Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_01-cv-05990/USCOURTS-caed-1_01-cv-05990-5/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 31:3729 False Claims Act

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IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA AND )

THE STATE OF CALIFORNIA ex )

rel. Dr. Barnett S. Salzman, )

et al., )

)

)

)

Plaintiff, )

)

vs. )

)

)

FRESNO COUNTY, et al., )

)

)

Defendant. )

)

)

No. CV-F-01-5990 REC/SMS 

ORDER STRIKING “AMENDED

PETITION TO MEMORANDUM OF

POINTS AND AUTHORITIES BY

PLAINTIFF (Docs. 85 & 86),

GRANTING DEFENDANTS' MOTION

TO DISMISS, AND DIRECTING

PLAINTIFF TO FILE FIRST

AMENDED COMPLAINT WITHIN 30

DAYS OF FILING DATE OF ORDER

On October 3, 2005, the court heard defendants Fresno County

and Fresno County Human Health System’s motion to dismiss.

Just prior to oral argument, plaintiff Barnett S. Salzman,

M.D., proceeding in pro per, filed two copies of a pleading

captioned:

AMENDED PETITION TO MEMORANDUM OF POINTS AND

AUTHORITIES BY PLAINTIFF IN OPPOSITION TO

DEFENDANT COUNTY OF FRESNO, INC.’S MOTION TO

DISMISS UNDER Fed.Civ.R.Pro. 12(b)(6. [sic]

REQUESTING DECLARATORY JUDGMENT TO GRANT

Case 1:01-cv-05990-REC -SMS Document 87 Filed 10/13/05 Page 1 of 10
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Dr. Salzman is advised that he is obligated to familiarize 1

himself and comply with the Federal Rules of Civil Procedure and

the Local Rules of Practice. Failure to comply with these rules

may result in the imposition of sanctions, including the sanction

of dismissal.

2

PLAINTIFF DR. BARNETT S. SALZMAN COMPENSATORY

AND PUNITIVE DAMAGES AND OTHER RELIEF AS THIS

COURT DEEMS EQUITABLE, WITHOUT FURTHER DELAY.

The court strikes these two pleadings and does not consider

them in resolving the motion to dismiss. The pleadings were not

timely filed as required by Rule 78-230(c), Local Rules of

Practice and neither defendants nor the court had any opportunity

to review these pleadings prior to oral argument.1

This action is a qui tam action brought by Dr. Barnett S.

Salzman and Dr. Jerome R. Lance on behalf of the United States

and the State of California against the County of Fresno and the

Fresno County Human Health System and Does 1-20. The Complaint

was filed on August 2, 2001 under seal. The Complaint alleges

that Dr. Salzman is a California licensed physician specializing

in psychiatry employed by the County of Fresno. The Complaint

alleges two causes of action. The First Cause of Action for

violation of the federal and state false claims act has been

settled and dismissed by court order filed under seal. The

Second Cause of Action is brought solely by Dr. Salzman. The

Second Cause of Action alleges in pertinent part:

20. Plaintiff Dr. Salzman complained to the

management of the Fresno County Human Health

System about the misuse of UPIN codes and the

upcoding for services which were either at

much lower level than indicated by the use of

the billing code or was non-existant

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altogether. In response Fresno’s management

told not to discuss the fraudulent billings

[sic]. 

21. As a result of such whistleblowing

reporting, the defendants have discriminated

against Dr. Salzman in the terms and

conditions of his employment by, among other

things, removing Dr. Salzman from his

supervisory duties (despite the fact that he

has been the chair of the Peer Review

Committee and a member of the Utilization

Review Board and is double Board Certified),

and by refusing to issue any letters of

recommendation to Dr. Salzman. Additionally,

threats have been made to terminate Dr.

Salzman’s employment, although that has not

occurred to date. All of this retaliatory

conduct by the defendants is in violation of

the Federal False Claims Act, 31 U.S.C. §

3730(h) and the California False Claims Act,

Cal. Gov. Code § 12653.

22. Dr. Salzman has been damaged by such

discrimination in an amount and to an extent

which will be shown at the time of trial.

The Second Cause of Action prays for the following relief:

“compensation for any damages sustained as a result of the

retaliation, including litigation costs and reasonable attorneys’

fees and all other relief necessary to make Dr. Salzman whole”

and “such other and further relief as the court deems just and

proper.” 

Defendants move the court to dismiss the Second Cause of

Action pursuant to Rule 12(b)(6), Federal Rules of Civil

Procedure, for failure to state a claim upon which relief can be

granted.

Dismissal of a complaint pursuant to Rule 12(b)(6) is

improper “unless it appears beyond doubt that the plaintiff can

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prove no set of facts in support of his claim which would entitle

him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46 (1957). In

testing the sufficiency of a complaint against a Rule 12(b)(6)

challenge, a court must “accept all material allegations in the

complaint as true and construe them in the light most favorable

to the plaintiff.” North Star Int’l v. Arizona Corp. Comm’n, 720

F.2d 578, 580 (9th Cir. 1983). The Court need not, however,

“accept legal conclusions cast in the form of factual allegations

if those conclusions cannot reasonably be drawn from the facts

alleged.” Clegg v. Cult Awareness Network, 18 F.3d 752 (9th Cir.

1994). 

A complaint may be dismissed as a matter of law if there is

a lack of a cognizable legal theory or if there are insufficient

facts alleged under a cognizable legal theory. Balistreri v.

Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1990). The

Court must determine whether or not it appears to a certainty

under existing law that no relief can be granted under any set of

facts that might be proved in support of a plaintiff’s claims. 

De La Crux v. Tormey, 582 F.2d 45, 48 (9th Cir. 1978), cert.

denied, 441 U.S. 965, 99 S. Ct. 2416, 60 L. Ed. 2d 1072 (1979). 

Normally, affirmative defenses should be raised in a responsive

pleading rather than in a motion to dismiss. Scott v. Kuhlmann,

746 F.2d 1377, 1378 (9th Cir. 1984). An affirmative defense,

however, may properly be raised in a motion to dismiss where the

affirmative defense is apparent on the face of the complaint and

the defense raises no disputed issues of fact. Id. Such

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Attached to Dr. Salzman’s opposition to this motion are 2

copies of numerous documents. The court disregards these documents

in resolving this motion to dismiss and, therefore, does not

convert the motion to dismiss to a motion for summary judgment. 

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affirmative defenses typically include laches, statute of

limitations, and lack of jurisdiction.2

Defendants move to dismiss the Second Cause of Action on two

grounds, failure to allege compliance with the California

Government Tort Claims Act and failure to allege facts

establishing the elements of a federal False Claims Act

retaliation claim.

A. Failure to Allege Compliance with California Government

Tort Claims Act.

As noted, by the Second Cause of Action, Dr. Salzman seeks

relief pursuant to California Government Code § 12653. Section

12653 provides in pertinent part:

(b) No employer shall discharge, demote,

suspend, threaten, harass, deny promotion to,

or in any other manner discriminate against,

an employee in the terms and conditions of

employment because of lawful acts done by the

employee on behalf of the employee or others

in disclosing information to a government or

law enforcement agency or in furthering a

false claim action, including investigation

for, initiation of, testimony for, or

assistance in, an action filed or to be filed

under Section 12652.

(c) An employer who violates subdivision (b)

shall be liable for all relief necessary to

make the employee whole, including

reinstatement with the same seniority status

that the employee would have had but for the

discrimination, two times the amount of back

pay, interest on the back pay, compensation

for any special damage sustained as a result

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of the discrimination, and, where

appropriate, punitive damages. In addition,

the defendant shall be required to pay

litigation costs and reasonable attorneys’

fees. An employee may bring an action in the

appropriate superior court of the state for

the relief provided in this subdivision.

In Campbell v. Regents of the University of California, 35

Cal.4th 311 (2005), petition for cert. filed, No. 05-233, the

California Supreme Court held that an employee alleging a

violation of Section 12653 must exhaust internal administrative

remedies before filing suit. In Campbell, the University of

California had adopted internal administrative remedies

pertaining to claims by its employees of retaliation resulting

from the reporting of improper activities. 

Relying on Campbell, defendants argue that the relief sought

by Dr. Salzman in the Second Cause of Action demonstrates that

this cause of action is subject to the claims filing requirements

of the California Government Tort Claims Act.

Dr. Salzman does not contest the applicability of the

California Government Tort Claims Act to that aspect of the

Second Cause of Action seeking relief California Government Code

§ 12653. Dr. Salzman conceded at oral argument that he did not

comply with the claim requirement of the California Government

Tort Claims Act before the filing of the Complaint in this

action. 

Therefore, that the Second Cause of Action is dismissed

without leave to amend to the extent that the Second Cause of

Action is based on the California False Claims Act.

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B. Failure to Plead Elements of Federal False Claims Act

Retaliation Claim.

As noted, the Second Cause of Action also pleads a violation

of 31 U.S.C. § 3730(h). Section 3730(h) provides in pertinent

part:

Any employee who is discharged, demoted,

suspended, threatened, harassed, or in any

other manner discriminated against in the

terms and conditions of employment by his or

her employer because of lawful acts done by

the employee on behalf of the employee or

others in furtherance of an action under this

section, including investigation for,

initiation of, testimony for, or assistance

in any action filed or to be filed under this

section, shall be entitled to all relief

necessary to make the employee whole. ....

In U.S. ex rel. Hopper v. Anton, 91 F.3d 1261 (9 Cir. th

1996), cert. denied, 519 U.S. 1115 (1997), the Ninth Circuit, in

an opinion reviewing summary judgment, held that there are three

elements that a plaintiff must prove in any Section 3730(h) cause

of action: “1) the employee must have been engaging in conducted

protected under the Act; 2) the employer must have known that the

employee was engaging in such conduct; and 3) the employer must

have discriminated against the employee because of [his]

protected conduct.” 91 F.3d at 1269. 

Defendants argue that the Complaint does not allege facts

from which it may be inferred that Dr. Salzman engaged in conduct

protected under the False Claims Act. In so arguing, defendants

note that the Complaint merely alleges:

20. Plaintiff Dr. Salzman complained to the

management of the Fresno County Human Health

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System about the misuse of UPIN codes and the

upcoding for services which were either at

much lower level than indicated by the use of

the billing code or was non-existant

altogether. In response Fresno’s management

told not to discuss the fraudulent billings

[sic]. 

Defendants argue that Dr. Salzman does not allege that he made

the complaints about the misuse of the codes in furtherance of an

action under the False Claims Act. In so arguing, defendants

refer the court to the following discussion in Hopper:

In this case, Hopper was not engaged in

activity protected under the Act. Judgment

should have been granted against her as a

matter of law. Section 3730(h) only protects

employees who have acted ‘in furtherance of

an action’ under the FCA. Specific awareness

of the FCA is not required. However, the

plaintiff must be investigating matters which

are calculated, or reasonably could lead, to

a viable FCA action ....

The entire record fails to demonstrate Hopper

was engaged in ‘furtherance of an action’

under the FCA. Rather, the record quite

clearly shows Hopper was merely attempting to

get the School District to comply with

Federal and State regulations. Her numerous

written complaints, seventy letters and over

fifty telephone calls were all directed to

this end. She was not trying to recover

money for the government; she was attempting

to get classroom teachers into IEP evaluation

sessions. She was not investigating fraud. 

She was not whistleblowing as envisioned in

the paradigm qui tam FCA action ... Quite

plainly, the thrust of her complaints was

that the School District was failing to meets

its IDEA obligations to its students. 

Correcting regulatory problems may be a

laudable goal, but not one actionable under

the FCA in the absence of actual fraudulent

conduct. Her FCA allegations were not

sufficient to pass summary judgment muster. 

Her investigatory activity did not have any

nexus to the FCA. Thus, the district court

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should have granted the School District’s

motion for judgment as a matter of law.

91 F.3d at 1269. Defendants further argue that the Second Cause

of Action does not allege facts from which it may be inferred

that Dr. Salzman’s employer was aware that Dr. Salzman was

investigating fraud. Again, defendants refer the court to

Hopper:

Further, unless the employer is aware that

the employee is investigating fraud, the

employer could not possess the retaliatory

intent necessary to establish a violation of

§ 3730(h) ... The legislative history clearly

provides that a ‘whistleblower must show the

employer had knowledge the employee was

engaged in “protected activity.”’ ...

Defendant’s contend that the Complaint “is devoid of any

factual allegations tending to show that Defendant had knowledge

of the fact, or was placed on notice that, [Dr. Salzman] was

investigating the County for ‘defrauding’ the Federal

government.”

Although Hopper involved summary judgment, not a motion to

dismiss for failure to state a claim, the court concludes that

the allegations of the Complaint are deficient for the reasons

argued by defendants. However, the court cannot conclude that

Dr. Salzman cannot amend the Second Cause of Action to state a

claim with regard to the elements set forth in Hopper. 

Consequently, the Second Cause of Action is dismissed with

leave to amend to the extent that it purports to state a claim

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In amending the Second Cause of Action, defendants move the 3

court to require Dr. Salzman to delete allegations in the Complaint

which have been rendered immaterial by the stipulated dismissal of

the First Cause of Action, including references to the United

States and the State of California. The court does order that Dr.

Salzman not refer in the Amended Complaint to the terms and

conditions of the stipulated dismissal of the First Cause of

Action. However, because defendants do not specifically describe

the allegations asserted to be immaterial and because Dr. Salzman

may be hampered in stating a claim if he cannot refer to the

conduct alleged to have constituted a violation of the federal

False Claims Acts, the court will not further proscribe the

allegations of the Amended Complaint.

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for relief pursuant to 31 U.S.C. § 3730(h). 

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ACCORDINGLY:

1. The Second Cause of Action is dismissed with prejudice

to the extent that it is based on California Government Code §

12653. 

2. The Second Cause of Action is dismissed with leave to

amend to the extent that it is based on 31 U.S.C. § 3730(h).

3. Dr. Salzman shall file a First Amended Complaint in

accordance with this Order within 30 days of the filing date of

this Order.

IT IS SO ORDERED.

Dated: October 11, 2005 /s/ Robert E. Coyle 

668554 UNITED STATES DISTRICT JUDGE

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