Bechtel v. St. Joseph Medical Center, Inc.
Filing
31
MEMORANDUM DECISION Re: Motion to Dismiss. Signed by Judge Marvin J. Garbis on 4/26/12. (bmhs, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
LISA BECHTEL
*
Plaintiff
vs.
*
*
CIVIL ACTION NO. MJG-10-3381
ST. JOSEPH MEDICAL CENTER, INC. *
Defendant
*
*
*
*
*
*
*
*
*
*
MEMORANDUM DECISION RE: MOTION TO DISMISS
The Court has before it Defendant St. Joseph Medical
Center’s Motion to Dismiss [Document 23] and the documents
related thereto.
I.
The Court finds a hearing unnecessary.
BACKGROUND1
A.
Bechtel's Pertinent Employment Chronology
Bechtel was employed by St. Joseph Medical Center (the
“Hospital”) in early 2000 as a Cardiac Surgery Physician
Assistant.
In her role, she provided professional services for
patients of cardiac surgeons at the Hospital, including Dr. Peter
Horneffer (“Dr. Horneffer”).
By 2005, Bechtel was promoted to
the position of Head Physician Assistant for Cardiac Services at
the Hospital.
In 2006, while still employed by the Hospital,
Bechtel took a part time position with Cardiac Surgery
1
The “facts” herein are as alleged by Plaintiff and are not
necessarily agreed upon by Defendant.
1
Associates, a professional medical association of which Dr.
Horneffer was a shareholder.
For reasons discussed herein the
Hospital terminated Bechtel's employment on November 23, 2009.
B.
Factual Allegations
Starting in 2000, Dr. Horneffer objected to the Hospital’s
relationship with Midatlantic Cardiovascular Associates, Inc.
(“Midatlantic”), which included the Hospital’s paying
inappropriate sums to Midatlantic for referral of lucrative
cardiac procedures.
As a result, Dr. Horneffer stopped receiving
referrals from Midatlantic and had to travel to other locations
to maintain his practice.
In 2004, Bechtel became an integral
part of his practice at the Hospital because she served as a key
liaison with his patients at the Hospital while he was traveling.
Starting in 2004, the Hospital “precluded Dr. Horneffer from
taking part in any business meetings, medical decisions, or other
actions in which Midatlantic physicians were also involved.”
Compl. ¶ 39.
Am.
However, Bechtel was permitted to attend some of
these meetings and conferences.
At these meetings, she became
aware of conversations between the Hospital’s management and
Midatlantic doctors that indicated that they wanted to “get rid
of” Dr. Horneffer because of his objections to their business
relationship.
Am. Compl. ¶ 40.
Bechtel also witnessed conversations between the Chief of
2
Cardiac Anesthesia and the Chief Medical Officer who was in
charge of all staffing matters.
They discussed the need to do
“whatever was needed” to remove Dr. Horneffer from practice at
the Hospital because his objections “could not be tolerated.”
Am. Compl. ¶ 40.
Bechtel told Dr. Horneffer about these
conversations and about other information concerning the conduct
of Midatlantic and the Hospital, and he, in turn, relayed the
information to the Government.
Bechtel provided other information to assist Dr. Horneffer
in regard to allegations that supported a False Claims Act case
brought in this Court against the Hospital and others.
See
United States ex rel. Stephen Lincoln, M.D., Peter Horneffer,
M.D., and Garth McDonald, M.D. v. St. Joseph Medical Center, MJG10-1632 (“the Qui Tam Case”).
In the Qui Tam Case, the relators
asserted that the Hospital submitted false claims to federal
health benefit programs by paying remuneration above fair market
value to Midatlantic in exchange for referrals and then submitted
claims for services that resulted from the remuneration.
For
example, Bechtel told Dr. Horneffer that the Hospital ignored the
medical mistakes of an incompetent Midatlantic surgeon and sought
to punish a nurse because the nurse tried to warn a patient about
the incompetent surgeon.
Bechtel informed Dr. Horneffer about
Midatlantic’s and the Hospital’s attempts to divert patients away
from Dr. Horneffer to Midatlantic surgeons and to prohibit Dr.
3
Horneffer from marketing his practice in order to maximize
revenues.
Bechtel “became aware that Midatlantic was willing to
refer these surgeries to their own surgeons, even if the
referrals raised the cost for other medical programs such as
Medicare, Medicaid, and private insurance.”
Am. Compl. ¶ 46.
Bechtel told Dr. Horneffer how, because the surgeons could not
operate fast enough, these referrals caused backups and caused
patients to incur additional costs.
This occurred even though
Dr. Horneffer was underutilized. Finally, Bechtel told Dr.
Horneffer that Midatlantic was attempting to cover up a medical
malpractice case that led to a large settlement.
In August 2007, the Hospital, in an attempt to remove Dr.
Horneffer from the medical staff, instituted a “sham peer
review,” which was eventually resolved in September 2008 when Dr.
Horneffer and the Hospital entered a settlement agreement.
Compl. ¶ 49.
Am.
As part of this settlement, the Hospital agreed to
help Bechtel further her career and her medical education.
In 2007, Bechtel enrolled at Oceania School of Medicine
(“Oceania”) because she wanted to be a board-certified Medical
Doctor.
Dr. Horneffer took an active role in advancing Bechtel’s
medical career by taking a part-time position as Associate Dean
of Oceania.
In early 2008, Dr. Jeffrey Sell (“Dr. Sell”), a Midatlantic
surgeon, became aware of Bechtel’s association with Dr.
4
Horneffer.
On or about February 6, 2008, Dr. Sell wrote a letter
to the Vice Chancellor of Oceania falsely accusing Dr. Horneffer
of sexually harassing Bechtel, and stated that “it [was Dr.
Sell’s] duty as her mentor to try to protect her in these
circumstances.”
Am. Compl. ¶ 54.
Further, Sell stated in the
letter that Dr. Horneffer’s involvement in Bechtel’s education
“posed a very real threat to her future.”
Id.
In April 2008, Bechtel drafted and submitted an affidavit to
Oceania that completely refuted Dr. Sell’s allegations and
described Dr. Sell’s efforts to threaten her into stopping Dr.
Horneffer’s qui tam lawsuit.
She forwarded her affidavit to the
Hospital’s managers and she filed a formal complaint with the
Hospital’s senior management.
But the Hospital’s senior
management did nothing to help her or to punish Dr. Sell for
falsely accusing Dr. Horneffer.
In 2008, Oceania conducted a
formal inquiry into Dr. Sell’s allegations and concluded that
they were unfounded.
In September 2009, the Hospital issued a falsely negative
performance appraisal of Bechtel’s work, the sole reason for
which “was to harass Ms. Bechtel and Dr. Horneffer as punishment
for their actions in furtherance of the False Claims Act.”
Compl. ¶ 70.
Am.
Previously, Bechtel had received “glowing reviews
of her job skills” and she had been promoted twice.
71.
5
Am. Compl. ¶
Then, in November 2009 the Hospital claimed that Bechtel had
improperly left a “wire” in a patient’s artery.
Am. Compl. ¶ 75.
The Hospital blamed her for the event even though several other
doctors had examined the patient after Bechtel.
When Bechtel
asked to review the patient’s medical records, the Hospital
refused and dispatched a security guard to remove her from the
Hospital.
Later that month the Hospital conducted a “sham
disciplinary action” of Bechtel, in which Bechtel was denied the
opportunity to appear before the panel to defend herself.
Compl. ¶ 76.
Am.
No one told Bechtel what the panel had reviewed,
who was on the panel, or whether the panel’s members were biased
against her.
Thereafter, and as a direct result of the incident with the
wire and the disciplinary action that followed, Bechtel’s
employment was terminated on November 23, 2009.
Compl. ¶ 77.
When Dr. Horneffer investigated her termination, he advised the
Hospital that there was no substantive evidence supporting its
decision. Nevertheless, the Hospital refused to rescind her
termination and it never punished the other doctors who had
examined the patient.
Between December 2009 and March 23, 2010, the Hospital
provided false, misleading, and inaccurate information about
Bechtel to the Board of Physicians of Maryland Department of
Health and Mental Hygiene (the “Board”).
6
The Hospital did so in
an attempt to have Bechtel’s license to practice medicine as a
Physician Assistant revoked.
Specifically, the Hospital notified
the Board that Bechtel had violated her “delegation agreement”2
and that she had been terminated from the Hospital.
80.
Am. Compl. ¶
Although Bechtel may lose her license, the Hospital refuses
to provide her with a copy of the patient’s medical records,
which she needs to prepare a proper defense in front of the
Board.
In December 2009, to further harm Bechtel, the Hospital
stopped honoring its agreement with Oceania.
Because of this
abrupt decision, Bechtel could no longer train at the Hospital.
The primary reason for its decision was to harass and intimidate
Bechtel and Dr. Horneffer.
The Hospital then reversed itself and allowed Oceania to use
its campus.
However, the Hospital said that Bechtel’s privileges
had automatically terminated when her employment ended because
she no longer had a delegation agreement signed by a sponsoring
physician that would allow her to practice with that physician.
In April and May 2010, Dr. Horneffer told the Hospital that the
State of Maryland had granted Bechtel a delegation agreement
under which he was her delegating physician.
But the Hospital
threatened to terminate Dr. Horneffer if he acted as Bechtel’s
2
A delegation agreement is the agreement establishing the
duties that a supervising physician may delegate to a physician
assistant. See Desmond v. Yale-New Haven Hosp., Inc., 738 F.
7
sponsor, so he was therefore unable to help Bechtel.
The Hospital’s management told Bechtel that she could have
her privileges restored at the Hospital if she had a physician
other than Dr. Horneffer act as her delegating physician.
Yet
the Hospital should have reasonably known that no physicians
would sponsor Bechtel because they would have been aware of the
threat the Hospital had made to Dr. Horneffer.
In the summer of 2010, the Joint Commission for the
Accreditation of Hospital Organizations (the “Commission”)
expressed interest in the circumstances surrounding Bechtel’s
termination.
After learning this, the Hospital’s Corporate
Responsibility Officer agreed to interview Bechtel.
Bechtel
provided documents to the Hospital’s officer that detailed
Bechtel’s actions.
Bechtel also asked the officer to undertake a
good-faith review of her termination.
After the interview in
September 2010, the officer told Bechtel that she would receive a
response in two to three weeks; however, that response never
came.
In November 2010, the Hospital entered into a settlement
agreement with the United States Government in the amount of $22
Million as consideration for settling claims raised in the Qui
Tam Case.
Supp. 2d 331, 334 (D. Conn. 2010).
8
C.
Procedural History
Bechtel filed the Complaint against the Hospital in December
2010.
The Complaint was dismissed without prejudice [Document
17].
Bechtel filed the Amended Complaint [Document 18] in June
2011 asserting claims in three Counts:
Count I
Whistleblower Retaliation, 31 U.S.C. § 3730(h)
Count II
Interference with Economic Relationship
Count III Wrongful Employment Termination
By the instant motion, the Hospital seeks dismissal of all
charges.
II.
DISMISSAL STANDARD
A motion to dismiss filed pursuant to Federal Rule of Civil
Procedure 12(b)(6) tests the legal sufficiency of a complaint.
A
complaint need only contain “a short and plain statement of the
claim showing that the pleader is entitled to relief, in order to
give the defendant fair notice of what the . . . claim is and the
grounds upon which it rests.”
Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007) (citations omitted).
When evaluating a
12(b)(6) motion to dismiss, a plaintiff’s well-pleaded
allegations are accepted as true and the complaint is viewed in
the light most favorable to the plaintiff.
However, conclusory
statements or a “formulaic recitation of the elements of a cause
of action” will not suffice.
Id.
9
A complaint must allege
sufficient facts to “cross ‘the line between possibility and
plausibility of entitlement to relief.’”
Francis v. Giacomelli,
588 F.3d 186, 193 (4th Cir. 2009) (quoting Twombly, 550 U.S. at
557).
Inquiry into whether a complaint states a plausible claim is
“a context-specific task that requires the reviewing court to
draw on its judicial experience and common sense.”
Id.
Thus,
if the well-pleaded facts contained within a complaint “do not
permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged – but it has not shown –
that the pleader is entitled to relief.”
Id. (quoting Ashcroft
v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1950 (2009))(internal
quotation marks omitted).
III. DISCUSSION
A.
Count I - Whistleblower Retaliation
In Count I, Bechtel alleges that the Hospital illegally
threatened, harassed, and discriminated against her in the terms
and conditions of her employment because she lawfully provided
Dr. Horneffer, her associate, with information that furthered his
action under the False Claims Act.
These actions, she alleges,
caused her to be illegally discharged and have significantly
limited her ability to pursue her medical degree and career as a
physician.
10
The Hospital seeks dismissal of Count I on the ground that
Bechtel fails to plead adequately that (1) she acted in
furtherance of the Qui Tam Case and (2) that the Hospital had
knowledge of her involvement or assistance with the Qui Tam Case.
Accordingly, the questions presented include:
1. Whether Bechtel must adequately plead that she
personally acted in furtherance of the Qui Tam
case or can recover by virtue of her association
with Dr. Horneffer who so acted.
2. Whether Bechtel has adequately pleaded that the
Hospital had notice of her pertinent actions or
association with Dr. Horneffer.
During the period pertinent to the instant case, § 3730(h)
was twice amended.
Accordingly, it is necessary to consider the
viability of Bechtel's claims under three different versions of
the statutory provision, i.e. the pre-May 20, 2009 version (the
“1986 Version”),3
the version in effect from May 20, 2009 to
July 10, 2010 (the “FERA Version”)4 and the post-July 21, 2001
version (the “Dodd-Frank Version”).5
1.
Pre-March 20, 2009 Claims (1986 Version)
From 1986 until May 20, 2009, 31 U.S.C. § 3730(h) provided,
in pertinent part:
(h) Any employee who is . . . in any . . .
3
31 U.S.C. § 3730(h), Pub. L. No. 99-562 (October 27, 1986).
31 U.S.C. § 3730(h), as amended by the Fraud Enforcement and
Recovery Act of 2009, Pub. L. No. 111-21.
5
31 U.S.C. § 3730(h), as amended by the Dodd-Frank Wall
Street Reform and Consumer Protection Act, Pub. L. No. 111-203.
11
4
manner . . . discriminated against in the
terms and conditions of employment by his or
her employer because of lawful acts done by
the employee on behalf of the employee or
others in furtherance of an action under this
section,
including
investigation
for,
initiation of, testimony for, or assistance in
an action filed or to be filed under this
section, shall be entitled to all relief
necessary to make the employee whole.
§ 3730(h) 1986 Version.
a.
In Furtherance
The 1986 Version of the statute essentially states that a
cause of action will lie when there has been retaliation “because
of lawful acts done by the employee on behalf of the employee or
others in furtherance of an action under this section.”
U.S.C. § 3730(h), 1986 Version (emphasis added).
31
The statute
unambiguously required Bechtel to have taken lawful acts in
furtherance of the Qui Tam action.
Accordingly, Bechtel must
allege that she, herself, did acts in furtherance of Dr.
Horneffer’s development of the Qui Tam Case.
Bechtel has done
so.
Bechtel alleges that she regularly “pass[ed] along any
information regarding [the Hospital’s] and/or Midatlantic’s
illegal activities which, Dr. Horneffer, in turn, would pass on
to the United States in furtherance of the False Claims Act case
he filed.”
Am. Compl. ¶ 24.
Specifically, she alleges that she
was present at meetings that Dr. Horneffer was excluded from that
12
were attended by representatives of the Hospital and Midatlantic
physicians.
See Am. Compl. ¶ 39.
Bechtel thus became aware of
conversations that Dr. Horneffer was not privy to between the
Hospital’s management and Midatlantic doctors that indicated that
they wanted to “get rid of” Dr. Horneffer because of his
objections to the referral structure that was integral to their
business relationship.
See Am. Compl. ¶ 40.
She also became
aware that the Chief of Cardiac Anesthesia at the Hospital felt
that Dr. Horneffer was threatening his group’s prosperity, which
depended on the referrals from Midatlantic.
As this referral structure was at the heart of the False
Claims Act case ultimately settled by the Hospital, for which Dr.
Horneffer was a relator, Bechtel’s claims that her actions
furthered that action are plausible at this stage and are not
subject to dismissal on this basis.
This is so despite the Hospital’s argument that “an
individual acts ‘in furtherance of’ a qui tam lawsuit only where
she ‘initiated, testified for, or assisted in the filing’ of the
matter.”
Reply Mot. Dismiss 5 (emphasis added) (citing Zahodnick
v. IBM, 135 F.3d 911, 914 (4th Cir. 1997)).
The 1986 Version of § 3730(h) provides a remedy for acts in
furtherance of a qui tam lawsuit “including investigation for,
initiation of, testimony for, or assistance in an action filed or
to be filed.”
§ 3730(h) (1986 version) (emphasis added).
13
The
protected activities enumerated by the statute are not an
exhaustive list.
As this Court noted in United States ex rel.
Ackley v. IBM:
Nor is the language of Section 3730(h) by any fair
construction all-inclusive. Although the statute
expressly lists “investigation for” a qui tam action
(and does not list “reporting fraud”) among its
examples of protected activity, the legislative history
indicates that “protected activity should . . . be
interpreted broadly.” S. REP. NO. 99-345, at 35
(1986), reprinted in 1986 U.S.C.C.A.N. 5266, 5300; see
United States ex rel. Yesudian v. Howard Univ., 332
U.S. App. D.C. 56, 153 F.3d 731, 741 (D.C. Cir.
1998) (noting that statute’s examples are not “intended
. . . to encompass the entire category”); United States
ex rel. McKenzie v. BellSouth Telecomm., Inc., 123 F.3d
935, 944 (6th Cir. 1997) (same).
110 F. Supp. 2d 395, 400 (D. Md. 2000).
Because Bechtel plausibly alleges that she acted in
furtherance of Dr. Horneffer’s qui tam action by passing relevant
information to him, she has adequately pleaded the “in
furtherance of” aspect of her claim.
b.
Knowledge
To establish a valid claim for retaliatory discrimination
under the 1986 Version of the False Claims Act, it is not enough
to plead that the employee took actions in furtherance of a qui
tam suit.
An employee must also prove that her employer knew of
her taking these actions.
Zahodnick v. IBM, 135 F.3d 911, 914
14
(4th Cir. 1997).6
The Fourth Circuit has explained this notice requirement:
Such notice can be accomplished by expressly stating an
intention to bring a qui tam suit, but it may also be
accomplished by any action which a factfinder reasonably
could conclude would put the employer on notice that
litigation is a reasonable possibility.
Such actions
would include, but are not limited to, characterizing the
employer’s conduct as illegal or fraudulent or
recommending that legal counsel become involved. These
types of actions are sufficient because they let the
employer know, regardless of whether the employee’s job
duties include investigating potential fraud, that
litigation is a reasonable possibility.
Eberhardt v. Integrated Design & Constr., Inc., 167 F.3d 861, 868
(4th Cir. 1999).
As Judge Bennett recently observed, “The employer must have
knowledge or notice of the possibility of qui tam litigation,
because without that requisite knowledge, it would be impossible
for the employer to retaliate against the employee.”
United
States, ex rel. Parks v. Alpharma Inc., No. RDB-06-2411, 2011 WL
1366491 at *6 (D. Md. Apr. 11, 2011).
A plaintiff need not have
used specific “buzzwords,” such as “fraudulent” or “false.”
Id.
The central question is whether the employer should have
reasonably understood the possible follow-on of qui tam
litigation from the employee’s complaints or other actions.
6
See
To make a successful claim for retaliatory discrimination
under the False Claims Act, an employee must prove (1) that the
employee took acts in furtherance of a qui tam suit; (2) her
employer knew of these acts; and (3) her employer discharged her
as a result of these acts. Zahodnick v. IBM, 135 F.3d 911, 914
(4th Cir. 1997) (applying 1986 Version).
15
Eberhardt, 167 F.3d at 868; United States ex rel. Ackley v.
Intn’l Bus. Mach. Corp., 110 F. Supp. 2d 395, 401 (D. Md. 2000).
Bechtel alleges that:
Starting in 2000 and continuing up through the present,
SJMC knew, or reasonably should have known, that Dr.
Horneffer objected to SJMC’s business relationship with
Midatlantic and was acting in furtherance of the False
Claims Act. On numerous occasions, starting in 2000,
Dr. Horneffer made clear to senior SJMC management that
SJMC’s business relationship with Midatlantic was
illegal and it harmed patient care. Dr. Horneffer
repeatedly requested that SJMC sever its business
relationship with Midatlantic and its referring
cardiologists and, instead, enter into business
relationships with cardiologists who placed patient
care above profits.
Am. Compl. ¶ 23.
Bechtel argues that she makes the following additional
averments regarding the Hospital’s state of knowledge: (1) the
Hospital reasonably could be expected to have known as early as
2000 that Bechtel worked closely with Dr. Horneffer, Am. Compl. ¶
24; (2) the Hospital knew that by 2006 Bechtel had taken a parttime position as an employee in Dr. Horneffer’s practice, id. ¶
37; and (3) as of April 14, 2008, the Hospital was fully aware
that Bechtel supported Dr. Horneffer’s efforts to stop the
Hospital’s illegal conduct because she drafted and submitted to
Oceania and the Hospital an affidavit refuting the allegations of
sexual harassment lodged by Dr. Sell against Dr. Horneffer, id.
¶¶ 24, 61-66.
The affidavit reflected that Dr. Sell had a motive
to “destroy” the careers of Dr. Horneffer and his associates
16
because Dr. Horneffer had sued Dr. Sell and other Midatlantic
doctors in Maryland state court over their business practices.
Id. ¶¶ 60-61; Opp’n Mot. Dismiss 38.
The affidavit also
reflected that Dr. Sell had confronted Bechtel multiple times
over a 2-day period in an effort to intimidate her into
“find[ing] a way to stop this lawsuit” or he would “make life
very unpleasant” for her, including subpoenaing her phone records
to “embarrass him, [her], and his wife.”
Am. Compl. ¶¶ 61-63.
These allegations do not plausibly allege that the Hospital
had a “sufficient amount of knowledge” of the acts that Bechtel
was taking7 in furtherance of Dr. Horneffer’s qui tam action to
put the Hospital on notice of the possibility of future qui tam
litigation such that the Hospital could have plausibly acted out
of retaliation before May 20, 2009.
On the other hand, although the qui tam lawsuit in which Dr.
Horneffer served as a government relator was not actually filed
until June 2010, Bechtel does plead that the Hospital was on
notice during this period that Dr. Horneffer was acting in
furtherance of a qui tam action based on his numerous complaints
to Hospital management that its relationship and referral
7
As described above, the 1986 Version of the False Claims Act
retaliation provision only provides a remedy for retaliation
against an employee who personally took action in furtherance of
a qui tam action. Under this version, an employee must prove (1)
that the employee took acts in furtherance of a qui tam suit; (2)
her employer knew of these acts; and (3) her employer discharged
her as a result of these acts. Zahodnick v. IBM, 135 F.3d 911,
17
structure with Midatlantic was illegal.
However, Bechtel does
not claim to have made any similar complaints to the Hospital.
While Bechtel alleges that the Hospital should have known that
she would support Dr. Horneffer’s qui tam action, Bechtel’s mere
association with him is not enough to satisfy the notice standard
under the 1986 version of the False Claims Act.
The allegations relating to her 2008 affidavit denying Dr.
Sell’s sexual harassment claims also do not satisfy the notice
requirement.
Bechtel does not allege that Dr. Sell’s threats
were due to any legitimate action that she took “in furtherance
of an action” under the 1986 Version.
Although Dr. Sell’s
behavior, if Bechtel's allegations are true, would be disturbing,
it would not tend to establish that he or the Hospital had a
“sufficient amount of knowledge” that Dr. Horneffer was going to
file a qui tam suit and that Bechtel was acting in furtherance of
that suit.
Bechtel makes the allegation that Dr. Sell tried to
intimidate Bechtel because of Dr. Horneffer’s acts in furtherance
of the Qui Tam Case but does not plead that the threats were due
to Bechtel’s actions as distinct from her association with Dr.
Horneffer.
Accordingly, due to Bechtel’s failure to plead adequately
the requisite knowledge of Bechtel’s alleged actions in
furtherance of the Qui Tam Case, Bechtel’s claims for alleged
914 (4th Cir. 1997) (applying 1986 Version).
18
acts of retaliation that took place before May 20, 2009 shall be
dismissed.
2.
FERA Version
From May 20, 2009 until July 21, 2010, 31 U.S.C. § 3730(h)
provided:
h) Relief from retaliatory actions.
(1)
In general. Any employee, contractor, or
agent shall be entitled to all relief
necessary to make that employee, contractor,
or agent whole, if that employee, contractor,
or agent is discharged, demoted, suspended,
threatened, harassed, or in any other manner
discriminated against in the terms and
conditions of employment because of lawful
acts done by the employee, contractor, or
agent on behalf of the employee, contractor,
or agent or associated others in furtherance
of other efforts to stop 1 or more violations
of this subchapter.
§ 3730(h) FERA Version.
a.
In Furtherance
The question presented is whether the phrase “lawful acts
done by the employee, contractor, or agent on behalf of the
employee, contractor, or agent or associated others” includes
lawful acts done by an “associated other” in addition to acts by
“the employee, contractor, or agent.”
The legislative history
supports a construction that would do so.8
8
Of course, it is
One of the co-sponsors of FERA’s False Claims Act
19
necessary to apply the statute as actually enacted, and not what
the legislature may have said they intended.
See United States
v. Bell, 5 F.3d 64, 68 (4th Cir. 1993).
The provision states “lawful acts done by the employee,
contractor, or agent on behalf of the employee, contractor, or
agent or associated others.”
This literally provides for “lawful
acts done by the employee, contractor, or agent on behalf of the
employee, contractor, or agent or [lawful acts done by]
associated others.”
If the provision were drafted to state what
amendments, Representative Howard L. Berman, stated:
I rise today in support of the Fraud Enforcement &
Recovery Act of 2009. . . . [N]ow is the time to plug
the loopholes that have been created in the False
Claims Act over the last quarter century. . . . As one
of the authors of both the 1986 False Claims Act
amendments and the relevant language in S. 386 which we
consider today, I submit this statement to clarify the
true intent of the False Claims Act. . . . Section
3730(h) of the False Claims Act . . . needs to be
amended so that it is clear that it covers the
following types of retaliation that whistleblowers
commonly have faced over the course of the last twenty
years: . . . retaliation against the family members and
colleagues of those who have blown the whistle. . . .
To address the concern about indirect retaliation
against colleagues and family members of the person who
acts to stop the violations of the False Claims Act,
Section 4(d) clarifies section 3730(h) by adding
language expressly protecting individuals from
employment retaliation when “associated others” made
efforts to stop False Claims Act violations. This
language is intended to deter and penalize indirect
retaliation by, for example, firing a spouse or child
of the person who blew the whistle.
155 Cong. Rec. E 1295, 1300 (daily ed. June 3, 2009).
20
the Hospital wishes, the legislation would have to eliminate the
second “or” and add a comma after the second “agent.”
Therefore,
the provision would have to be edited to state “lawful acts done
by the employee, contractor, or agent on behalf of the employee,
contractor, or agent[,] or associated others.”
The Court must observe that the provision, as written, does
not carry out the legislative intent to include both retaliation
for acts done by an employee on behalf of associated others and
for acts done by an associated other.
Rather, by clear
inadvertence, while the provision adds coverage for retaliation
for acts done by an associated other, it eliminates coverage for
retaliation for acts done by an employee on behalf of an
associated other.
This matter is moot in the instant case due to
Bechtel’s failure to adequately plead knowledge with regard to
her own actions on behalf of Dr. Horneffer.
Accordingly, the
Court concludes that under the FERA version of § 3730(h), a cause
of action will lie when an employer has retaliated against an
employee because of lawful acts done by an associated other in
furtherance of a qui tam action.9
Therefore, as to acts of retaliation alleged while the FERA
version of § 3730(h) was in effect from May 20, 2009 through July
9
Whether such an action would lie for actions of the employee
herself on behalf of associated other is a moot question in the
instant case due to the absence of adequate pleading to establish
the requisite knowledge.
21
21, 2010,10 Bechtel has pleaded a plausible claim under § 3730(h)
on the theory that she was retaliated against for the actions
that Dr. Horneffer took in furtherance of the Qui Tam Case.
b.
Knowledge
An employee must plead that her employer knew of these acts
being taken in furtherance of a qui tam action such that the
employer was on notice that qui tam litigation was a reasonable
possibility.
See Eberhardt v. Integrated Design & Constr., Inc.,
167 F.3d 861, 868 (4th Cir. 1999); Zahodnick v. IBM, 135 F.3d
911, 914 (4th Cir. 1997).
As discussed above, Bechtel has not
adequately pleaded such knowledge as to any actions taken by her.
However, Bechtel has adequately pleaded knowledge that Dr.
Horneffer, an “associated other” vis-à-vis Bechtel, was taking
actions in furtherance of the Qui Tam Case suit and that the
Hospital knew she was associated with Dr. Horneffer.
For
example, Bechtel alleges that from early 2000, “on numerous
occasions” Dr. Horneffer “made clear to senior [Hospital]
management that [the Hospital’s] business relationship with
10
During this period, Bechtel alleges that the Hospital (1)
issued a falsely negative performance appraisal of her work, Am.
Compl. ¶ 70; (2) improperly fired Bechtel, id. ¶ 74; (3) filed a
false and misleading report to the Maryland Board of Physicians
accusing Bechtel, id. ¶ 79; (4) further attempted to derail her
medical education, id. ¶ 85; and (5) refused to grant Bechtel
privileges to work at the Hospital under a delegation agreement,
id. ¶ 87. Some of these actions occurred after the termination
of Bechtel’s employment, the import of which is discussed below.
22
Midatlantic was illegal.” Am. Compl. ¶ 23.
Bechtel alleges that
as of April 14, 2008, the Hospital was aware that Dr. Horneffer
had sued Dr. Sell and other Midatlantic physicians in state
court.
Bechtel also alleges throughout her complaint that the
Hospital was aware that she worked closely with Dr. Horneffer as
a physician assistant, that by 2006 she had taken a part time
position as an employee in his practice, and that by April 2008
the Hospital was aware that Dr. Horneffer was helping her pursue
her medical degree from Oceania.
Therefore, under the FERA version of § 3730(h), Bechtel has
sufficiently alleged that the Hospital was on notice that Dr.
Horneffer was taking actions in furtherance of a qui tam suit and
that she was associated with Dr. Horneffer.
c.
Post-Termination Retaliation
Bechtel alleges that the Hospital took the following
retaliatory actions between May 20, 2009 and July 21, 2010:
September 2009: Issued a falsely negative performance
appraisal of her work, Am. Compl. ¶ 70;
November 23, 2009: Improperly discharged Bechtel, id. ¶ 7477;
Between December 2009 and March 23, 2010: Filed a false and
misleading report to the Maryland Board of Physicians
accusing Bechtel, id. ¶ 79;
December 2009: Further attempted to derail her medical
education, id. ¶ 85; and
Between December 2009 and May 2010: Refused to grant Bechtel
23
privileges to work at the Hospital under a delegation
agreement, id. ¶ 87.
The Hospital contends that § 3730(h) does not provide a
remedy for post-termination activities.
All three versions of § 3730(h) expressly provide relief
when an employee “is discharged, demoted, suspended, threatened,
harassed, or in any other manner discriminated against in the
terms and conditions of employment.”
This language is not
reasonably interpreted to include post-termination retaliatory
actions.
Indeed, it appears that all courts considering the
issue have held that § 3730(h) does not provide a remedy for acts
of retaliation subsequent to termination.
See United States ex
rel. Wright v. Cleo Wallace Ctrs, 132 F. Supp. 2d 913, 928 (D.
Colo. 2000) (dismissing plaintiff’s allegations of defendant’s
retaliatory conduct following plaintiff’s discharge, but allowing
allegations of defendant’s conduct prior to his discharge to
proceed); Lehoux v. Pratt & Whitney, 2006 WL 346399 at *2 (D. Me.
2006) (“It is apparent to me that [Plaintiff’s] cause of action
under the FCA accrued at the latest on the date he was
terminated”), report and recommendations adopted, 2006 WL 616057
(D. Me. 2006)); United States ex rel. Head v. Kane Company, 2011
WL 3010610 at *14 (D.D.C. 2011) (holding that “the plain language
of” section 3730(h) “applies only to the employment context and,
therefore, cannot extend to claims for retaliatory action
occurring solely after a Plaintiff has been terminated from his
24
job”); United States ex rel. Davis v. Lockheed Martin Corp., 2010
WL 4607411 at *8 (N.D. Tex.) (section 3730(h) “does not
contemplate recovery for post-employment conduct”).
Bechtel has
proffered no contrary legal authority and the Court has found
none.
Accordingly, the Court holds that Bechtel’s claims
pertaining to post-termination retaliatory action shall be
dismissed.
3.
Dodd-Frank Version
Beginning July 21, 2010, § 3730(h) has provided, in
pertinent part:
(h) Relief from retaliatory actions.(1) In general.--Any employee, contractor, or
agent . . . shall be entitled to all relief
necessary to make that employee . . . whole,
if that employee . . . is . . . in any . . .
manner discriminated against in the terms and
conditions of employment because of lawful
acts done by the employee, contractor, agent
or associated others in furtherance of an
action under this section or other efforts to
stop 1 or more violations of this subchapter.
§ 3730(h) Dodd-Frank Version.
By eliminating the “on behalf of” phrase, the Dodd-Frank
version rather clearly provides that a cause of action is
available when an employee is retaliated against because of acts
done by the employee or by an associated other.
However, in the
instant case, any retaliatory actions that may have taken place
25
after July 21, 2010 were, of course, post-termination actions.
Accordingly all claims based upon such actions shall be
dismissed.
B.
Count II - Interference With Economic Relationships
Bechtel alleges that the Hospital caused “significant loss
of income generated from her profession as a PA and a delay in
her education to become a Medical Doctor, as well as damage to
her professional reputation.”
Am. Compl. ¶ 107.
The Hospital contends that this claim must be dismissed
because (1) a party cannot interfere with its own economic
relationship, and (2) a party cannot interfere with a purely
speculative future economic relationship.
Bechtel responds that this claim should proceed because “the
Hospital’s conduct was calculated to ruin her career and preclude
her from ever engaging in her profession again.”
Dismiss at 40.
Opp. Mot.
According to Bechtel, the Hospital’s improper
termination of her employment, its report to the Board of
Physicians, and the Hospital’s efforts to derail Bechtel’s
medical training at the Hospital “have had, and will continue to
have, an adverse impact on her ability to work in her chosen
profession as a Physician Assistant at other hospitals” and “has
harmed her ability to become a medical doctor.”
Dismiss 41.
Opp’n Mot.
In sum, her claim is that “the Hospital’s conduct
26
constituted a tortious interference with future economic
relationships.”
Id. at 42.
In Maryland, “the two general types of tort actions for
interference with business relationships are inducing the breach
of an existing contract and, more broadly, maliciously or
wrongfully interfering with economic relationships in the absence
of a breach of contract.”
K & K Management, Inc. v. Lee, 557
A.2d 965, 973 (Md. 1989) (internal quotation marks and citation
omitted).
For the latter type, a plaintiff must show “‘(1)
intentional and willful acts; (2) calculated to cause damage to
the plaintiffs in their lawful business; (3) done with the
unlawful purpose to cause such damage and loss, without right or
justifiable cause on the part of the defendants (which
constitutes malice); and (4) actual damage and loss resulting.’”
Kaser v. Fin. Prot. Mktg., 831 A.2d 49, 53 (Md. 2003) (quoting
(Willner v. Silverman, 71 A. 962, 964 (Md. 1909)).
“The tort of wrongful interference with economic relations
will not lie where the defendant is a party to the economic
relationship with which the defendant has allegedly interfered.”
Kaser, 831 A.2d at 54.
Therefore, to the extent that Bechtel’s
claim against the Hospital concerns the Hospital’s termination of
Bechtel’s employment, this claim must be dismissed.11
Bechtel cites the seminal Maryland case of Willner v.
11
This much Bechtel concedes. Opp’n Mot. Dismiss 40.
27
Silverman, 71 A. 962, 964 (Md. 1909), for the proposition that an
employer may be sued for intentional interference with business
relationships when it fires an employee and then attempts to harm
that employee’s future job prospects.
In that case, the
plaintiff’s employer wrote a letter containing false statements
that notified members of a trade association that he had fired
the plaintiff, requested them not to give him employment, and the
plaintiff was subsequently refused employment by members of the
association.
Id.
In Baron Fin. Corp. v. Natanzon, 471 F. Supp. 2d 535 (D. Md.
2006), this Court concluded that, under Maryland law, a plaintiff
could not bring “a claim for tortious interference with unknown
future prospective business relationships.”
Id. at 542.
Magistrate Judge Gauvey found that the issue of “how certain the
anticipated business relationship must be before a party may
bring a claim seeking damages for the disruption of the
relationship” was an issue of first impression in Maryland that
had not yet been determined by the Maryland Court of Appeals.
Id.
She considered other sources of law:
Under the Reporter's Notes to the Restatement (Second)
of Torts, “an individual must allege more than a
disruption of a future relationship to a yet to be
determined party -- a “reasonable probability” must be
shown that a contract will arise from the parties’
current dealings.” Reporter's Note to the Restatement
(Second) of Torts § 766B. Similarly, every state which
has addressed the issue has found that the party must
establish some evidence that a prospective business
relationship is likely to occur. The Court concludes
28
that Maryland Courts would rule that plaintiffs must
identify a possible future relationship which is likely
to occur, absent the interference, with specificity.
Id. at 542-46 (citing cases from 22 states holding that the mere
expectation or hope of a prospective relationship is not
sufficient for a plaintiff to recover under this tort).
In view of the absence of definitive Maryland authority as
to the level of certainty required, the Court finds it
appropriate to reserve judgment on the claims in Count II and
decide upon the adequacy of Bechtel’s case in light of the
evidence she produces in response to a summary judgment motion.
Accordingly, the Court holds that the claim for interference
with business relationships, except as it relates to the alleged
wrongful discharge that is the subject of Count I, shall remain
pending.
C.
Count III - Wrongful Termination
Bechtel avers that the Hospital wrongfully terminated her
employment in violation of “the avowed public policy of the State
of Maryland . . . to encourage citizens to resist and to report
unethical and illegal conduct in the healthcare industry . . .
[and] assist in the investigation of illegal and unethical
activities and to support those who are investigating illegal
activities.”
Am. Compl. ¶ 116.
Maryland recognizes the tort of wrongful discharge “when the
29
motivation for the discharge contravenes some clear mandate of
public policy.”
(Md. 1981).
Adler v. Am. Standard Corp., 432 A.2d 464, 473
However, “[a]busive discharge is inherently limited
to remedying only those discharges in violation of a clear
mandate of public policy which otherwise would not be vindicated
by a civil remedy.”
Makovi v. Sherwin-Williams Co., 561 A.2d
179, 180 (Md. 1989), see also Watson v. Peoples Sec. Life Ins.
Co., 588 A.2d 760, 766 (Md. 1991) (discrimination claims covered
by Title VII of the Civil Rights Act of 1964 do not create an
independent claim for abusive discharge because Title VII
provides its own remedy for any violation).
The retaliation provision of the False Claims Act, 31 U.S.C.
§ 3730(h), provides a civil remedy for employees who have been
discharged after assisting in or bringing qui tam actions.
Zahodnick v. IBM, 135 F.3d 911, 914 (4th Cir. 1997).
See
Maryland
law “precludes the use of the wrongful discharge tort to recover
in the name of the same public policy interest.”
Glynn v. EDO
Corp., 536 F. Supp. 2d 595, 616 (D. Md. 2008) (granting motion to
dismiss claim for wrongful discharge in violation of Maryland
public policy while allowing retaliation claim under the False
Claims Act to proceed); see also Zahodnick, 135 F.3d at 914 (“We
conclude that § 3730(h) adequately covers Zahodnick’s claim.”).
In the instant case, Bechtel’s wrongful termination claim is
predicated on the same actions as her retaliation claim under the
30
False Claims Act.
Although she argues that her wrongful
discharge termination claim is broader than the activities
remedied by the False Claims Act12 and should not be dismissed,
she has provided no authority establishing a “clear mandate” of
public policy that supports her claim.
See Adler, 432 A.2d at
473.
Therefore, this Court concludes that § 3730(h) adequately
covers Bechtel’s claim, and the motion to dismiss Count III is
granted.
12
In her Opposition, Bechtel notes that in addition to
assisting Dr. Horneffer in “exposing financial improprieties
actionable under the False Claims Act,” her assistance “also
exposed patient mistreatment arising from the Hospital’s
accommodation of [Midatlantic’s] activities” and “provided
information regarding the Hospital’s attempts to hide vital
information from patients about the caliber of [Midatlantic’s]
doctors.” Opp’n Mot. Dismiss 47.
31
IV. CONCLUSION
For the aforementioned reasons,
1.
Defendant St. Joseph Medical Center’s Motion to
Dismiss [Document 23] is GRANTED IN PART and
DENIED IN PART.
2.
All claims in Count I are dismissed except for
claims based upon the September 2009 performance
appraisal and the November 2009 termination of
employment.
3.
All claims in Counts II remain pending except
those relating to the alleged wrongful discharge
that is a subject of the pending claims in Count
I.
4.
All claims in Count III are dismissed.
SO ORDERED, this Thursday, April 26, 2012.
/s/__________
Marvin J. Garbis
United States District Judge
32
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