Thurlow v. York Hosp. — Jan. 2017 (Summary)

FALSE CLAIMS ACT RETALIATION

Thurlow v. York Hosp.
Docket No. 2:16-cv-179-NT (D. Me. Jan. 10, 2017)

The United States District Court for the District of Maine denied a hospital’s motion to dismiss and granted a physician’s motion to amend his complaint alleging retaliation in violation of the federal False Claims Act (“FCA”), as well as two state law claims, against the hospital following the physician’s termination.

The employed physician voiced complaints about the work of a fellow surgeon whom the physician had suspected of performing unnecessary procedures, falsifying notes, and improper coding.  When the hospital informed the physician that it was merging two hospital-owned practice groups and that the physician would have to work alongside the surgeon about whom he had complained, the physician once again voiced complaints and refused to work with the surgeon.  Three months later, the hospital terminated the physician without cause and without notice.  Despite no longer being a hospital employee, the physician remained a member of the medical staff.  Almost eight months after the termination, the hospital’s President asked the physician to sign a “behavioral compact” if he wished to talk with the President about the hospital’s surgical services.

The physician sued the hospital, claiming that his termination from the hospital was retaliation for his complaining about the surgeon’s activities.  Although the physician initially failed to timely serve the complaint on the hospital, the court ultimately allowed the complaint to be filed.  The hospital then filed a motion to dismiss, after which the physician filed a motion to amend his complaint, which now included more detailed factual allegations and the new two state law claims.

The hospital first argued that the court should deny the physician’s motion to amend his complaint because of the physician’s lack of due diligence in filing his initial complaint.  The hospital claimed that the physician’s initial failure to timely file his complaint, as well as his filing a motion to amend after the hospital had already submitted its motion to dismiss, demonstrated a lack of due diligence.  The hospital also argued that the physician’s expanded factual allegations and new state law claims should have been included in his first complaint, and that these omissions also demonstrated a lack of due diligence that warrant the court to deny the physician’s motion to amend.  The court disagreed with all three of the hospital’s due diligence arguments, and found that the physician’s motion for leave to file an amended complaint was not an obvious attempt to “unnecessarily extend th[e] lawsuit.”

The hospital next argued that the court should deny the physician’s motion to amend his complaint because the physician’s FCA claim was “futile.”  The hospital claimed that there was not sufficient “temporal proximity” between the adverse employment action against the physician (i.e., his termination) and the physician’s statutorily protected activity (i.e., preventing the surgeon from defrauding the federal government).  The court did not agree with this temporal proximity argument, stating that a three-month gap between the protected activity and the adverse employment action supports a plausible inference of retaliation.  Furthermore, the court found that the hospital’s insistence that the physician sign the behavioral compact further supported a plausible inference that the hospital “harbored a retaliatory animus” toward the physician.

Accordingly, the court denied the hospital’s motion to dismiss and granted the physician’s motion to amend his complaint alleging FCA retaliation and state law violations.