This Bad Boss Asked an Employee to Lie Under Oath — and Fired Him After He Refused
When Matthew Flanigan saw evidence that a senior executive at his company might be violating security protocols, he alerted a group that included Allan Metzger, the cofounder and then-CEO of Rheumatology Diagnostics Laboratory (RDL), a Los Angeles-based medical testing facility.
At first, Mr. Metzger agreed to restrict the executive’s access to RDL’s computer network, according to a lawsuit filed later by Mr. Flanigan, who was the lab’s IT director.
But after the alleged culprit made a fuss, Mr. Metzger instead reversed course and dragged Mr. Flanigan into a high-stakes corporate battle by asking him to declare under oath that he’d never seen any sign of a security breach, according to testimony.
Mr. Flanigan refused to lie for the CEO, a former doctor who had previously made headlines for his care of pop stars Janet and Michael Jackson — and who had surrendered his medical license in 2014 after being convicted of sexually exploiting a patient during an examination, according to court records.
Instead, the IT director signed a declaration for the other side in the fight — and quickly faced retaliation.
According to court documents, Mr. Metzger suspended Mr. Flanigan and started a probe of his behavior. Among the investigators: The husband of the executive who had earlier been flagged for security violations.
Just two weeks later Mr. Flanigan was fired, supposedly for deleting company files during his suspension, an action he believes was concocted to frame him, according to court documents.
Allan Metzger is our latest Bad Boss of the Month.
Mr. Flanigan sued RDL in California state court, claiming he’d actually been fired for, among other things, refusing to perjure himself. In late 2021, a Los Angeles jury found RDL liable and awarded him $1.68 million in damages. This May a judge awarded Mr. Flanigan nearly $900,000 more in interest, costs, and attorney fees.
RDL, the main assets of which were acquired by testing giant LabCorp in 2020, is appealing the verdict.
Mr. Flanigan had been at RDL for just over a year when the trouble started — but he already was thriving at the lab, having earned a promotion, a company car, and $40,000 in raises during his short tenure.
As IT director his job included overseeing computer security, so he was alarmed in early 2017 when software showed that RDL’s new compliance chief, Kristine Azarraga, had plugged in an unauthorized thumb drive and introduced foreign files into the lab’s network.
The files, Mr. Flanigan said in court documents, came from Ms. Azarraga’s previous employer, also a healthcare company, and included personal data from thousands of patients in apparent violation of HIPAA, the Health Insurance Portability and Accountability Act of 1996, a law that protects the privacy of such information.
The IT director went to the top with his concerns, calling a meeting with Mr. Metzger and two other top executives, Samuel Morris and Richard Kazdan. Faced with Ms. Azarraga’s apparent misuse of a former employer’s data, the men initially agreed to limit her access to RDL’s data, Mr. Flanigan testified.
But then things went sideways.
First, Mr. Metzger reversed the decision about Ms. Azarraga after the compliance chief complained: “I’m the CEO and you’ll … do what I tell you to do,” Mr. Flanigan said Mr. Metzger yelled at him.
And second, the incident pulled the IT director into a fight that was stewing between the CEO and the other two executives to whom Mr. Flanigan had reported Ms. Azarraga’s breach, Mr. Morris and Mr. Kazdan.
Some background: RDL had been founded in 1976 by Mr. Metzger and the late Robert Morris, a noted rheumatologist and the father of Samuel Morris. For decades, the lab was run by the elder Morris, who acted as president, and his wife Barbara, who acted as CEO. Son Samuel later joined as a top manager.
Although Mr. Metzger was a co-owner, he mostly pursued flashier interests, according to court filings — including prescribing medication to stars such as Janet Jackson, for which he was censured in 2000, and accompanying Michael Jackson on tour as a physician.
(Mr. Metzger didn’t prescribe or administer the drugs that caused Mr. Jackson’s death in 2009; indeed, he testified against Conrad Murray, the physician who was convicted of involuntary manslaughter in the case.)
Mr. Kazdan was the lab’s longtime CFO.
By 2016 Robert and Barbara Morris were ailing; both would die before long. Having lost his California medical license in 2014, Mr. Metzger turned his focus to RDL — and, with the help of a minority shareholder, voted for himself as CEO to wrest control of the lab away from the Morrises, according to court filings.
Mr. Metzger treated RDL as a “personal piggy bank,” according to a declaration filed in court by the younger Mr. Morris: The new CEO paid himself an $800,000 salary; leased a Maserati as a company car; flew first-class and stayed in posh hotels with a girlfriend on “alleged … business outings”; and engaged in “sexual harassment” of RDL employees. The lab began to struggle financially, according to Mr. Morris, who testified that he had to lend RDL money just to make payroll.
Against this backdrop, Ms. Azarraga’s network access wasn’t just a security matter: It was fodder for a claim of mismanagement against Mr. Metzger.
Following the Azarraga incident, both Mr. Morris and Mr. Kazdan left RDL; Mr. Morris resigned and Mr. Kazdan was fired after warning the CEO about improper lab practices, according to court documents. In August, the duo filed a derivative action against Mr. Metzger and others, including Ms. Azarraga, claiming a breach of fiduciary duty and seeking at least $20 million for shareholders, along with changes to RDL’s “governance, policies and culture.”
Among the facts they cited: Mr. Flanigan’s warning about Ms. Azarraga — and Mr. Metzger’s subsequent restoration of her network privileges.
After being served with the lawsuit, the CEO summoned Mr. Flanigan into his office, according to testimony. A lawyer for RDL attended via phone and quizzed the IT director about the Azarraga incident; a few days later, Mr. Flanigan received a document in which he was asked to swear that he was unaware of any evidence that Ms. Azarraga had violated security protocols.
“Having reported Ms. Azarraga for doing precisely that only four months earlier,” Judge Terry Green noted in a later order, Mr. Flanigan “could not very well sign the declaration.”
Meanwhile, attorneys for Mr. Morris and Mr. Kazdan had also been in touch with the IT director. They too had drafted a declaration — and on the same day he refused to endorse Mr. Metzger’s document, Mr. Flanigan signed the competing version, which he found to be truthful.
The next day, after his declaration was filed in court, the IT director was put on investigative leave. The issue, according to court documents: In his declaration, Mr. Flanigan might have disclosed privileged information — and Mr. Metzger wanted to see whether he was leaking dirt to the other side. The IT director was forbidden to access RDL’s computer system.
Mr. Flanigan wasn’t at work when he got news of the suspension; the morning after siding against Mr. Metzger, he had called in sick with chest pains. His RDL office was quickly stripped of his personal effects.
“It was pretty obvious that they intended to fire me,” he testified.
Ironically, just weeks earlier Mr. Flanigan had been cleared of any collaboration with the recently departed Mr. Morris and Mr. Kazdan — via a secret investigation launched by Mr. Metzger himself. Concerned that his email had been compromised, the CEO had asked an outside security consultant to assess whether his IT director was “spying,” according to a copy of the report filed in the case.
The resulting exoneration was definitive: “I … would go so far as to stake my professional reputation … that the likelihood of Matt Flanigan committing any wrongdoing or unethical activity [is remote],” the investigator wrote in a report that didn’t surface until years into the lawsuit.
Nonetheless, RDL pressed ahead with another investigation. This time evidence showed that “the conclusion was foregone,” according to Judge Green.
First, according to court documents, came an informal probe by — of all people — Ms. Azarraga’s husband, Garabed Yegavian, himself an IT professional. Mr. Yegavian “might well” have been biased against Mr. Flanigan, according to Judge Green.
Either way, Mr. Yegavian promptly delivered logs that purported to show that Mr. Flanigan had deleted a bunch of files after being banned from the network. Then RDL provided the same logs to an outside investigator, who agreed with Mr. Yegavian’s conclusion — but didn’t address what Judge Green called “the very real possibility” that someone else had used Mr. Flanigan’s passwords, which he had provided to RDL, to create the firing offense. In fact, records showed that the IT director wasn’t at the RDL office when Mr. Yegavian’s logs supposedly showed him logging in from there.
Based on these investigations, which Judge Green wrote “can hardly be called rigorous,” Mr. Metzger fired Mr. Flanigan in September 2017. About a month later, RDL began paying Mr. Yegavian as a consultant, according to court documents.
The matter finally reached trial in state court in September 2021. After three weeks of proceedings, a Los Angeles jury found Mr. Metzger’s firing of the IT director to be both unlawful and “malicious, oppressive, and/or fraudulent,” awarding Mr. Flanigan $1.08 million in direct damages and a further $600,000 in punitive damages — to which Judge Green later added almost $900,000 in interest, fees, and costs, for a total of more than $2.5 million.
The dispute over RDL’s governance, meanwhile, settled in 2019. After selling most of the business to LabCorp, Mr. Metzger wound up the corporation in 2020, according to state filings. His medical license had been reinstated earlier that year, with a host of probationary conditions that included the use of a chaperone when treating female patients and successful completion of a program on “professional boundaries,” but the now-former CEO agreed to surrender his license again in 2021.
The most recent order by the Medical Board of California doesn’t state a reason, but cites a provision that covers either Mr. Metzger’s decision to stop practicing medicine or his inability “to satisfy the terms and conditions of probation.”
» Watch Mr. Metzger’s testimony in the trial of Conrad Murray, a physician convicted of the involuntary manslaughter of Michael Jackson
The Employment Law Group® law firm was not involved in Flanigan v. Rheumatology Diagnostics Laboratory, Inc. We select “Bad Boss” cases to illustrate the continuing relevance of employee protection laws for our newsletter’s audience, which includes attorneys and former TELG clients.
Mr. Flanigan was represented by the Law Offices of Edward Y. Lee.