Justices rule state immune to ex-IDEM worker’s whistleblower claim

November 3, 2017

A divided Indiana Supreme Court has found that the state is immune from a non-tort claim made by a former state employee under the Indiana False Claims and Whistleblower Protection Act.

Suzanne Esserman, a former employee of the Indiana Department of Environmental Management, said she was fired in retaliation for calling attention to questionable payments from the excess-liability trust fund. She claimed the disbursements were made without proper documentation and many applicants received payments to which they were not entitled.

A split Supreme Court affirmed the Marion Superior Court’s dismissal of her lawsuit in Suzanne E. Esserman v. Indiana Department of Environmental Management, 49S02-1740-PL-00189. The majority of justices found Indiana has not waived sovereign immunity because the Legislature did not “clearly evince” in the whistleblower statute that the state could be subjected to lawsuits for violations of the act. Esserman argued that under the whistleblower provision, Indiana Code section 5-11-5.5-8, the state is not immune. The language of Section 8 does not expressly prohibit a lawsuit against the state.

The Indiana Court of Appeals agreed and reversed the trial court’s ruling. The unanimous panel rejected the state’s argument that common law sovereign immunity applies, noting that in Section 8, the word “employer” is not defined and, therefore, does include the state.

However, the Supreme Court took a thorough review of the doctrine of sovereign immunity and concluded Indiana does retain common law sovereign immunity for non-tort claims. To waive immunity, the statute must be unequivocal and Section 8 fails in that regard.

“The statute, while clearly stating that an employee may sue her employer, does not name the State (or one of its agencies or officials) as a permissible whistleblower defendant,” Justice Geoffrey Slaughter wrote for the majority. “Had the legislature intended to subject the State to whistleblower liability, it could have expressed that intention any number of ways.”

Justice Steven David dissented, arguing the plain meaning of the term “employer” in the statute includes the state. He contended Esserman could bring a claim under against IDEM under the Whistleblower statute.

“While I agree with the majority that the legislature could have defined employer in this section to include the State, I do not believe that not including such a definition serves to exclude the State looking at the plain language here,” David wrote. “There is no limiting language indicating any exceptions or carve outs for the State or any other entity that has employees.”

Slaughter did point out state employees can find remedy under the State Personnel Act, I.C. 4-15-10-1, -4. Although the employee could receive 30 days back pay and reinstatement, the justice conceded the remedy is not as generous as that provided by the whistleblower act.




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