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Stailey v. Gila Regional Medical Center

United States District Court, D. New Mexico

February 21, 2017

MARIE STAILEY, Plaintiff,
v.
GILA REGIONAL MEDICAL CENTER, DAN OTERO, and BRIAN CUNNINGHAM, Defendants.

          MEMORANDUM OPINION AND ORDER

         This matter is before the Court on Defendants Dan Otero, Brian Cunningham, and Gila Regional Medical Center's Motion to Dismiss Counts I, II, and IV of Plaintiff's First Amended Complaint … [Doc. 8]. The Court has reviewed the motion, as well as the response and the reply. For the reasons set forth below, the Court concludes that the motion to dismiss should be granted in part and denied in part.

         FACTUAL AND PROCEDURAL BACKGROUND

         On May 26, 2016, Plaintiff Marie Stailey (“Stailey”) filed her original Complaint [Doc. 1] in this Court. On July 15, 2016, prior to the filing of an answer by any defendant, Stailey filed her Amended Complaint [Doc. 4].

         Stailey alleges that she was employed by Defendant Gila Regional Medical Center (“GRMC”) as its Director of Patient Financial Services, and that GRMC terminated her employment on June 4, 2014. Doc. 4 at ¶ 2. Defendant Dan Otero (“Otero”) was GRMC's Chief Operations Officer, and Brian Cunningham (“Cunningham) was its Chief Executive Officer. Id. at ¶¶ 4-5. According to the Amended Complaint, Stailey was responsible for managing certain parts of GRMC's billing and collections, id. at ¶ 10, and that in May of 2014 she learned about certain fraudulent claims submitted to Medicare for payment. Id. at ¶¶ 16-27. Stailey reported the fraudulent billings to her supervisor, Otero. Id. at ¶¶ 28-29. While the people responsible for creating the false billings were not fired, Stailey was disciplined and ultimately terminated in retaliation for her actions. Id. at ¶¶ 30-31, 52-58.

         Stailey has asserted claims for violation of the federal False Claims Act (Count I), the New Mexico Medicaid False Claims Act (Count II), the federal Age Discrimination in Employment Act (Count III, asserted against GRMC only), the New Mexico Human Rights Act (Count IV), and the Whistleblower Protection Act (Count V). The motion currently before the Court pertains only to Counts I, II, and IV.

         LEGAL STANDARD

         Under rule 12(b)(6), a court may dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). “The nature of a Rule 12(b)(6) motion tests the sufficiency of the allegations within the four corners of the complaint after taking those allegations as true.” Mobley v. McCormick, 40 F.3d 337, 340 (10th Cir. 1994). The sufficiency of a complaint is a question of law, and when considering and addressing a rule 12(b)(6) motion, a court must accept as true all well-pleaded factual allegations in the complaint, view those allegations in the light most favorable to the non-moving party, and draw all reasonable inferences in the plaintiff's favor. See Moore v. Guthrie, 438 F.3d 1036, 1039 (10th Cir. 2006); Hous. Auth. of Kaw Tribe v. City of Ponca City, 952 F.2d 1183, 1187 (10th Cir. 1991).

         A complaint need not set forth detailed factual allegations, yet a “pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action” is insufficient. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)(citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. See Brown v. Montoya, 662 F.3d at 1163 (stating that the “plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully”). “Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Twombly, 550 U.S. at 555 (citation omitted).

         DISCUSSION

         The individual Defendants, Otero and Cunningham, move to dismiss Stailey's claims in Counts I and II on the grounds that the statutes under which she asserts those claims do not provide for liability of individual supervisors, as opposed to the liability of the employer entity. In addition, GRMC moves to dismiss Stailey's Count II claim against it on the grounds that the allegations of the Amended Complaint fail to state a claim against GRMC under the New Mexico Medicaid False Claims Act. Finally, Otero and Cunningham move to dismiss Stailey's claims in Count IV under the New Mexico Human Rights Act on the grounds that she failed to exhaust her administrative remedies.

         I. THE FEDERAL FALSE CLAIMS ACT

         In Count I of her Amended Complaint, which she asserts against all Defendants, Stailey contends that GRMC terminated her employment in violation of 31 U.S.C. § 3730(h), which provides protections to “whistleblowers” under the False Claims Act (“FCA”). Specifically, Stailey alleges that on multiple occasions in the year immediately preceding her termination, she informed various managers, including the individual Defendants, of GRMC's failures to comply with federal and state billing laws; she further alleges that in some instances they directed her to file Medicare bills without complying with federal regulations. Doc. 4 at ¶ 46. Stailey objected and refused to do so, and Defendants retaliated against her as a result. Id. at ¶¶ 47-48, 54-58. However, Otero and Cunningham argue that the FCA only permits claims against employers such as GRMC, as opposed to individual supervisors like them. As a result, they contend that Stailey fails to state a claim against them.

         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). The FCA authorizes individuals to bring qui tam suits on behalf of the government and keep a percentage of any monies recovered. McBride v. Peak Wellness Center, Inc., 688 F.3d 698, 703 (10th Cir. 2012). Because “employees will often be in the best position to report frauds perpetrated by their employers, the FCA includes ‘whistleblower' provisions protecting employees who do so from retaliation.” Id. Whistleblowers are entitled to reinstatement, double back pay, and litigation costs and attorneys' fees. Id. at 703-04 (citing 31 U.S.C. § 3730(h)(2)).

         Section 3730(h) was amended in 2009 to expand protection from retaliation to additional potential plaintiffs. Before 2009, Section 3730(h) protected only employees; after the amendment, that protection now extends to contractors and agents as well. Pub. L. No. 111-21, § 4(d), 123 Stat. 1617, 1624-25 (2009). The amendment also eliminated the word “employer” as a source of the retaliation. Id. As amended, the statute now reads:

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, or agent or associated others in furtherance of other efforts to stop 1 or more violations of this subchapter.

31 U.S.C. § 3730(h)(1). The amendment applies to conduct on or after May 20, 2009, see Pub. L. No. 111-21, ยง 4(f), 123 Stat. 1617, 1624-25 (2009), and so clearly applies to Stailey's June 2014 discharge. The question before the Court is whether the current ...


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