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Malicious Prosecution Verdict Highlights Need For Caution In Workplace Investigations


A recent case from Massachusetts highlights just how important it is for employers that suspect an employee has engaged in workplace misconduct to enlist a lawyer to conduct a careful, deliberate, thorough and fair investigation before taking any definitive action.

The employee in the case, Susan Moran, worked for Pentucket Medical Associates for nine years, during which time she was promoted several times. But understaffing apparently made the job difficult for Moran, PMA’s clerical manager, and she looked for a new job.

Several months later, she told her supervisor she was taking a job at a large Boston hospital and gave four weeks’ notice but agreed to stay longer to train her replacement.

Among Moran’s duties was auditing reconciliations of patient payments and copayments at two other locations — a task that required her to travel between locations to audit cash, checks and credit card slips and place them in locked bags, which would be picked up by couriers and delivered first to headquarters and then to the bank.

As Moran was preparing to leave, PMA started receiving complaints from patients about billing errors and uncashed checks, and the company realized it had an $18,000 shortfall in its books.

Meanwhile, PMA and its management already faced negative press coverage from an unrelated incident in which PMA couriers had left boxes of patient medical records in a publicly accessible area, where they were photographed and carried away.

Things got contentious when management, without any evidence from security cameras or financial records, accused Moran of absconding with the $18,000. PMA then announced it was suspending Moran without pay pending an investigation. Moran, who was preparing to start a new job anyway, responded that she would be leaving immediately.

Without further investigation, management reported to police that Moran had stolen the $18,000 in cash and checks but provided no hard evidence in support.

Though the district attorney ultimately decided not to prosecute, given the lack of valid evidence, Moran still had to make several humiliating court appearances, including being brought into the courtroom in handcuffs for her arraignment. She claimed she suffered severe emotional distress as a result of the ordeal.

Moran ultimately sued PMA and the managers for malicious prosecution, with a jury finding that not only was the managers’ report false, but that it was made to shift blame away from themselves for their own mismanagement of the company. The jury awarded a seven-figure verdict.