Fakorede v. Mid-South Heart Ctr., P.C. — Apr. 2016 (Summary)

FALSE CLAIMS ACT

Fakorede v. Mid-South Heart Ctr., P.C.
No. 15-1285 (W.D. Tenn. Apr. 26, 2016)

The United States District Court for the Western District of Tennessee granted a clinic’s motion to dismiss claims made by a physician that it violated the federal False Claims Act (“FCA”).  The physician had been recruited out of cardiology training and had entered into a recruiting assistance agreement and an employment agreement to practice cardiology at a hospital.  A dispute arose about how the hospital was handling an account that had been established pursuant to the agreement which would supplement the cardiologist’s net collections as he worked to establish his practice over the course of the three-year term of the agreement. In order to calculate the hospital’s obligations under the supplemental account, the clinic had to submit certain financial statements to the hospital.  Despite the fact that the cardiologist’s gross collections appeared to exceed the amount necessary to trigger a payment out of the supplemental account, the clinic directed the cardiologist to take draws from the account and to assign those monies to the clinic.

Following several requests, the cardiologist reviewed partial financial information in which he disputed the depreciation costs that would offset his collections that were calculated by the clinic.  After that review, the cardiologist requested a complete audit of the clinic’s financial practices. After several weeks of back and forth regarding the financial information, the physician was terminated by the clinic, which he claimed was in retaliation for his efforts to prevent violations of the FCA.

The court disagreed, finding that the requested audit was not a protected activity because none of the physician’s initial reports to those in authority at the hospital or the clinic alleged fraud. According to the court, the cardiologist’s allegations revealed nothing more than an attempt to minimize his personal financial liability under the recruitment assistance and employment agreements, not an effort to stop an FCA violation.