Rhodes v. Sutter Health (Summary)

EMPLOYMENT – DISCRIMINATION

Rhodes v. Sutter Health, No. CIV. 2:12-0013 WBS DAD (E.D. Cal. Feb. 28, 2012)

The United States District Court for the Eastern District of California granted two entities’ motions to dismiss a physician’s claims under the False Claims Act (“FCA”) and the Fair Housing and Employment Act (“FHEA”) because the physician did not allege sufficient facts to prove she was an employee under the statutes. The conflict began after the physician, employed by a medical group that was affiliated with two other corporate entities, claimed that she informed the group that its protocol requiring a pre-biopsy surgical consultation by a member of a group was medically unnecessary, delayed proper patient care, and was a self-referral to the group that she alleged amounted to Medicare fraud. After her report to the group’s senior partners, she alleged that the group relegated the physician to lower value work, forced her to work increased hours, caused her to be denied an annual performance bonus, and eventually to take a leave of absence for medical exhaustion. Furthermore, she alleged that her employer had implemented a policy requiring the group’s employees to live in the vicinity of the hospital in a gender-discriminatory manner. Consequently, the physician brought an action against her employer and the two affiliated entities for, among other claims, retaliation under the FCA and for violation of the FHEA. The two affiliated groups that were not the plaintiff’s employer filed a motion to dismiss the FCA and FHEA-related claims.

The two affiliated entities argued that the physician could not bring an action against them because she was not their employee. The physician, however, argued that the two affiliated entities were an “integrated enterprise” with her employer, and that, as such, they could be considered a single employer. The court disagreed. First, the court concluded that the plaintiff’s FCA and FHEA-related claims in this case arose due to her employment relationship and, as such, require the individual alleging retaliation and discrimination to be an employee. Furthermore, it found that the affiliated entities did not have “centralized control of labor relations,” and consequently they were not an integrated enterprise. Consequently, the physician was not an employee of the two affiliated entities and could not bring retaliation and discrimination claims against them under the FCA and FHEA. Finally, the court found that the physician had not exhausted her administrative remedies under the FHEA by not first filing a complaint with its administrative agency. Consequently, the court dismissed the claims against the two affiliated entities.