Craig v. Not for Profit Hosp. Corp.
| Decision Date | 09 September 2022 |
| Docket Number | Civil Action 18-347 (FYP) |
| Parties | JULIAN CRAIG, Plaintiff, v. NOT FOR PROFIT HOSPITAL CORPORATION, et al., Defendants. |
| Court | U.S. District Court — District of Columbia |
In 2015, Dr. Julian Craig became the Chief Medical Officer of the Not-for-Profit Hospital Corporation (“the Hospital”), a District of Columbia government hospital that is commonly known as the United Medical Center. The year after he assumed his role, the Hospital hired a management company, Veritas of Washington, LLC (“Veritas”) to run its operations. With Veritas at the helm, Craig's hours were slashed by a third, and his compensation was likewise reduced. Craig developed concerns that the Hospital was trying to improve its financial situation by pressuring its employees to improperly increase patient admissions so that it could submit claims for reimbursement from Medicare and Medicaid. Craig filed an official complaint with the Hospital. He also reported Veritas's mismanagement and malfeasance to the D.C. Council, which led to his public testimony about the Hospital's problems. Two weeks after his testimony, the Hospital terminated his employment.
Craig sued the Hospital, Veritas, and officers of Veritas, bringing claims of retaliation under the federal False Claims Act and its D.C. equivalent, see 31 U.S.C. § 3730(h), D.C. Code § 2-381.04; whistleblower discrimination under the D.C. Whistleblower Protection Act, see D.C. Code § 2-223.02; wrongful discharge; breach of contract; violation of the D.C Wage Payment and Collection Law, see D.C. Code § 32-1302; tortious interference with his employment contract; and defamation. He seeks a declaratory judgment, as well as compensatory, liquidated, and punitive damages. Now before the Court are motions to dismiss filed by (1) the Hospital, (2) Veritas and two of its officers, and (3) Luis Hernandez, Veritas's Chief Restructuring Officer. The defendants collectively challenge each cause of action in the Complaint, except for the defamation claim. For the following reasons, the Court will dismiss Craig's wrongful discharge claim, Count IV. The Court will otherwise deny the Motions.
Craig is a physician working in Washington, D.C. See ECF No. 3 (Amended Complaint), ¶ 2. On June 3, 2015, he accepted the position of Chief Medical Officer (“CMO”) at the Hospital. See id., ¶ 17. That same day, Craig signed an offer letter, which specified that he would work 32 hours per week, would earn an annual salary of $320,000, and would receive benefits. See id. Later, Craig entered a written employment contract with the Hospital. See id., ¶ 18. In addition to reiterating the hours and salary promised in the offer letter, the contract stated that it would last for one year, with the option of being renewed year by year, for up to five years. See id. Further, the contract provided that it could be modified “only by a written instrument signed by both Parties.” See id. The contract was executed by Craig and the Hospital, and it was ratified by the Hospital's Board of Directors. See id.
On April 15, 2016, almost a year into Craig's tenure Veritas “assumed control” of the Hospital's operations. See id., ¶¶ 2, 21-22. The Hospital's Board engaged Veritas because the D.C. Department of Health Care determined “that a management company needed to assume control of [Hospital] operations after significant financial losses in 2015.” See id., ¶ 21. Luis Hernandez was the Veritas employee who served as the Hospital's Chief Restructuring Officer, “overs[eeing] the operations of all of the departments,” as well as supervising its then-CEO Andrew Davis. See id., ¶ 22. Chrystie Boucree, the President of Veritas, and Corbett Price, the Executive Chairman, were the “final decision-makers for all important matters” related to the Hospital's operations. See id., ¶ 23; see also id., ¶¶ 13-14, 22, 24.
Shortly after taking control, Veritas decided that the Hospital did not need a full-time CMO. See id., ¶ 25. Then-CEO Davis therefore informed Craig that his hours would be reduced to 20 per week and his annual salary reduced to $100,000. See id. Boucree and Price allegedly “made the decision to reduce Dr. Craig's pay.” See id., ¶ 26. On April 29, 2016, Davis sent a letter with the new terms to Craig. See id., ¶ 27. Craig did not agree in writing to modify his employment contract. See id., ¶ 28. He continued to work the minimum of 32 hours required by his original contract while the Hospital “paid him less than his contract required.” See id.
On July 22, 2016, Craig and the Hospital's Chief Operating Officer, Charletta Washington, signed an agreement to renew his employment contract under terms that maintained Craig's 32-hour work week and $320,000 annual salary. See id., ¶ 33. In July or August of 2016, however, Washington told Craig that Hernandez, now CEO, would not restore Craig's compensation, even though Hernandez knew that Craig was continuing to work 32 hours per week. See id., ¶¶ 31, 35.
Beginning in the fall of 2016 and continuing through 2017, Craig developed concerns that “the Hospital was engaged in some practices that compromised patient care and safety, and other practices that he reasonably believed violated federal and District of Columbia law.” See id., ¶ 41.
Specifically, Craig learned that Hernandez and Veritas were directing Hospital employees to bolster the Hospital's financials by increasing patient admissions. See id. Craig “saw a number of examples of patients admitted to [the Hospital] for issues that did not meet admissions criteria, or for whom there lacked appropriate documentation to support an admission decision.” See id. Further, on February 23, 2017, the Hospital's Chief Financial Officer met with Craig and the Hospital's Directors of Quality and Medical Records and shared a 2016 letter from KEPRO, a Medicare beneficiary. See id., ¶ 43. The letter detailed KEPRO's findings that none of the charts it reviewed for patients with short stays at the Hospital met admission criteria, indicating that the Hospital should not have billed Medicare for those patients' stays. See id. Around the same time, Craig learned that the Chief Financial Officer had conducted an internal audit of patient admission records and determined that the Hospital would likely have to return $5 million to Medicare and Medicaid for improperly billed patient stays. See id., ¶ 49.
On February 24, 2017, Craig submitted an official complaint to the Hospital's Director of Human Resources, Eric Johnson. See id., ¶ 45. The complaint explained that Hernandez's actions to increase patient admissions put the Hospital “at serious federal regulatory and financial risk.” See id. The complaint further stated that Veritas's actions had put the Hospital's staff's careers and medical licenses in jeopardy. See id.
Within two days, Craig met with Johnson and the Hospital's attorneys to discuss his complaint. See id., ¶ 46. Craig “reported that he had learned from physicians that Mr. Hernandez had pressured [Hospital] employees to increase hospital admissions, without regard to medical necessity and proper documentation, to improve [the Hospital]'s finances,” reiterating that “he and other physicians could lose their licenses by participating in this illegal behavior.” See id. Craig also voiced his concern that Hernandez and Veritas “had deliberately undermined his role as CMO by excluding him from meetings with fellow doctors and reducing his pay ....” See id. Johnson and others acknowledged that these were “serious” concerns and promised to investigate. See id., ¶ 47. Craig believes that Hernandez and other Veritas officials soon learned of his official complaint and “became even more determined to remove him as CMO.” See id., ¶ 48.
On April 21, 2017, an attorney for the Hospital presented Craig with modifications “to his original contract that would have resolved [his] concerns about the Hospital's unilateral reduction in his pay.” See id., ¶ 53. Specifically, those modifications would have made the terms of Craig's original employment contract retroactively effective from June 1, 2016, to May 31, 2017, and they also would have extended those terms to May 31, 2018. See id. Craig signed the agreement, but the contract modifications required the approval of the Hospital's Board to become effective. See id.
On April 29, 2017, the Board met and discussed Craig's complaint against Veritas and his employment at the Hospital. See id., ¶ 55. Hernandez told the Board that an official complaint had been made against Veritas, and that the concerns raised were being investigated. See id., ¶ 55. The referenced complaint was the one that Craig made to Johnson in February 2017, and Craig believes that some members of the Board knew that Craig was the one who had filed it. See id. When the Board later discussed Craig's employment, Hernandez, at the direction of Boucree and Price, “urged the Board not only to reject the contract modifications but to remove Dr. Craig as CMO altogether.” See id., ¶ 55-56. Craig alleges that the Board did not approve the modifications to his employment contract because of Hernandez's statements at the Board meeting. See id., ¶ 55.
Meanwhile public scrutiny of the Hospital began to mount. The Washington Post published an article on the Hospital's Medicare billing errors and its potentially dire financial straits in May 2017, and the D.C. Department of Health provisionally closed the Hospital's obstetrics program in August 2017. See id., ¶¶ 61, 65. The D.C. Council's Committee on Health then held a hearing on the program's closure, which spurred the Council to investigate Veritas's stewardship of the Hospital. See id., ¶¶ 67, 71. On November 3,...
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