United States District Court, Middle District of Pennsylvania
MELANIE A. LAMPENFELD, Plaintiff
PYRAMID HEALTHCARE, INC., a wholly owned subsidiary of CLEARVIEW CAPITAL, LLC, and BRETT L. SCHARF, M.D., Defendants
MATTHEW W. BRANN UNITED STATES DISTRICT JUDGE
March 4, 2015 Defendants Pyramid Healthcare, Inc. (hereinafter "Pyramid"), Clearview Capital, LLC (hereinafter "Clearview"), and Brett L. Scharf, M.D. have filed a partial Motion to Dismiss Plaintiff Melanie A. Lampenfeld's Complaint for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Plaintiff's Complaint, filed February 17, 2014, alleges claims for violation of the retaliation provision of the False Claims Act (hereinafter, the "FCA"), codified at 31 U.S.C. § 3730(h), violation of the Pennsylvania Whistleblower Law, 43 P.S. § 1423, and public policy wrongful termination. Pl.'s Compl., Feb. 17, 2014, ECF No. 1 (hereinafter "Pl.'s Compl.").
Defendants seek to dismiss all claims against Defendant Clearview, all claims against Defendant Scharf, and all claims except the FCA retaliation claim against Defendant Pyramid. For the following reasons, Defendants' partial Motion to Dismiss is granted in its entirety. Count I is dismissed without prejudice as against Defendant Scharf and Count II is dismissed without prejudice as against all Defendants, both with leave to amend in accordance with this Court's decision. Count III is dismissed with prejudice as against all Defendants.
This case arises from Plaintiff's employment, first as a Registered Nurse and most recently as a "Detoxification Program Director/Nurse Manager, " for Defendant Pyramid. Pl.'s Compl. ¶ 18, 20. Pyramid is a for-profit corporation which operates drug and alcohol treatment facilities throughout Pennsylvania. Id. . ¶ 5. Plaintiff commenced employment with Pyramid in September 2003 and was promoted three times over the course of her employment, most recently to Detoxification Program Director/Nurse Manager. Id. . ¶ 18-20. In this position, Plaintiff's principal accountabilities included ensuring that clients in the detoxification and inpatient units were provided proper medical care. Id. . ¶ 24. During her employment, Plaintiff alleges that she made four reports of wrongdoing at Pyramid, for which reports she was ultimately terminated. Id. . ¶ 78, 80.
The first of these reports of wrongdoing occurred in the fall of 2012 when it was brought to Plaintiff's attention by the Department of Health (hereinafter, the "DOH") inspector that numerous patient charts contained the exact same vital sign entries and the same documentation of patient examinations conducted by Defendant Brett L. Scharf, M.D. Id. . ¶ 29-30. Plaintiff further alleges that federal and state government reimbursement programs were being billed for patient assessments and medical examinations that were purportedly, but never actually, performed by Defendant Scharf. Id. . ¶ 36-37. Plaintiff then reported these inaccuracies to Defendant Pyramid's Director of Nursing, Bernadette Grove. Id. . ¶ 31.
Next, in August 2013, upon receiving a patient complaint, Ms. Grove requested that Plaintiff investigate an issue arising from a medication and charting error. Id. . ¶ 58. After completing this assigned investigation, Plaintiff reported to Ms. Grove and her direct supervisor, Richard Knab, that the patient complaint resulted from Defendant Scharf's professional incompetence and that the "nursing staff are fed up with him." Id. . ¶ 58-60. Though she did not report her findings to Defendant Scharf, Ms. Grove informed Defendant Scharf of Plaintiff's opinions. Id. . ¶ 63. After hearing Plaintiff's report, Defendant Scharf indicated to Mr. Knab that he felt that the trust relationship between himself and Plaintiff had been "irrecvocably broken." Id. . ¶ 64-67. Approximately four days later, Plaintiff was placed on suspension, apparently for insubordination directed to a supervisor. Id. . ¶ 68.
Third, on August 28, 2013, Plaintiff sent a letter to Mr. Knab in which she reiterated her concerns over Defendant's Scharf's improper and negligent medical care and its effect on patient safety, as well as her concerns regarding the fraudulent billing of insurance providers for patient assessments and medical services which were never performed. Id. . ¶ 72-73. In addition, she mentioned to Mr. Knab that patients lodged concerns to her that their charts contained specific references to aspects of physical examinations that Defendant Scharf never conducted. Id. . ¶ 74.
Two days later, Defendant Pyramid terminated Plaintiff's employment, allegedly for insubordination and making false or malicious statements regarding Defendant Scharf, the medical director, and Ms. Grove, the director of nursing. Id. ¶ 78-79. Finally, on September 6, 2013, Plaintiff submitted an appeal of Defendant Pyramid's decision to terminate her to Pyramid's CEO, Jonathan Wolf. Id. . ¶ 81. She again reported the information relating to Defendant Scharf's conduct and the inaccuracies in billing. Id. . ¶ 82. This appeal was denied by Mr. Wolf on September 12, 2013. Id. . ¶ 86.
As previously discussed, Plaintiff asserts in her Complaint claims for violations of the FCA as against all Defendants, violations of the Pennsylvania Whistleblower Law as against all Defendants, and public policy wrongful termination as against only Pyramid and Clearview. On April 24, 2014, Defendants filed their partial Motion to Dismiss Plaintiff's Complaint for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6).  This matter is now ripe for disposition.
II. STANDARD OF REVIEW
When considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a court must view all allegations stated in the complaint as true and construe all inferences in the light most favorable to plaintiff. See Hishon v. King & Spaulding, 467 U.S. 69, 73 (1984); see also Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). However, "the tenet that a court must accept as true all of the [factual] allegations contained in the complaint is inapplicable to legal conclusions." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations omitted). In ruling on such a motion, the court primarily considers the allegations of the pleading, but is not required to consider legal conclusions alleged in the complaint. Kost, 1 F.3d at 183. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678. At the motion to dismiss stage, the court considers whether plaintiff is entitled to offer evidence to support the allegations in the complaint. See Maio v. Aetna, Inc., 221 F.3d 472, 482 (3d Cir. 2000).
A complaint should only be dismissed if, accepting as true all of the allegations in the amended complaint, plaintiff has not pled enough facts to state a claim to relief that is plausible on its face. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 561 (2007). "Determining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 663-664.
"In considering a Rule 12(b)(6) motion, we must be mindful that federal courts require notice pleading, as opposed to the heightened standard of fact pleading." Hellmann v. Kercher, No. 07-1373, 2008 WL 1969311 at * 3 (W.D. Pa. May 5, 2008) (Lancaster, J.). Federal Rule of Civil Procedure 8 "requires only 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 on which it rests.'" Twombly, 550 U.S. at 554 (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). However, even under this lower notice pleading standard, a plaintiff must do more than recite the elements of a cause of action, and then make a blanket assertion of an entitlement to relief. See Hellmann, 2008 WL 1969311 at *3. Instead, a plaintiff must make a factual showing of his entitlement to relief by alleging sufficient facts that, when taken as true, suggest the required elements of a particular legal theory. See Twombly, 550 U.S. at 561. "[W]here the well-pleaded facts 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." Iqbal, 556 U.S. at 679 (quoting Fed.R.Civ.P. 8(a)).
The failure-to-state-a-claim standard of Rule 12(b)(6) "streamlines litigation by dispensing with needless discovery and factfinding." Neitzke v. Williams, 490 U.S. 319, 326-27 (1989). A court may dismiss a claim under Rule 12(b)(6) where there is a "dispositive issue of law." Id . at 326. If it is beyond a doubt that the non-moving party can prove no set of facts in support of its allegations, then a claim must be dismissed "without regard to whether it is based on an outlandish legal theory or on a close but ultimately unavailing one." Id . at 327.
A. Individual Liability Under The FCA
Defendants first contend that Plaintiffs' claim in Count I for retaliation under the FCA should be dismissed as to Defendant Scharf because, as a matter of law, there can be no individual liability under §3730(h) of that act. In so arguing, they acknowledge that courts have split on this issue and cite to several recent district court opinions from varying jurisdictions. Plaintiff counters by citing to district court cases which came to the contrary determination.
The FCA imposes liability on any person who "knowingly presents, or causes to be presented, to an officer or employee of the United States Government . . . a false or fraudulent claim for payment or approval." 31 U.S.C. § 3729(a)(1). Section 3730(h) of the FCA creates "a private cause of action for an individual retaliated against by his employer for assisting an [FCA] investigation or proceeding." Graham Cnty. Soil & Water Conservation Dis. V. U.S. ex rel. Wilson, 545 U.S. 409, 412 (2005). Congress amended this provision in 2009 to read:
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, agent or associated others in furtherance of an action under this section or other efforts to stop 1 or more violations of this subchapter.
31 U.S.C. § 3730(h)(1). In so doing, Congress expanded protection under the FCA from only employees to employees, contractors, and agents. Moreover, it removed any reference to retaliation "by his or her employer, " leaving the potential categories of defendants under this section legally unsettled. 31 U.S.C. § 3730(h) (2003).
Prior to this amendment, courts were consistent in finding that § 3730(h) did not support a claim for individual liability. See Mruz v. Caring Inc., 991 F.Supp. 701, 708-10 (D.N.J. 1998) (determining that, as per the plain meaning of the statute, the term "employer" did not extend liability to individual supervisors); Palladino ex rel. U.S. v. VNA of Southern New Jersey, Inc., 68 F.Supp.2d 455, 464-65 (D.N.J. 1999) ("[T]here is no individual liability for non-employers under § 3730(h) . . . ."); United States ex rel. Lamar v. Burke, 894 F.Supp. 1345, 1347-48 (E.D.Mo. 1995) ...