Court allows whistleblower's retaliation claim to move forward

A federal judge has denied a company’s request to dismiss a retaliation claim filed by a former employee under the False Claims Act.  In Forsythe v. National Health Corporation, a former physical therapist filed suit in federal court in Tennessee alleged that he was fired after refusing to input false codes related to group therapy.  

The plaintiff alleged that during his employment, the company held a compliance training program explaining changes in Medicare regulations that affected how physical therapists were to code patients. Specifically, if the therapists saw patients in a group, they would need to use a group code, rather than the one-on-one codes they had used previously. This new form of coding directly impacted the reimbursement rate for the claims that National Health submitted to Medicare, resulting in less revenue due to the lower reimbursement rate for the group therapy code. Failure to comply with the new regulations, the plaintiff and the others were told, was “committing Medicare fraud.” Despite this warning the plaintiff claimed that his supervisor, told them repeatedly to continue to code the old way unless management was observing. The plaintiff’s supervisor was upset about the new way of coding because it caused productivity and revenue to go down.

The plaintiff alleged that he refused to comply with his supervisor’s commands, and reported his supervisor, who subsequently resigned.  The plaintiff further alleged that he began to be treated differently at work, that he was referred to as a ‘snitch’ by his co-workers, his work schedule was abruptly changed, he was denied requests for time off, and he was given the cold shoulder. He also claimed to have been written up as a pretext for firing him. He was fired for allegedly “creating a hostile environment,” and he filed suit against the company for retaliation under the False Claims Act.  National Health Corporation then filed a motion to dismiss his claims.  

For a retaliation claim, the plaintiff must show (1) he engaged in a protected activity, (2) his employer knew that he engaged in the protected activity, and (3) his employer discharged or otherwise discriminated against the employee as a result of the protected activity. Yuhasz v. Brush Wellman, Inc., 341 F.3d 559, 566 (6th Cir. 2003).

The Court held that the Plaintiff had properly pled all three elements of his claims.  First, the Court found that the plaintiff had properly pled that he engaged in protected activity, as he alleged that his boss encouraged him to continue to input codes under the previous system. Further, he has alleged that the purpose of these code inputs was to increase the amount of money National Health would receive, greater than what it should have received, from Medicare.  The Court stated that this alleged “upcoding” is a common form of Medicare fraud.

Next, the Court found that the complaint properly alleged that NHC knew of the plaintiff’s protected activity.  Where one “alleges that he observed purportedly fraudulent activity, he confronted his employer about it, and his employer fired him because of it,” the allegations are sufficient to survive a motion to dismiss. United States ex rel. Marlar v. BWXT Y-12, LLC, 525 F.3d 439, 449-50. The plaintiff alleged that he complained to his boss about his unwillingness to commit what he reasonably believed was Medicare fraud. He even called the company’s hotline and was informed a few days later that an investigation was underway. As such, the Court found that the plaintiff had pled that National Health had notice of the claims being filed against it.

Lastly, the Court concluded that the plaintiff properly alleged that he was fired as a result of his protected activity.  The Court cited the plaintiff’s allegation that the plaintiff’s boss threatened him for failing to participate in the upcoding scheme (“S— rolls down hill and I’m putting it on you.”)  The plaintiff also alleged that after he reported the protected activity, he began to be treated coldly at work and was even written up for failing to perform physical therapy on a patient who had refused therapy before being fired for “creating a hostile environment.” As such, the Court found that “it is plausible to believe that [plaintiff] was fired for reporting the upcoding issue, and the court finds he has sufficiently pleaded enough facts from which such inferences can be drawn.”  Because the plaintiff had pled all three elements of his False Claims Act retaliation claim, the Court denied the motion to dismiss.  

If you have knowledge of fraudulent billings made by your employer against the federal government, speak with an attorney experienced in handling false claims cases.  Josh Borsellino is a Texas whistleblower attorney in Fort Worth that represents workers in claims against their current or former employers.  For a free consultation, call Josh at 817.908.9861 or complete this form.

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