to audit the reconciliations of patient payments and copayments received at two locations. Receptionists at those locations received checks, cash and credit cards from patients as payments or copayments for health services and posted those payments to patients’ accounts.
Due to understaffing, Moran, who primarily worked in another office, was asked to travel to the two locations to audit the receptionists’ cash and check bundle reconciliations and then ensure that the bundles of cash, checks and credit card slips were placed into locked bags to be picked up by PMA couriers.
The bags would then be delivered to PMA’s headquarters, undergoing a final audit before the cash and checks would be deposited at a bank.
Defendants Mike Baker and Jason Khalil, PMA’s senior director of finance, had key leadership roles in overseeing the company’s finances, while defendant Suzanne Constantino was the company’s director of human resources during the relevant period.
As Moran was getting ready to take her new job at Tufts, PMA began receiving complaints from patients about incorrect billing and checks not being cashed.
Part of the plaintiff’s theory was that as Baker and Khalil continued to be unable to pinpoint the cause of the copayment billing issues, they decided to make Moran their scapegoat for the loss of $18,000 that was missing, even though there was no evidence collected by security cameras or in financial records on which to base such a conclusion.
Moran was called into what quickly became an antagonistic meeting. The defendants claimed that, upon being confronted with the substantial amount of missing money, Moran made statements they considered incriminating.
Moran was told she would be suspended without pay pending the outcome of the investigation, but because she was already planning to join Tufts, she told the defendants that she would be leaving immediately.
Six days later, Khalil and Constantino reported to the police that Moran had stolen three months of cash and checks worth approximately $18,000. They supplied no surveillance video or bank records to support that assertion.
After speaking with all the relevant PMA employees, the officer looking into the allegations reported that he had been unable to find anyone who had actually seen Moran take the money.
But despite expressing reservations about the lack of valid evidence, he recommended that the matter be put before a clerk-magistrate to determine whether charges should be issued.
Moran did not appear at the hearing — she claimed inadequate notice — and a criminal charge for felony larceny was issued based solely on the police report.
The local District Attorney’s Office would ultimately file a nolle prosequi in the case — a formal notice of abandonment — due to the lack of evidence, but not before Moran made several court appearances, including being brought into the courtroom in handcuffs for her arraignment and bail hearing.
The whole experience took a toll on her performance at her new job, which she eventually felt compelled to leave, and her attempts to find suitable employment thereafter largely failed.
The ordeal also exacerbated Moran’s preexisting mental health issues and caused her to lose nearly 50 pounds and begin suffering from alcohol abuse.