Court Opinion

ID: 4205808
Source: CourtListenerOpinion
Date Created: 2017-09-22 20:00:55.986473+00
Date Added: 2024-06-11T14:40:36.211370
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                          File Name: 17a0538n.06

                                       Case No. 16-5722
                                                                                     FILED
                                                                                Sep 22, 2017
                         UNITED STATES COURT OF APPEALS
                                                                            DEBORAH S. HUNT, Clerk
                              FOR THE SIXTH CIRCUIT

FALUSO FAKOREDE,                                     )
                                                     )
       Plaintiff-Appellant,                          )
                                                     )        ON APPEAL FROM THE
v.                                                   )        UNITED STATES DISTRICT
                                                     )        COURT FOR THE WESTERN
MID-SOUTH HEART CENTER, P.C.,                        )        DISTRICT OF TENNESSEE
                                                     )
       Defendant-Appellee.                           )

                                                                                  OPINION

BEFORE: McKEAGUE, KETHLEDGE, STRANCH, Circuit Judges.

       McKEAGUE, Circuit Judge. Faluso Fakorede brings this claim alleging unlawful

retaliation in violation of the False Claims Act (FCA) following his termination from Mid-South

Heart Center in February of 2015. The district court found Fakorede failed to allege that he had

engaged in protected activity prior to his termination and thus granted Mid-South’s Rule 12(b)(6)

motion to dismiss. We agree and affirm.

                                                I

       Fakorede was a physician who worked as a cardiologist in Jackson, Tennessee from 2013

to 2015. He was recruited to work in the Jackson area by the Jackson-Madison County General

Hospital District—a Tennessee governmental entity—in order to fill a need for cardiologists in

the area.
Case No. 16-5722, Fakorede v. Mid-South Heart Center

       As a result, Fakorede became an employee of Mid-South, a private corporation in

Jackson. Under a separate recruiting agreement, the Hospital District agreed to establish a

support account that ensured Fakorede was paid $500,000, no matter his total patient collections.

Essentially, the Hospital District permitted Fakorede to use the support account to draw the

difference between his net collections (total collections value minus any expenses attributed to

him) and $500,000. Instead, in accordance with its separate employment agreement, Mid-South

simply paid Fakorede $500,000, accounted for his collections, and then directed him to draw on

the support account based on those calculations. Fakorede then assigned the draw to Mid-South.

Additionally, Mid-South and Fakorede agreed that, if Fakorede did not stay for the full three-

year term outlined in the recruiting agreement, he would owe any draw amount back to the

Hospital District. However, Mid-South agreed to indemnify Fakorede if the Hospital District

determined “based on an accounting” that draws from the support fund had been improperly

calculated.

       Approximately ten months into his first year, Fakorede asked for documentation related

to Mid-South’s calculations of the draw totals. Then, approximately fourteen months after

starting work at Mid-South—some four months after he first raised concerns about how expenses

had been calculated—Fakorede was terminated. It later came to light that Mid-South had

improperly attributed over $200,000 in expenses to Fakorede during his first year. He now

brings this retaliation claim under the FCA, 31 U.S.C. § 3730(h), based on his termination. The

district court granted Mid-South’s Rule 12(b)(6) motion to dismiss for failure to state a claim and

dismissed the complaint.

                                               -2-
Case No. 16-5722, Fakorede v. Mid-South Heart Center

                                                II

       The district court’s grant of a motion to dismiss pursuant to Rule 12(b)(6) is reviewed de

novo. Goad v. Mitchell, 297 F.3d 497, 500 (6th Cir. 2002). We may affirm a decision of the

district court if correct for any reason, including one not considered below. U.S. Postal Serv. v.

Nat’l Ass’n of Letter Carriers, AFL-CIO, 330 F.3d 747, 750 (6th Cir. 2003).

       Rule 12(b)(6) permits a court to dismiss a complaint for “failure to state a claim upon

which relief can be granted.” Fed. R. Civ. P. 12(b)(6). We construe the complaint in the light

most favorable to the plaintiff and accept all well-pleaded factual allegations as true. Ashcroft v.

Iqbal, 556 U.S. 662, 678 (2009). To survive a Rule 12(b)(6) motion, the complaint must contain

“either direct or inferential allegations respecting all material elements necessary for recovery

under a viable legal theory.” D’Ambrosio v. Marino, 747 F.3d 378, 383 (6th Cir. 2014) (citation

omitted).

       This case arises under the FCA’s anti-retaliation provision, 31 U.S.C. § 3730(h). The

provision provides relief for an employee who was:

       . . . 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). To succeed on a claim that § 3730(h) was violated, a plaintiff must show

that (1) she engaged in a protected activity, (2) the employer knew she engaged in the protected

activity, and (3) the 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); Jones-McNamara v. Holzer Health Sys., 630 F. App’x 394, 398 (6th Cir. 2015).

                                               -3-
Case No. 16-5722, Fakorede v. Mid-South Heart Center

Dismissal of a retaliation claim is proper when a plaintiff fails to adequately plead any one of

these three elements. See Yuhasz, 341 F.3d at 566.

       Our analysis begins and ends with the first element—whether Fakorede’s complaint

adequately alleges that he engaged in protected activity prior to his termination. Relevant

protected activity would be an “effort[] to stop 1 or more violations of [the FCA].” 31 U.S.C. §

3730(h). Such an effort must stem from a reasonable belief that fraud is being committed against

the federal government. Jones-McNamara, 630 F. App’x at 400. In other words, to plead

protected activity, Fakorede must allege conduct directed at stopping what he reasonably

believed to be fraud committed against the federal government. See Miller v. Abbott Labs.,

648 F. App’x 555, 560 (6th Cir. 2016) (quoting Jones-McNamara, 630 F. App’x at 399). In this,

Fakorede’s pleadings fall short.

       Fakorede’s relevant pre-termination conduct was related to the calculation of costs

attributed to him by Mid-South for which it was effectively reimbursed by the Hospital District.

Fakorede requested information related to those expenses, including a year-end financial report

and underlying documents and data.         After receiving the financial report, he “expressed

concerns” about some of the expenses attributed to him.            Eventually, he requested an

independent review of the report and was told there would be a line-item audit. Although

Fakorede was “reassured by the line-item audit,” he nonetheless “reminded” the Hospital District

that “only expenses permitted by federal law for the [Hospital District] to cover” were properly

attributable to Fakorede under his recruiting agreement. He was terminated approximately one

week later. To tie his conduct to federal fraud, as is necessary for his claim to survive, Fakorede

asserts that, if Mid-South improperly calculated expenses to overdraw from the support account,

then any Medicare claims “tainted” by violations of the Stark Law and Anti-Kickback Statute

                                               -4-
Case No. 16-5722, Fakorede v. Mid-South Heart Center

were submitted to Medicare in violation of the FCA.          This legal conclusion itself is not

unfounded, as the connection between the Anti-Kickback Statute, the Stark Law, and the FCA is

statutory. See 42 U.S.C. § 1395nn(a)(1)(B); 42 U.S.C. § 1320a-7b(g). Nonetheless, one cannot

reasonably infer from Fakorede’s complaint that his efforts were directed toward preventing

what he reasonably believed was ongoing federal fraud.

       In essence, Fakorede requested information related to expenses attributed to him by his

private employer, expressed concerns as to whether those expenses were correctly calculated and

reimbursed by a Tennessee entity, and reminded others that an audit should check for

compliance with federal law. This fails to allege conduct reasonably related to fraud against the

federal government. See McKenzie v. BellSouth Telecommunications, Inc., 219 F.3d 508, 516–

17 (6th Cir. 2000) (protected activity does not include “merely urging compliance with

regulations”) (citing U.S. ex rel. Yesudian v. Howard Univ., 153 F.3d 731, 744 (D.C. Cir. 1998);

see also Iqbal, 556 U.S. at 679 (we do not accept legal conclusions as true absent supporting

factual allegations). Accordingly, Fakorede has not pled that he engaged in protected activity.

       However, Fakorede argues that his complaint should survive because it is reasonable to

infer that he was concerned about the violations of federal law because he knew that Mid-South,

like all major healthcare providers, submitted claims to Medicare for Fakorede’s services. But

this inference is not supported by any factual allegations in the complaint.         At best, the

complaint—in its “governing law” section—shows that the FCA may be implicated by violations

of the Stark Law. While this may be true, there are no underlying allegations to support the

conclusion that Fakorede himself, at any time prior to his termination, understood the connection

between the FCA and other federal law, that his activity was motivated by this connection, or

that even a single Medicare claim was submitted by Mid-South during that time. We are not to

                                               -5-
Case No. 16-5722, Fakorede v. Mid-South Heart Center

assume Fakorede’s conduct was directed at preventing possibly “tainted” claims from being

submitted to the federal government when nothing in the pleadings shows he understood, was

motivated by, or even aware of that possibility. See Iqbal, 556 U.S. at 679.

       Still, it may be fair to infer that Fakorede’s alleged conduct arose out of a reasonable

belief that his employer was committing fraud against the Hospital District. Even so, it is

unreasonable to infer that Fakorede believed any fraud committed against the Hospital District—

a state entity—constituted fraud against the federal government. Indeed, the alleged fraud

committed against the Hospital District was precisely what Fakorede’s “concerns” seemed to

target: that Mid-South miscalculated expenses in order to induce the Hospital District to overpay.

However, the alleged fraud against the federal government—involving unspecified Medicare

claims “tainted” by violations of federal law—was indirect, complex, and nowhere facially

contemplated in Fakorede’s conduct as described in his complaint. Absent any supporting

factual allegations, it is unreasonable to infer that Fakorede’s conduct was directed toward

preventing federal fraud. Thus, Fakorede has failed to allege he was engaged in protected

activity under the FCA prior to his termination. He therefore has no retaliation claim under 31

U.S.C. § 3730(h).

                                                III

       For the foregoing reasons, we affirm the district court.

                                               -6-
Case No. 16-5722, Fakorede v. Mid-South Heart Center

       JANE B. STRANCH, Circuit Judge, dissenting. At issue in this case is whether Dr.

Fakorede stated a claim against his employer for retaliation in violation of the False Claims Act

(FCA). To make this determination, we accept as true the allegations of the complaint and

evaluate their viability under the provisions of the FCA in force at the time of the filing. Dr.

Fakorede filed his complaint after the FCA was amended in 2009 to expand the protections—and

therefore claims—available to qui tam relators. Because I believe that Dr. Fakorede’s complaint

states a claim under the amended FCA, I respectfully dissent.

       The FCA is the key tool employed by the government to require that fraudulently claimed

funds be returned to the United States and its citizens. Many FCA cases rely on whistleblowers

within companies to find and report such fraud, collect evidence, and sometimes litigate the

claims. But whistleblowers face serious risks, as employers are unlikely to shrug off leaks of

incriminating information from within their own ranks.           The FCA has long protected

whistleblowers by authorizing a cause of action for employees who have been retaliated against

for involvement with an FCA claim. Traditionally, civil relief for retaliatory actions could be

sought by those “in furtherance of an action under [the FCA].” 31 U.S.C. § 3730(h)(1). Because

judicial narrowing of the scope of the FCA led to a decline in such cases and a significant drop in

monies recovered, Congress sought to make the FCA more effective by expanding protection for

whistleblowers. S. Rep. 111-10, 4. Under the FCA as amended in 2009, the ability to seek relief

was made available not just to those acting “in furtherance of an action” under the FCA but also

to those who undertook “other efforts to stop 1 or more violations of this subchapter.” 31 U.S.C.

§ 3730(h)(1). The amended FCA and subsequent cases show that Dr. Fakorede states a claim

within the category of those protected by the FCA’s retaliation provision.

                                               -7-
Case No. 16-5722, Fakorede v. Mid-South Heart Center

       This claim arose in the context of Dr. Fakorede’s concern about expenses that were

attributed to his practice and thereby retained by his employer, Mid-South. In December 2014,

he began requesting financial information from the Hospital that was late and, upon its receipt,

raised issues with multiple executives and requested an audit. On January 30, 2015, he was told

that over $200,000 of expenses claimed by Mid-South were disallowed.               In response, Dr.

Fakorede made multiple requests in early February for information about the audit he had

requested, emphasizing that his contract contains express language on expenses permitted by

federal law. The Hospital told him on February 9 that a line-item audit was in progress. Mid-

South terminated Dr. Fakorede on February 10. He was right to be concerned—the audit Dr.

Fakorede requested ultimately found that Mid-South claimed over $314,000 in expenses related

to his medical practice that were improper.

       Dr. Fakorede had correctly warned that the improper expenses could constitute an “illegal

kickback scheme.” Healthcare providers who participate in Medicare and Medicaid—which

includes all major providers—certify that they are complying with the Stark Law and Anti-

Kickback     Statute   when     they   submit     claims   for    payment.        See   CMS-1500,

https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/Downloads/CMS1500.pdf (last visited

Sept. 18, 2017) (“In submitting this claim for payment from federal funds, I certify that: . . . this

claim . . . complies with all applicable Medicare and/or Medicaid laws, regulations and program

instructions for payment including but not limited to the Federal anti-kickback statute and

Physician Self-Referral law (commonly known as Stark law) . . . .”).            “Falsely certifying

compliance with the Stark or Anti-Kickback Acts in connection with a claim submitted to a

federally funded insurance program is actionable under the FCA.”             United States ex rel.

Kosenske v. Carlisle HMA, Inc., 554 F.3d 88, 94 (3d Cir. 2009) (internal citations omitted).

                                                -8-
Case No. 16-5722, Fakorede v. Mid-South Heart Center

       The majority opinion finds that Dr. Fakorede did not adequately plead that he reasonably

believed he was engaged in conduct to prevent fraud against the federal government. Maj. Op. 4.

However, Dr. Fakorede pled that on multiple occasions, he pointed out his concerns over “an

illegal kickback scheme.” He specifically mentioned a “violation of Stark Laws” in an email to

executives in the immediate aftermath of his termination. Even the recruiting agreement that

was the basis for the claimed expenses stated that Mid-South would include “only those expenses

which are legally permitted by federal laws governing recruiting agreements.”

       Dr. Fakorede’s statements and actions occurred within the context of the healthcare

industry, where sophisticated parties such as those involved here are well aware that claims

submitted to Medicare are paired with certifications of compliance with applicable laws. In the

complaint, Dr. Fakorede pointed out that Stark Law and Anti-Kickback Statute violations can

“taint” claims that are made for services covered by Medicare or Medicaid, federally funded

programs. Even if the factual basis for some of the steps could have been laid out in more detail,

an FCA retaliation claim does not require pleading with particularity. Graham Cty. Soil &

Water Conservation Dist. v. United States ex rel. Wilson, 545 U.S. 409, 416 & n.1 (2005). The

only question before us is whether Dr. Fakorede’s complaint states a claim.            Drawing on

“judicial experience and common sense” to undertake the “context-specific task” of Rule

12(b)(6), Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009), I believe that Dr. Fakorede adequately

pled a reasonable belief that fraud was being committed against the federal government and that

Mid-South retaliated against him for acting on that belief. I therefore respectfully dissent.

                                                -9-