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STATE OF MINNESOTA IN COURT OF APPEALS A07-1644 Michael Marn, Relator, vs. Fairview Pharmacy Services LLC, Respondent, Department of Employment and Economic Development, Respondent. Filed September 30, 2008 Affirmed Worke, Judge Department of Employment and Economic Development File No. 5449 07 Sharon E. Jacks, 540 Fairview Avenue North, Suite 300, St. Paul, MN 55104 (for relator) Dennis J. Merley, H. Le Phan, Felhaber, Larson, Fenlon & Vogt, P.A., 220 South Sixth Street, Suite 2200, Minneapolis, MN 55402 (for respondent Fairview Pharmacy Services LLC) Lee B. Nelson, Katrina I. Gulstad, Department of Employment and Economic Development, First National Bank Building, 332 Minnesota Street, Suite E200, St. Paul, MN 55101 (for respondent Department) Considered and decided by Connolly, Presiding Judge; Minge, Judge; and Worke, Judge. SYLLABUS An employee who breaches a duty of loyalty to the employer commits employment misconduct disqualifying the employee from receiving unemployment benefits.

OPINION WORKE, Judge Relator challenges the decision by the unemployment-law judge (ULJ) that he was disqualified from receiving unemployment benefits because he had been discharged for misconduct after he contacted one of his employer's business partners and urged it to terminate a business contract, arguing that (1) he acted reasonably under the circumstances and made a good-faith error in judgment; and (2) his due-process rights were violated because the ULJ relied on hearsay and did not grant him an additional hearing in order to consider an affidavit submitted with his request for reconsideration. Because the ULJ did not err in determining that relator breached a duty of loyalty to his employer constituting disqualifying misconduct and because relator received a fair hearing, we affirm. FACTS Relator Michael Marn worked as a patient financial advocate for respondent Fairview Pharmacy Services LLC. Fairview has a business contract with Blue Cross Blue Shield of Minnesota (BCBS) and services a large number of BCBS-insured patients. Relator was aware that the contract resulted in millions of dollars of business for Fairview, but believed that the pharmacy volume had exceeded the capacity of the staff to provide adequate service. Relator was concerned that prescriptions were being filled without being properly verified by pharmacists. Relator spoke with Fairview employees, including Fairview's president, Bob Beacher, about leadership issues and patient-safety concerns. Relator also once anonymously called the Minnesota Board of Pharmacy and 2

generally inquired with a hypothetical question as to whether what he believed was going on at Fairview constituted a regulatory violation. Relator was told that the situation he described was a violation. However, relator never reported to the board what he believed was occurring at Fairview. Relator then talked to an individual he knew who worked at BCBS. This individual encouraged relator to contact Al Heaton, director of pharmacies for BCBS. Relator called Heaton a number of times and left anonymous voicemail messages expressing his opinion that Fairview was being stretched to the limit of its operating capacity and that it was detrimental to patients with BCBS insurance. Relator suggested that BCBS reevaluate its contract with Fairview. Although uncertain of what the result would be from his messages, relator understood that steering business away from Fairview was certainly a possibility. In January 2007, Heaton approached Kari Amundson, Fairview's director of specialty services, and told her that he received voicemail messages from an individual who alerted him to poor service within Fairview. Heaton accessed his voicemail and played two of the messages for Amundson and Vicki Stevens, Fairview's director of human resources. Although the caller did not identify himself, Amundson recognized relator's voice. In the messages, relator stated that he was a concerned employee who felt that it would be a good thing for BCBS to terminate its contract with Fairview because patients were suffering from poor service. Relator also stated that Fairview was not prepared to deal with changes to Medicare that affected the pharmacy business. Relator further stated that Fairview made promises that it could not keep and that it could not deliver on. Additionally, relator suggested that Fairview was utterly unprepared and 3

inadequately managed after it entered into the contract with BCBS. Finally, relator stated that BCBS should consider starting its own specialty pharmacy in order to take the pressure off of Fairview. Beacher and Stevens met with relator and asked him if he knew anything about the calls. Relator's reply was: "No comment." Beacher gave relator the option to resign in exchange for telling him whom relator had called and what information he divulged. Relator told Beacher that he wanted to resign, but refused to tell Beacher whom he had called. Beacher then terminated relator for acting in a manner that was contrary to Fairview's best interests. Following his discharge, relator established a benefit account with respondent Department of Employment and Economic Development (DEED), and it was initially determined that relator was disqualified from receiving unemployment benefits. Relator appealed. Following a hearing, the ULJ determined that relator was discharged because of employment misconduct and disqualified from receiving unemployment benefits. The ULJ decided that relator's actions were against the standards of behavior that Fairview had a right to reasonably expect of him when he violated his duty of loyalty by interfering with Fairview's business contract. The ULJ determined that the evidence did not show that public safety was in danger or that relator thoroughly pursued other avenues for a solution to his perceived problem with Fairview. Relator then requested reconsideration and submitted an affidavit from a pharmacy technician who had been employed at Fairview. The ULJ affirmed, noting that relator made the same arguments in his request for reconsideration as he did at the hearing. 4

Regarding the affidavit, the ULJ determined that relator failed to show good cause for failing to submit the affidavit at the hearing and that it would not likely change the outcome of the decision. This certiorari appeal follows ISSUES I. Did the ULJ err in determining that relator was discharged for employment misconduct and disqualified from receiving unemployment benefits? Were relator's due-process rights violated when the ULJ permitted hearsay testimony and when the ULJ did not consider an affidavit submitted with relator's request for reconsideration? ANALYSIS I. This court may affirm the decision of the ULJ, remand the case for further proceedings, or reverse or modify the decision if the substantial rights of the petitioner may have been prejudiced because the findings, inferences, conclusion, or decision are: (1) in violation of constitutional provisions; (2) in excess of the statutory authority or jurisdiction of the department; (3) made upon unlawful procedure; (4) affected by other error of law; (5) unsupported by substantial evidence in view of the entire record as submitted; or (6) arbitrary or capricious. Minn. Stat.

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