Law & Courts

Court Backs Texas Education Agency Over U.S. Education Dept. on Whistleblower Complaint

By Mark Walsh — March 24, 2021 4 min read
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A federal appeals court has ordered the dismissal of a federal whistleblower complaint by a former employee of the Texas Education Agency that had been sustained by the U.S. Department of Education’s inspector general’s office.

A three-judge panel of the U.S. Court of Appeals for the 5th Circuit, in New Orleans, ruled unanimously that the actions of the Education Department—which had investigated the complaint, found it credible, and awarded her damages—violated the sovereign immunity of Texas.

The court said the TEA was an arm of the state, and Texas had not waived its sovereign immunity under the National Defense Authorization Act of 2013, a federal statute that bars recipients of federal funds from retaliating against whistleblowers who report abuses of those dollars. The statute provides for an administrative enforcement system in which whistleblowers report allegations of financial abuses to the inspector general of the relevant federal agency.

The Texas case involves Laurel Kash, who was hired by the TEA in 2017 as its director of special education. Within a few months, Kash voiced concerns about a contract for data analysis that TEA had entered into with an entity called SPEDx. The contract was funded with money under the federal Individuals with Disabilities Education Act.

Kash told her boss she believed the contract was unnecessary and had been awarded based on friendships between a SPEDx contractor and sub-contractor and a TEA employee, court papers say. Kash also reported her concerns to the TEA’s director of internal audit.

Soon after, Kash’s boss gave her a letter of reprimand alleging instances of unprofessionalism and inappropriate communications with external stakeholders. Meanwhile, the TEA learned about a lawsuit that had been filed in Oregon, where Kash used to work, which alleged that Kash had tried to cover up the physical and sexual abuse of a 6-year-old child. Kash told her supervisors the suit was filed by a disgruntled colleague.

Days after the TEA had learned about the lawsuit, Kash made a complaint to the federal Education Department about her concerns over the SPEDx contract. The next day, the TEA fired her, though court papers say the state agency may not have been aware of Kash’s federal complaint when it terminated her, while it was aware of her complaint to the TEA auditor.

Kash filed an additional complaint with the Education Department’s inspector general alleging whistleblower retaliation. After a yearlong investigation, the office of inspector general sustained her complaint. A federal administrative law judge agreed and ordered the TEA to pay Kash unspecified damages.

That’s when the TEA filed an appeal in the 5th Circuit court. In its March 23 decision in Texas Education Agency v. U.S. Department of Education, the appeals court sided with the TEA.

The court said some federal statutes properly put states on notice that they are waiving their immunity from suits or administrative enforcement as a condition of receiving federal funds. These include the IDEA and Title IX of the Education Amendments of 1972, which bars sex discrimination in federally funded programs.

The Education Department argued to the 5th Circuit court that the National Defense Authorization Act unambiguously put the TEA on notice that it would be subject to administrative review of whistleblower claims should the TEA choose to accept federal funds through any federal grant, including those under the IDEA.

The TEA argued that the NDAA is inadequately clear about states giving up their immunity because the text makes no reference to “states” or to “immunity.” The state agency argued that the Education Department’s interpretation was impermissibly broad because it relies on the statute’s references to “contractor” and “grantee” acting as “a global waiver of sovereign immunity for any state that enters into any contract with or receives any grant from the federal government.”

“The TEA is correct,” the 5th Circuit court said in its opinion. “The NDAA lacks the clarity required for a knowing waiver under our and Supreme Court case law.”

The NDAA does not mention states, “leaving it ambiguous whether it applies to them,” the court said, while other federal whistleblower retaliation provisions do so, “demonstrating that Congress knows how to make such provisions’ application to states clear.”

Also, the NDAA makes no mention of sovereign immunity, the court said. While Congress is not required to always use certain “magic words,” it added, “the case law shows that we have tended to require that the statute at least mention immunity.”

The court said “the sheer breadth of the opposite holding—that states must forgo every dollar of federal funding or else waive immunity—is reason to be skeptical that states knowingly made that choice.”

The appeals court tossed out the relief granted to Kash and ordered the Education Department to dismiss the proceedings “without delay.”

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