By Brandi O. Brown, J.D.
An EMT who alleged that he was fired after refusing to alter a document used by his employer to seek Medicare reimbursement can once again pursue his False Claims Act retaliation claim after the Second Circuit ruled that it was dismissed in error. The employee adequately pleaded engagement in a protected activity—his refusal to falsify the document. The court also ruled that the qui tam claim brought by the trustee for the employee’s bankruptcy case was wrongly dismissed and that the trustee alleged the FCA claim with sufficient specificity under Federal Rule of Civil Procedure 9(b). The judgment of the district court was vacated and the case was remanded (U.S. ex rel. Chorches v. American Medical Response, Inc., July 27, 2017, Lynch, G.).
For over a year, the EMT was employed by American Medical Response, Inc., the largest ambulance company in the United States. He alleged that during that time he was frequently required to alter the Patient Care Reports he submitted after ambulance runs to include false statements that would make the run appear to be medically necessary, thus ensuring that it would be reimbursed by Medicare. This was required even if the service was not medically necessary, such as when a patient called 911 for a chronic allergy issue and when a patient repeatedly dialed 911 for transport to the hospital only because he wanted to go there.
Refused to rewrite report. With regard to the latter, the employee claimed he was directed, under the threat of being placed on unpaid leave, to make false statements for those runs. However, in February 2012, he was told to recreate a report from December 2011 and complete it with information provided to him, which included information in words that were not his. He was told that if he did not include the information as instructed, he could not return to work. He refused and his employment was effectively terminated.
Lower court proceedings. He filed suit as a relator on behalf of the United States, asserting two FCA claims. The first alleged that the employer violated 31 U.S.C. sec. 3729(a)(1)(A) and (B) by making false statements and submitting false claims to the government. The second alleged that the employer fired him in retaliation for his efforts to stop submission of a false claim, a violation of 31 U.S.C. sec. 3730(h). The district court dismissed the latter claim with prejudice for failure to state a claim and dismissed the former on standing grounds because of the employee’s earlier bankruptcy petition. The qui tam claim pre-dated that petition and thus the claim was property of his bankruptcy estate. The bankruptcy trustee joined the action and filed an amended complaint pleading only the qui tam claim, which was then dismissed with prejudice for failure to state a claim. Both the employee and the trustee appealed the dismissals.
Adequately pleaded, not abandoned. With regard to the employee’s retaliation claim, which had arisen after his bankruptcy proceedings were completed, the appeals court ruled that the district court erred in holding that he failed to state a claim for retaliation. Contrary to the employer’s argument, the employee’s claim (which belonged to him individually) was not abandoned and he was entitled to appeal dismissal of that claim. In that complaint, contrary to the district court’s conclusion, the employee adequately pleaded engagement in a protected activity. Section 3730(h) protects an employee’s lawful acts done in furtherance of efforts to stop a violation (or violations) of the FCA. The employee’s refusal, which was a lawful act, qualified as an effort to stop a fraudulent scheme based on the provision’s plain language. The employee verbally refused to alter the document, despite the threat of termination, and he had reason to believe that his refusal to do so would make it harder or even impossible for the employer to file a false claim for that run. Thus, it would prevent or at least hinder one violation. This conclusion, the court also noted, was supported by the drafting history of the provision, as well as policy considerations. Thus, the appeals court vacated the district court’s dismissal of the claim.
No bar to qui tam claim. The appeals court also ruled that the qui tam claim had been adequately pleaded under Rule 9(b) and rejected the employer’s argument that the district court lacked jurisdiction to consider the claim under the FCA’s public disclosure bar. That bar provides that courts should dismiss actions or claims under section 3730 if substantially the same allegations were already publicly disclosed. Although the employer had not raised the argument before the district court itself, because it was a jurisdictional argument the appeals court addressed it. However, it concluded that after a 2010 amendment the bar is not jurisdictional and, therefore, that the employer had forfeited the defense by failing to raise it below.
Qui tam claim adequately pleaded. The claim was adequately pleaded under Rule 9(b). Although the employer argued that the rule was not satisfied because the trustee did not identify the actual invoices that were submitted to the federal government, the court explained that the complaint had adequately alleged that such information was peculiarly within the knowledge of the employer. The billing procedures used by the employer made it virtually impossible for most employees, including the EMT, to have access to that information without the benefit of discovery.
Moreover, the amended complaint alleged a basis for a strong inference that specific false claims were, in fact, submitted to the government. The complaint alleged that the employee was informed by supervisors that the revisions were necessary for Medicare reimbursement and it identified specific instances in which supervisors asked for reports to be falsified to qualify for reimbursement. Also, allowing the trustee to plead such submission on information and belief based on these facts was consistent with both the rule and the FCA. To require qui tam plaintiffs to plead billing details regarding specific claims, even when that information was “peculiarly within the defendant’s purview,” would discourage such lawsuits. The allegations in the complaint were “sufficiently robust to allay any fear of undermining Rule 9(b)’s purpose,” the court explained.
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