USA ex rel Michael S. Lord v. North American Partners In Anesthesia, LLP et al
Filing
255
MEMORANDUM (Order to follow as separate docket entry) re 236 MOTION Motion to Accept Response and Statement of Facts in Opposition to Motion for Summary Judgment Out of Time filed by USA ex rel Michael S. Lord, 209 MOTION to Exclude or to limit the expert testimony of Dr. Robert Ertner filed by NAPA Management Services Corporation, North American Partners In Anesthesia (Pennsylvania), LLC, North American Partners In Anesthesia, LLP, 208 MOTION to Exclude Or Limit the Expert Testimony of Eric Rubenstein, MS, CFE filed by NAPA Management Services Corporation, North American Partners In Anesthesia (Pennsylvania), LLC, North American Partners In Anesthesia, LLP, 213 MOTION for Partial Summar y Judgment filed by USA ex rel Michael S. Lord, 201 MOTION for Summary Judgment filed by NAPA Management Services Corporation, North American Partners In Anesthesia (Pennsylvania), LLC, North American Partners In Anesthesia, LLP Signed by Honorable Malachy E Mannion on 09/26/2023. (gg)
Case 3:13-cv-02940-MEM Document 255 Filed 09/26/23 Page 1 of 28
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF PENNSYLVANIA
UNITED STATES OF AMERICA,
ex rel. MICHAEL S. LORD,
Plaintiff/Relator,
v.
NAPA MANAGEMENT
SERVICES CORPORATION, et
al.,
Defendants.
:
:
CIVIL ACTION NO. 3:13-2940
:
(JUDGE MANNION)
:
:
:
:
MEMORANDUM
Presently before the court are the parties’ cross motions for summary
judgment. (Docs. 201, 213). The motions are fully briefed and ripe for
disposition. This case is about medical billing for anesthesia services.
Relator Michael Lord claims Defendants knowingly billed Medicare and
Medicaid for “medically directed” anesthesia services when Defendants’
anesthesiologists did not actually perform medically directed anesthesia
services. Then Defendants fired Lord for pointing out their alleged fraud, Lord
says. If the parties’ motions demonstrate anything, they demonstrate most
of Lord’s claims involve genuine disputes. Disputes must be resolved by a
trier of fact. So, for the reasons explained below, the court will DENY Lord’s
motion and GRANT in part and DENY in part Defendants’ motion.
Case 3:13-cv-02940-MEM Document 255 Filed 09/26/23 Page 2 of 28
I.
FACTUAL BACKGROUND
The following essential, undisputed facts are taken from the parties’
submissions to the extent they are consistent with the evidence in the record.
(See Docs. 201, 202, 213, 215, 222, 223, 231, 232, 234, 235, 243, 249).
Defendant NAPA-PA is an anesthesiology group that employs both
anesthesiologists and certified registered nurse anesthetists (CRNAs). The
anesthesiologists and CRNAs assign to NAPA-PA their rights to receive
reimbursements from third-party payers, including Medicare and Medicaid,
for the anesthesia services they provide at Pocono Medical Center (PMC).
Relator Michael S. Lord, R.N., CRNA, DNP, was employed by Defendant
NAPA-PA as a CRNA at PMC from June 2011 through June 2013. During
that time, he observed what he believed to be fraudulent billing of Medicare
and Medicaid by his employer for anesthesia services.
A.
Anesthesia billing generally
The Centers for Medicare and Medicaid Services (CMS) is the federal
agency that administers the Medicare and Medicaid programs. CMS
contracts with Medicare Administrative Contractors and Medicare HMOs
(collectively, “MACs”) to receive claims and issue payments to healthcare
providers, including anesthesiologists and CRNAs. CMS publishes manuals
to help administer the Medicare program under applicable federal statutes
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and regulations. The Medicare Claims Processing Manual (MCPM), of which
the court takes judicial notice, sets forth information on the correct billing of
Medicare claims, including claims for anesthesia services.
Medicare requires the use of anesthesia claims modifiers on claims for
anesthesia services. Anesthesia modifiers inform CMS of the level of an
anesthesia provider’s involvement in a case. The modifiers include:
• AA – Anesthesia service personally performed by an
anesthesiologist;
• QK – “Medical direction” by an anesthesiologist of two to four
concurrent anesthesia procedures;
• QY – “Medical direction” by an anesthesiologist of one anesthesia
procedure;
• AD – “Medical supervision” by an anesthesiologist of more than four
concurrent anesthesia procedures;
• QX – Anesthesia service by a CRNA or anesthesiology assistant
with “medical direction” by an anesthesiologist; and
• QZ – Anesthesia service by a CRNA without “medical direction” by
an anesthesiologist.
The focus of this case is on the contours and requirements of “medical
direction.” Medical direction occurs when an anesthesiologist directs a
qualified individual, such as a CRNA, in not more than four concurrent cases,
and the anesthesiologist performs the so-called “seven steps” of medical
direction. 42 C.F.R. §§414.46(d), 415.110(a); MCPM, Ch. 12, §§50.C, 50.I.
As a condition for payment for medical direction, the anesthesiologist must
perform the following seven steps:
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1) Perform a pre-anesthetic examination and evaluation;
2) Prescribe the anesthesia plan;
3) Personally participate in the most demanding procedures in the
anesthesia plan, including, if applicable, induction and emergence;
4) Ensure that any procedures in the anesthesia plan that he or she
does not perform are performed by a qualified individual;
5) Monitor the course of anesthesia administration at frequent
intervals;
6) Remain physically present and available for immediate diagnosis
and treatment of emergencies; and
7) Provide indicated post-anesthesia care.
42 C.F.R. §415.110(a)(1); MCPM, Ch. 12, §50.C. 42 C.F.R. §415.110(b)
provides further:
The physician alone inclusively documents in the patient's
medical record that the conditions set forth in paragraph (a)(1) of
this section [the seven steps] have been satisfied, specifically
documenting that he or she performed the pre-anesthetic exam
and evaluation, provided the indicated post-anesthesia care, and
was present during the most demanding procedures, including
induction and emergence where applicable.
See also MCPM, Ch. 12, §50.C.
Medicare’s system of paying claims relies upon providers to submit
accurate and truthful claims with supporting documentation. A claim for a
service that is not truthfully and adequately documented in the medical
record is generally not eligible for payment by CMS. Indeed, by enrolling in
the Medicare program, and by submitting claims, a practitioner agrees to
submit truthful and accurate claims. CMS requires practitioners to preserve
the medical records supporting each claim for six years. MACs will then
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select certain claims to review for support after payment is made. CMS
employs contractors to also review claims for support after payment is made.
In general, if, on post-payment review, a claim is determined to be
invalid or the review reveals the medical records do not support the service
that was billed, CMS will deny the claim or require the provider to repay the
money that Medicare may have paid. Or, in cases involving medical services
that have different levels of services and reimbursement rates, if postpayment review determines that the medical records do not support the level
of service that was billed, CMS will generally demand a refund, subject to
the provider’s right of appeal in most instances.
B.
NAPA-PA’s anesthesia billing system
During the relevant period of June 2011 through July 2013, NAPA-PA
used a one-page form to document anesthesia administered in the operating
rooms at PMC (the “Anesthesia Record”). (See Doc. 218-1). The Anesthesia
Record contained this statement followed by a line for the anesthesiologist’s
initials: “I was present for induction, key portions of the procedure and
emergence: and immediately available throughout” (the “Attestation”). The
Anesthesia Record was a paper, carbonless copy form, which created a
duplicate of the writing on the Anesthesia Record on the duplicate form
underneath. The original form stayed with the patient’s hospital chart. The
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anesthesiologist or CRNA would place the carbonless copy into a box in
NAPA-PA’s office at PMC to be used for billing.
Information on the Anesthesia Records formed the basis of the bills
Defendant
NAPA
Management
generated
for
NAPA-PA.
NAPA
Management provided business-related management services to NAPA-PA
such as human resources, credentialing and contracting, malpractice, billing
and collections, payroll, information IT, information technology. The NAPA
Management billing department staff would create bills using the information
from the clinical documents and the patient’s demographic and financial
information. The NAPA Management billing software automatically coded
anesthesia services as “medically directed” if three pieces of information
were entered in the software: the name of an anesthesiologist on the case;
the name of a CRNA on the case; and a checkmark in the field indicated that
the Attestation on the Anesthesia Record had been initialed. NAPA
Management billing staff would then transmit those bills to the payors,
including Medicare and Medicaid.
C.
Defendants’ alleged billing malpractice
Lord contends NAPA-PA anesthesiologists at PMC routinely presigned the Attestation prior to all key portions of the anesthetic. He says, in
most cases, the anesthesiologists pre-signed the Attestations around the
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time of induction, before surgery began, and sometimes before the patient
even arrived in the operating room. Lord provides several time-stamped
photographs he took of medical records purporting to show the records were
signed before the key events took place. Defendants contend NAPA-PA
maintained a policy that attestations were to be signed at the end of the
procedure, and NAPA-PA anesthesiologists were trained that they were not
to pre-sign medical records. Defendants point to deposition testimony of
witnesses from NAPA-PA who testified that they were not aware of any
instances of pre-signing.
Lord also asserts that the medical records Defendants produced for
services provided on a randomly selected sample dates of services included
nine instances in which the Attestation was not signed at all. In those cases,
Lord avers, NAPA Management should not have billed for medical direction
because, without a signed Attestation, the medical records did not
adequately support the claim that the anesthesiologist completed the seven
steps. Defendants point to deposition testimony to the effect that if the
Attestation were not signed, the billing staff could attempt to confirm
elsewhere whether the requirements of medical direction were met.
Lastly, Lord asserts that the medical records produced by Defendants
for services provided on the randomly selected sample dates of service
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include at least five instances in which a NAPA-PA anesthesiologist
conducted pain management consultations with a patient, while claiming to
be medically directing a CRNA on a separate case at the same time.
Defendants contend that pain management consultations are permitted
activities that may be performed while medically directing.
As explained more fully below, Lord brought these alleged violations to
the attention of Defendants’ upper-level management, which, according to
Lord, set off a series of retaliatory adverse employment actions against him,
culminating in his termination in or around June 2013.
II.
LEGAL STANDARD
Summary judgment is appropriate “if the pleadings, the discovery
[including, depositions, answers to interrogatories, and admissions on file]
and disclosure materials on file, and any affidavits show that there is no
genuine issue as to any material fact and that the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(c); see also Celotex Corp.
v. Catrett, 477 U.S. 317, 322–23 (1986); Turner v. Schering–Plough Corp.,
901 F.2d 335, 340 (3d Cir. 1990). A factual dispute is genuine if a reasonable
jury could find for the non-moving party and is material if it will affect the
outcome of the trial under governing substantive law. Anderson v. Liberty
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Lobby, Inc., 477 U.S. 242, 248 (1986); Aetna Cas. & Sur. Co. v. Ericksen,
903 F.Supp. 836, 838 (M.D. Pa. 1995). At the summary judgment stage, “the
judge's function is not himself to weigh the evidence and determine the truth
of the matter but to determine whether there is a genuine issue for trial.”
Anderson, 477 U.S. at 249; see also Marino v. Indus. Crating Co., 358 F.3d
241, 247 (3d Cir. 2004) (a court may not weigh the evidence or make
credibility determinations). The court must consider all evidence and
inferences drawn therefrom in the light most favorable to the non-moving
party. Andreoli v. Gates, 482 F.3d 641, 647 (3d Cir. 2007).
To prevail on summary judgment, the moving party must affirmatively
identify those portions of the record which demonstrate the absence of a
genuine issue of material fact. Celotex, 477 U.S. at 323–24. The moving
party can discharge the burden by showing that “on all the essential elements
of its case on which it bears the burden of proof at trial, no reasonable jury
could find for the non-moving party.” In re Bressman, 327 F.3d 229, 238 (3d
Cir. 2003); see also Celotex, 477 U.S. at 325. If the moving party meets this
initial burden, the non-moving party “must do more than simply show that
there is some metaphysical doubt as to material facts,” but must show
sufficient evidence to support a jury verdict in its favor. Boyle v. County of
Allegheny, 139 F.3d 386, 393 (3d Cir. 1998) (quoting Matsushita Elec. Indus.
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Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). The non-moving party
must direct the court’s attention to specific, triable facts by “citing particular
parts of materials in the record.” Fed. R. Civ. P. 56(c)(1)(A) (emphasis
added); see United States v. Starnes, 583 F.3d 196, 216 (3d Cir. 2009)
(“Judges are not like pigs, hunting for truffles buried in briefs.”) (quoting
United States v. Dunkel, 927 F.2d 955, 956 (7th Cir.1991)); see also
DeShields v. Int'l Resort Properties Ltd., 463 F. App'x 117, 120 (3d Cir. 2012)
(“If factual support for [a plaintiff’s] claim exist[s] in the record, it [i]s
incumbent upon her to direct the District Court's attention to those facts.”).
If the non-moving party “fails to make a showing sufficient to establish
the existence of an element essential to [the non-movant's] case, and on
which [the non-movant] will bear the burden of proof at trial,” Rule 56
mandates the entry of summary judgment because such a failure
“necessarily renders all other facts immaterial.” Celotex, 477 U.S. at 322–23;
Jakimas v. Hoffman–La Roche, Inc., 485 F.3d 770, 777 (3d Cir. 2007).
The summary judgment standard does not change when the parties
have filed cross-motions for summary judgment. Applemans v. City of Phila.,
826 F.2d 214, 216 (3d Cir. 1987). When confronted with cross-motions for
summary judgment, as in this case, Athe court must rule on each party=s
motion on an individual and separate basis, determining, for each side,
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whether a judgment may be entered in accordance with the summary
judgment standard. @ Marciniak v. Prudential Financial Ins. Co. of America,
2006 WL 1697010, at *3 (3d Cir. June 21, 2006) (citations omitted) (not
precedential). If review of cross-motions reveals no genuine issue of material
fact, then judgment may be entered in favor of the party deserving of
judgment in light of the law and undisputed facts. Iberia Foods Corp. v.
Romeo, 150 F.3d 298, 302 (3d Cir. 1998) (citation omitted).
III.
DISCUSSION
Defendants move for summary judgment on all of Lord’s remaining
claims. Lord moves for summary judgment on his False Claims Act (FCA)
qui tam claims. The court will address the parties’ arguments in turn.
A.
FCA qui tam claims
“To prevail on an FCA claim, the relator must prove that the defendant
(1) made a false statement, (2) with scienter, (3) that was material, (4)
causing the government to make a payment.” United States v. Care
Alternatives, No. 22-1035, 2023 WL 5494333, at *2 (3d Cir. Aug. 25, 2023)
(precedential) (citing Universal Health Servs., Inc. v. United States ex rel.
Escobar, 579 U.S. 176, 181–82 (2016)). Lord contends the undisputed facts
establish all four elements. Defendants argue Lord cannot demonstrate
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materiality as a matter of law, requiring summary judgment in their favor.
“Materiality” is the only element where the parties’ motions cross; and it is
the element which torpedoes both motions since a reasonable jury could go
either way on this record.
Materiality is an element under factual falsity and legal falsity theories
(Lord proceeds on both theories). See United States ex rel. Doe v. Heart
Sols., PC, 923 F.3d 308, 317 (3d Cir. 2019) (“[M]ateriality is an element of
all FCA claims, regardless of whether the specific statutory provision lists
materiality as an element.”) (citing Escobar, 579 U.S. at 191–92). Materiality
is a rigorous, demanding standard for an FCA relator to meet. Escobar, 579
U.S. at 181. This makes sense, because the FCA is not “an all-purpose
antifraud statute or a vehicle for punishing garden-variety breaches of
contract or regulatory violations.” Id. at 194. The FCA defines materiality as
“having a natural tendency to influence, or be capable of influencing, the
payment or receipt of money.” 31 U.S.C. §3729(b)(4). The Supreme court
explained in Escobar that materiality “turns on a variety of factors such as:
(1) whether the government has expressly designated the legal requirement
at issue as a ‘condition of payment’; (2) whether the alleged violation is ‘minor
or insubstantial’ or instead goes to the ‘essence of the bargain’ between the
contractor and the government; and (3) whether the government made
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continued payments, or does so in the ‘mine run of cases,’ despite ‘actual
knowledge’ of the violation.” Care Alternatives, 2023 WL 5494333 at *2
(citing Escobar, 579 U.S. at 193 n.5, 194–95). The materiality inquiry is
holistic, considering the totality-of-the-circumstances. Id.
Starting with Lord, his motion fails because he has not shown that there
is no genuine dispute as to the materiality of NAPA’s alleged noncompliance
with billing regulations. To be sure, Lord has identified several facts which
favor a finding of materiality under the holistic approach, but they fall short of
pushing this issue beyond dispute.
First, 42 C.F.R. §415.110(a), the primary regulation Defendants
allegedly failed to comply with, identifies proper completion and
documentation of the seven steps for medically directed anesthesia as a
condition of payment. Indeed, even the regulation’s title conveys it is a
condition of payment: “Conditions for payment: Medically directed
anesthesia services.” This factor weighs in favor of materiality, but it is not
dispositive. Care Alternatives, 2023 WL 5494333, at *4 (citing Escobar, 579
U.S. at 190).
Second, §415.110(b)’s medical documentation requirements are not
insignificant. As Lord points out, when HHS adopted the medical
documentation requirement in §415.110(b), it rejected a request from the
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American Society of Anesthesiologists for a looser standard which provided:
“the medical record must include an amount of documentation to enable a
medical records’ auditor to conclude that the physician was sufficiently
involved to support the payment of a medical direction fee.” 63 Fed. Reg.
58,844 (1998). Put simply, a strong documentation requirement “protects the
public fisc and the overall integrity” of Medicare and Medicaid billing for
anesthesia services, ensuring public funds go to pay for anesthesia services
that actually occurred. Care Alternatives, 2023 WL 5494333, at *6.
Third, Lord has brought forth evidence suggesting NAPA-PA
management and anesthesiologists knew they should not be pre-signing the
Attestations. For example, in mid-2012, at the direction of NAPA
Management’s VP of HR and Compliance, the Chief Anesthesiologist for
NAPA-PA at PMC sent an email stating in part that “the attestation statement
must also be initialed indicating our presence in [sic] for induction,
emergence, and any critical times during the case,” and that “[f]ailure to
comply with the above may result in what can be perceived as fraudulent
billing.” (Doc. 215 at 36–37). In addition, Defendants’ compliance attorney
and external auditor gave NAPA-PA management a presentation in 2012 in
which the attorney explained, inter alia, CMS has counseled against presigning, which is “considered fraud.” This weighs in favor of materiality.
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On the other hand, the record reveals other circumstances that weigh
against materiality. First, if the NAPA anesthesiologists failed to satisfy all
the seven steps—what some call “broken medical direction”—Defendants
have brought forth evidence that the claim would have been payable in the
same amount under the “CRNA services without medical direction” category
using the QZ modifier, instead of the modifiers for “medical direction.”
Defendants’ expert asserts that, “for group practices like NAPA-PA, the
practice receives the same amount whether it bills the services as personally
performed, medically directed, or CRNA services without medical direction
[QZ]. Thus, if the NAPA defendants incorrectly billed a case as medical
direction but could have correctly billed the case under the QZ modifier, there
would be no difference in the reimbursement they received from Medicare
under either scenario.” (Doc. 215-12 at 29). This cuts against materiality.
Second, a jury could consider Defendants’ alleged regulatory violations
to be relatively infrequent. See Care Alternatives, 2023 WL 5494333, at *6
(considering severity of alleged noncompliance by looking at percentage of
noncompliant records in representative samples). The parties debate the
math; but even by Lord’s calculation, the record evidence supporting Lord’s
allegations of false claims amount to 6.1% of Defendants’ medical direction
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claims from approximately 2011 to 2013. This could be considered minor or
insubstantial noncompliance cutting against materiality.
In light of the competing contentions pertaining to materiality described
above, Lord has not met his burden as the moving party for summary
judgment.
Turning to Defendants’ motion, they similarly have not met their burden
of showing there is no dispute of material fact as to the materiality of their
alleged billing violations. Defendants’ motion rests on the argument
articulated above that even if they falsely billed for “medical direction,” the
relevant anesthesia services were still billable under the QZ modifier and
payable at the same rate. While this argument and its supporting evidence
cuts against materiality, it in no way establishes immateriality as a matter of
law. Even assuming arguendo that all the alleged false bills could have been
billed originally as QZ for the same rate—a proposition Lord disputes—
Defendants have not offered sufficient evidence to demonstrate CMS would
have still paid those bills. In other words, perhaps CMS would have paid the
QZ rate had Defendants billed QZ. But would CMS had paid the QZ rate had
Defendants falsely and knowingly submitted the bills under “medical
direction,” as Lord alleges? Defendants do not offer sufficient evidence
supporting that contention, which is fatal to their motion.
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Accordingly, the court will deny the parties’ cross motions for summary
judgment on Lord’s FCA claims; there is a genuine dispute as to materiality. 1
B.
Employment-related claims
Next, the NAPA defendants seek summary judgment on Lord’s FCA
retaliation and breach of contract claims.
1.
Lord’s employment with NAPA Management
NAPA Management argues Lord’s FCA retaliation claim against it
should be dismissed because it was not Lord’s employer—NAPA-PA was.
To determine whether NAPA Management was Lord’s employer, we turn to
Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 323–24 (1992). See
United States ex rel. Watson v. Connecticut Gen. Life Ins. Co., 87 F. App'x
257, 261–62 (3d Cir. 2004) (applying Darden to FCA retaliation claim);
Crosbie v. Highmark Inc., No. CV 19-1235, 2021 WL 880212, at *4 (E.D. Pa.
Mar. 9, 2021), aff'd, 47 F.4th 140 (3d Cir. 2022) (same).
In Darden, the Supreme Court articulated the test for deciding if a party
qualifies as an employee. The Court listed the following factors as relevant
for consideration: (1) the skill required, (2) the source of instrumentalities and
tools, (3) the location of the work, (4) the duration of the relationship between
The court, in its discretion, declines at this juncture to issue a Rule
56(g) order specifying uncontroverted facts on this record as Lord requests.
1
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the parties, (5) whether the hiring party has the right to assign additional
projects to the hired party, (6) the extent of the hired party's discretion over
when and how long to work, (7) the method of payment, (8) the hired party's
role in hiring and paying assistants, (9) whether the work is part of the regular
business of the hiring party, (10) whether the hiring party is in business, (11)
the provision of employee benefits, and (12) the tax treatment of the hired
party. Darden, 503 U.S. at 323–24. The Third Circuit has generally focused
on “which entity paid [the employee’s] salaries, hired and fired them, and had
control over their daily employment activities.” Faush v. Tuesday Morning,
Inc., 808 F.3d 208, 214 (3d Cir. 2015) (citation and internal quotation marks
omitted). Even so, “all of the incidents of the relationship must be assessed
and weighed with no one factor being decisive.” Id. (citing Darden, 503 U.S.
at 324).
Here, the fact that Defendants contend NAPA-PA was Lord’s employer
does not preclude a finding that NAPA Management was also Lord’s
employer. As the Third Circuit has explained:
Significantly, the inquiry under Darden is not which of two entities
should be considered the employer of the person in question.
Two entities may be “co-employers” or “joint employers” of one
employee . . . . Graves v. Lowery, 117 F.3d 723, 727 (3d Cir.
1997). Indeed, at common law, one could be a “dual servant
acting for two masters simultaneously” or a “borrowed servant”
who by virtue of being “‘directed or permitted by his master to
perform services for another may become the servant of such
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other.’” Williamson v. Consol. Rail Corp., 926 F.2d 1344, 1349
(3d Cir. 1991) (quoting Restatement (Second) of Agency §227
(1958)).
Id. at 215.
The evidence marshaled by Lord, viewed in the light most favorable to
him, is sufficient to preclude summary judgment on the ground that NAPA
Management was not Lord’s employer. A rational jury applying the Darden
factors could find that Lord and NAPA Management had a common-law
employment relationship.
First, record evidence supports Lord’s contention that NAPA
Management and NAPA-PA are closely related entities. So it would not be
beyond reason to conclude they are “co-“ or “joint” employers of Lord. NAPA
Management “provided management services [to NAPA-PA] in the form of
human resources, credentialing and contracting, malpractice, billing and
collections, payroll, information IT, information technology. Any other
business-related but not clinical management type of responsibility.” (Doc.
203-1). In addition, Leslie Russo, VP of HR and Compliance for NAPA
Management, was closely involved in NAPA Management’s response to
Lord’s reports of fraudulent billing. Ms. Russo was also responsible for
enforcing the compliance plan for NAPA-PA and conducting investigations.
(See Doc. 235 at 30).
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Second, Lord has submitted evidence showing NAPA Management
played a role in hiring Lord. For example, Ms. Russo authorized the hiring of
Lord, NAPA Management handled the on-boarding process, and Lord was
instructed to return all his employment and benefit forms to NAPA
Management. In addition, NAPA Management’s credentialing department
was responsible for completing and submitting paperwork enrolling NAPA
providers as participating providers with Medicare and Medicaid. NAPA
Management also applied for a National Provider Identification number for
Lord. (See Doc. 235-2).
Third, NAPA Management administered all insurance benefits that
Lord received. (See Doc. 235 at 186–87).
Finally, NAPA Management played an active role at the conclusion of
Lord’s employment. Record evidence suggests that Ms. Russo encouraged
Lord to leave his employment. Thomas Delaney, of NAPA Management, cut
off Lord’s access to his NAPA email account; he also advised PMC that
“NAPA has terminated [Lord’s] employment.” (See Doc. 235 at 182–83).
A rational jury, running these facts through the Darden factors, could
conclude that NAPA Management was Lord’s employer in addition to NAPAPA. Thus, the court will not grant NAPA Management summary judgment on
this ground.
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2.
NAPA
Management’s
employment agreement
obligations
under
the
Next, NAPA Management seeks summary judgment in its favor on
Lord’s state law breach of contract claim. Lord brings this claim against the
NAPA defendants for breach of his employment agreement. NAPA
Management argues it was not a party to that agreement, NAPA-PA was, so
none of the contract’s provisions can be enforced against it under Lord’s
proffered legal theory. The court agrees.
Lord acknowledges NAPA Management was not a party to his
employment
agreement
with
NAPA-PA;
but
he
contends
NAPA
Management is nonetheless liable thereunder because it “was a third-party
beneficiary of Lord’s work.” (Doc. 234 at 33). Lord does not offer meaningful
support for his argument that a party to an agreement can enforce that
agreement against a non-party under Pennsylvania law. Contract law
typically works in the opposite manner to what Lord posits: Third-party
beneficiary status entitles the beneficiary to enforce the agreement against
the parties to the agreement, not the other way around.
The cases cited by Plaintiff are unavailing. The Supreme Court in
Arthur Andersen held a nonparty could seek relief under a contractual
arbitration provision. Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 631
(2009). The Pennsylvania Superior Court similar dealt with a non-party trying
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to enforce an agreement in Provenzano. Provenzano v. Ohio Valley General
Hospital, 121 A.3d 1085, 1097 (Pa. Super. 2015) (“non-signatories to an
arbitration agreement can enforce such an agreement when there is an
obvious and close nexus between the non-signatories and the contract or
the contracting parties”).
The court is unaware of, nor has Lord brought to our attention, any
authority supporting the proposition that a third-party beneficiary of a contract
may also be contractually liable under the same agreement. Accordingly,
here, NAPA Management cannot be liable as a non-party under Lord’s
employment agreement based on Lord’s third-party beneficiary theory. Thus,
the court will grant summary judgment in favor of NAPA Management on
Lord’s breach of contract claim.
3.
FCA retaliation claim against NAPA-PA
Next, Defendant NAPA-PA seeks summary judgment on Lord’s FCA
retaliation claim. Under the FCA's anti-retaliation provision, an employee is
entitled to relief if he was “discharged, demoted, suspended, threatened,
harassed, or in any other manner discriminated against in the terms and
conditions of employment because of lawful acts” conducted in furtherance
of an FCA action. DiFiore v. CSL Behring, LLC, 879 F.3d 71, 76 (3d Cir.
2018) (citing 31 U.S.C. §3730(h)(1)). Courts in this Circuit have analyzed
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FCA retaliation claims under the three-step burden-shifting framework from
McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). See, e.g., Crosbie
v. Highmark Inc., No. 19-1235, 2021 WL 880212, at *4 (E.D. Pa. Mar. 9,
2012). Defendants insist the court use this framework here. The Third Circuit,
however, “ha[s] never held that this three-step framework governs False
Claims Act claims.” Crosbie v. Highmark Inc., 47 F.4th 140, 144 (3d Cir.
2022). In any event, the court need not decide which framework applies
because the sole ground offered by Defendants for summary judgment fails
under their proffered framework.
Defendants say summary judgment on Lord’s FCA retaliation claim
should be granted in their favor because Lord cannot make out a prima facie
case of retaliation. To make out a prima facie case, Lord must show “that he
has been fired (or demoted or the like) for protected conduct.” Crosbie v.
Highmark Inc., 47 F.4th 140, 144 (3d Cir. 2022). Defendants argue Lord has
not come forward with evidence that he suffered an adverse employment
action, e.g., discharge, demotion, etc. Lord says he has, or, alternatively, that
the evidence shows he was at least constructively discharged. The court
need not dig into the parties’ plethora of constructive discharge arguments,
however, since there is a genuine dispute of fact as to whether Lord was
fired—the quintessential “adverse employment action.” See generally Basri
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Case 3:13-cv-02940-MEM Document 255 Filed 09/26/23 Page 24 of 28
v. Trustees of Univ. of Pennsylvania, No. CV 19-4935, 2020 WL 7231357, at
*6 (E.D. Pa. Dec. 8, 2020) (“Where there is a genuine issue of fact as to
whether plaintiff quit [his] job or was terminated, summary judgment is not
the proper means of disposing of the claim.”) (citations and internal quotation
marks omitted).
Lord argues that, from his perspective, NAPA-PA terminated him, and
he points to several pieces of evidence on which a jury could find for him on
this issue. The Third Circuit has “recognized that the reasonable belief of the
employee is relevant to determining whether he or she had resigned or had
been terminated.” Johnson-Winters v. Redner's Mkt. Inc., 610 F. App'x 149,
153 n.5 (3d Cir. 2015) (citing Burton v. Teleflex Inc., 707 F.3d 417 (3d Cir.
2013)).
First, Defendants removed access to Lord’s email on June 21, 2013.
This came as a surprise to Lord and indicated to him that he was being
terminated. Second, Lord provided a “Notice of Dispute Resolution” to
Defendants that requested “a meeting to attempt to resolve [the ongoing
employment] dispute in accordance with Paragraph 7 of Mr. Lord’s
Employment Agreement,” and proposed a date of July 3, 2013. (Doc. 235 at
184). That paragraph of the employment agreement required written notice
and mandated a meeting be held within one week. Defendants never
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Case 3:13-cv-02940-MEM Document 255 Filed 09/26/23 Page 25 of 28
responded to this request, which indicated to Lord that he was being
terminated. Third, Thomas Delaney, Defendants’ Senior Vice President
(SVP), stated in a letter to PMC’s SVP that “NAPA has terminated [Lord’s]
employment.” (Doc. 235 at 186). And fourth, Lord contends Defendants’ VP
of HR and Compliance modified the internal documentation of his separation
of employment by changing the box that was originally checked
“Termination” to “Voluntary” in August 2013. (See Doc. 235-69). Defendants
did not respond to this argument.
Defendants retort that the above series of actions that Lord points to
all occurred because of Lord’s actions on June 20, 2013. On that day, Lord
informed Dr. Nostro that he would not be returning to work. Lord in fact did
not return to work, and by July 5, 2013, he had already secured other
employment. This, Defendants aver, demonstrates Lord voluntarily resigned
and thus did not suffer an adverse employment action. However, as Lord
points out, the record contains evidence that his communication with Dr.
Nostro on June 20 was not as definite as Defendants portray. Lord testified
at his deposition that he told Dr. Nostro “until an investigation was done, [he]
did not feel safe continuing to take responsibility for a life of a patient on an
operating room table under anesthesia while [he] was looking over [his]
shoulder at anesthesiologists falsifying records behind [his] back.” (Doc. 235- 25 -
Case 3:13-cv-02940-MEM Document 255 Filed 09/26/23 Page 26 of 28
12 at 15–16). And, according to a notice he sent Defendants on July 5, 2013,
Lord only sought substitute employment to mitigate his damages since he
construed
Defendants’
actions
as
constructive termination
of
his
employment.
On this record, there is a genuine dispute as to whether Defendants’
terminated Lord. So summary judgment is inappropriate. The dispute
surrounding Lord’s alleged termination is also fatal to Defendants motion for
summary judgment on Lord’s breach of contract claim since Defendants
motion with respect to those claims is largely premised on Lord’s alleged
voluntarily resignation. There is also a genuine dispute as to whether
Defendants breached the employment agreement by failing to conduct a
dispute resolution meeting with Lord, as noted above.
C.
Motions to exclude expert testimony
Also before the court are two motions from Defendants to limit or
exclude testimony from two of Lord’s experts pursuant to Rule 702 of the
Federal Rules of Evidence. (Docs. 208 & 209). That Rule provides:
A witness who is qualified as an expert by knowledge, skill,
experience, training, or education may testify in the form of an
opinion or otherwise if:
(a) the expert’s scientific, technical, or other specialized
knowledge will help the trier of fact to understand the evidence
or to determine a fact in issue;
(b) that testimony is based on sufficient facts or data;
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Case 3:13-cv-02940-MEM Document 255 Filed 09/26/23 Page 27 of 28
(c) the testimony is the product of reliable principles and
methods; and
(d) the expert has reliably applied the principles and
methods to the facts of the case.
Fed. R. Evid. 702. Rule 702, along with the principles announced in Daubert
v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 592-94 (2000), requires
a multi-faceted factual analysis of the proffered expert opinions. The
determination of admissibility of an expert opinion is a task better suited for
an evidentiary proceeding prior to trial. Indeed, the Third Circuit has
cautioned that “[i]t would appear that the most efficient procedure that the
district court can use in making the reliability determination is an in limine
hearing.” United States v. Downing, 753 F.2d 1224, 1241 (3d Cir. 1985).
Considering this, the court will dismiss Defendants’ expert motions as
premature and without prejudice to renewal as motions in limine at an
appropriate time.
IV.
CONCLUSION
In light of the foregoing, Defendants’ motion for summary judgment will
be GRANTED in part and DENIED in part. It will be GRANTED with respect
to the breach of contract claim against NAPA Management and DENIED in
all other respects. Lord’s motion for partial summary judgment will be
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Case 3:13-cv-02940-MEM Document 255 Filed 09/26/23 Page 28 of 28
DENIED. Defendants’ motions to limit or exclude Lord’s experts will be
DISMISSED without prejudice. An appropriate order follows.
s/ Malachy E. Mannion_
MALACHY E. MANNION
United States District Judge
DATE: September 26, 2023
13-2940-07
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