Scates v. Shenandoah Mem’l Hosp. — Oct. 2015 (Summary)

FALSE CLAIMS ACT

Scates v. Shenandoah Mem’l Hosp.
No. 5:15-cv-00032 (W.D. Va. Oct. 19, 2015)

An ultrasound technician at a hospital filed a complaint against her former employer for terminating her employment in retaliation for her complaints about allegedly false billing practices for ultrasound exams. The ultrasound technician reported to her supervisor that there was an inconsistency between the hospital’s ultrasound practices and the number of ultrasound photos required by the Current Procedural Terminology (“CPT”) codes. The technician complainant also reported concerns about a fellow employee to the hospital and the hospital told her that it would take no action against the employee because it would seem retaliatory. The hospital’s reasoning was related to prior complaints that the accused employee had made against the complainant technician in the past.

In responding to the hospital’s motion to dismiss, the court held that to proceed with the claims, the complainant had to allege sufficient facts to raise a plausible inference that there was an objectively reasonable possibility that the conversations between her and her employer were in furtherance of a False Claims Act (“FCA”) suit or an effort to stop an FCA violation. The court noted that the complainant “only highlighted ‘inconsistencies’ in billing practices, and never asked the hospital to change its ultrasound policies, objected to these policies, nor mentioned her belief that the hospital’s billing policies might be illegal.”

As such, the court held that the complainant failed to show how the conversations with her employer would have induced fear in the employer of an FCA claim. The court also held that the complainant did not meet any of the three exceptions for wrongful termination claims in the Commonwealth of Virginia, given that she failed to cite any statute that would support her claim, failed to show how her termination was in violation of public policy according to statute, and failed to show how her behavior was a refusal to engage in criminal conduct. Thus, the court dismissed the complainant’s wrongful termination claim with prejudice, but did allow her leave to amend on her FCA retaliation complaint against the hospital.