Elkharwily v. Mayo Holding Co.

• Decision Date: 02 July 2013
• Docket Number: Civil No. 12–3062(DSD/JJK).
• Citation: 955 F.Supp.2d 988
• Parties: Alaa E. ELKHARWILY, M.D., Plaintiff, v. MAYO HOLDING COMPANY, a corporation, d/b/a Mayo Health System, d/b/a Mayo Clinic Health System, d/b/a Albert Lea Medical Center–Mayo Health System, Mayo Clinic Health System–Albert Lea, a corporation, Mayo Foundation, Mark Ciota, M.D., John Grzybowski, M.D., Dieter Heinz, M.D., Robert E. Nesse, M.D., Steve Underdahl, and Stephen Waldhoff, Defendants.
• Court: U.S. District Court — District of Minnesota

955 F.Supp.2d 988

Alaa E. ELKHARWILY, M.D., Plaintiff,

v.MAYO HOLDING COMPANY, a corporation, d/b/a Mayo Health System, d/b/a Mayo Clinic Health System, d/b/a Albert Lea Medical Center–Mayo Health System, Mayo Clinic Health System–Albert Lea, a corporation, Mayo Foundation, Mark Ciota, M.D., John Grzybowski, M.D., Dieter Heinz, M.D., Robert E. Nesse, M.D., Steve Underdahl, and Stephen Waldhoff, Defendants.

Civil No. 12–3062(DSD/JJK).

United States District Court,

D. Minnesota.

July 2, 2013.

Richard T. Wylie, Esq., Minneapolis, MN, for plaintiff.

David T. Schultz, Esq., Charles G. Frohman, Esq. and Maslon, Edelman, Borman & Brand, LLP, Minneapolis, MN, for defendants.

ORDER

DAVID S. DOTY, District Judge.

This matter is before the court upon the motion to amend by plaintiff and the motion to dismiss by defendants.¹ Based on a review of the file, record and proceedings herein, and for the following reasons, both motions are granted in part.

BACKGROUND

This employment dispute arises out of the termination of plaintiff Alaa E. Elkharwily by defendant Mayo Clinic Health System–Albert Lea (MCHSAL). Elkharwily held a hospitalist position at MCHSAL from September 7, 2010, through December 10, 2010. Second Am. Compl. ¶ 7. Elkharwily's employment was governed by an employment contract that contemplated sixty days' notice for termination without cause or sixty days' pay in lieu of notice. Id. ¶ 10.

While employed by MCHSAL, Elkharwily alleges that he observed instances of compromised patient safety and fraudulent billing. Id. ¶ 11. Elkharwily reported these violations to MCHSAL human resources personnel, the Utilization Department and various supervisors. Id. ¶ 15. Specifically, Elkharwily reported, among other things, negligence and unnecessary emergency room admissions, patient misdiagnosis resulting in substandard care and fraudulent billing, unnecessary admittance of a terminally-ill patient for “comfort care,” improper coding of wound care, inaccurate billing, alterations in the cause of admission and the failure to follow hand-off procedures. Id. ¶¶ 11, 12, 15.

On December 7, 2010, two emergency room patients were in “near death conditions,” and Elkharwily requested that defendant John Grzybowski, the “on call” physician and Medical Director of MCHSAL, report to the hospital. Id. ¶ 11(U). Grzybowski did not respond to Elkharwily's call and failed to report to the hospital until the following day. Id. ¶ 11(U)-(W). On December 8, 2010, Elkharwily reported Grzybowski's failure to respond to defendant Steve Underdahl, an MCHSAL administrator. Id. ¶ 11(U).

When Grzybowski arrived at the hospital, he attempted to transfer one of Elkharwily's patients to the Mayo Clinic in Rochester, Minnesota. Id. ¶ 11(W). Elkharwily alleges that he resisted the transfer, as the patient was experiencing respiratory failure and first needed to be stabilized. Id. In his January 3, 2011, report to the Minnesota Board of Medical Practice, however, Elkharwily stated that he “refused the transfer because [he] was taking care of the patient already and she was already stabilized and feeling better.” Civello Decl. Ex. 4, at B–2.²

Later that day, Underdahl informed Elkharwily that he was being placed on administrative leave. Second Am. Compl. ¶¶ 18–20. On December 10, 2010, Grzybowski and Underdahl requested that Elkharwily resign. Id. ¶ 24. Elkharwily refused and was terminated, effective immediately. Id. ¶ 26. Following the termination, Elkharwily reported his observations regarding compromised patient safety and violations of federal and state law to numerous Mayo Clinic officials and the Minnesota Board of Medicine. Id. ¶ 39. Elkharwily also filed an administrative appeal. On July 8, 2011, MCHSAL confirmed the termination decision. Id. ¶ 46.

On December 6, 2012, Elkharwily filed suit, alleging violations of the False Claims Act (FCA), Emergency Medical Treatment and Active Labor Act (EMTALA), Minnesota Whistleblower Act (MWA), Minnesota Vulnerable Adults Act (MVAA), breach of contract, intentional infliction of emotional distress (IIED) and defamation. On December 20, 2012, defendants filed a motion to dismiss. Thereafter, on February 1, 2013, Elkharwily filed a motion to amend the complaint. The court held oral argument on February 22, 2013, where it granted the motion to amend and took the motion to dismiss under advisement. See ECF Nos. 29–30. Thereafter, on March 27, 2013, Elkharwily filed a second motion to amend.

DISCUSSION

I. Leave to Amend

The court shall provide leave to amend “when justice so requires.” Fed.R.Civ.P. 15(a)(2). Leave to amend, however, is not an absolute right and “undue delay, bad faith, or dilatory motive, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the non-moving party, or futility of the amendment may be grounds to deny a motion to amend.” Doe v. Cassel, 403 F.3d 986, 991 (8th Cir.2005) (citation and internal quotation marks omitted).

Elkharwily first seeks leave to amend in order to correct several internal cross-references in the first amended complaint. Defendants do not object, and the motion to file a second amended complaint is granted.

Elkharwily next seeks “leave to further amend as to any claim on which the Court might find that [the] pleadings fall short.” Pl.'s Mem. Supp. Am. 2. In other words, Elkharwily asks for conditional permission to file a third motion to amend. Setting aside ripeness concerns, it is not the role of the court to draft Elkharwily's complaint by telling him what facts are sufficient to survive a motion to dismiss. Moreover, such a request does not comply with District of Minnesota Local Rules regarding amendment. SeeD. Minn. LR 15.1 (requiring a “copy of the proposed amended pleading”); see also In re 2007 Novastar Fin. Inc., Sec. Litig., 579 F.3d 878, 884–85 (8th Cir.2009) ( “[I]n order to preserve the right to amend the complaint, a party must submit the proposed amendment along with its motion.” (alteration in original) (citation and internal quotation marks omitted)). Therefore, to the extent that Elkharwily seeks conditional permission to file a third amended complaint, the motion is denied.

II. Motion to Dismiss

To survive a motion to dismiss for failure to state a claim, “ ‘a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.’ ” Braden v. Wal–Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir.2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)). “A claim has facial plausibility when the plaintiff [has pleaded] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Although a complaint need not contain detailed factual allegations, it must raise a right to relief above the speculative level. See Twombly, 550 U.S. at 555, 127 S.Ct. 1955. “[L]abels and conclusions or a formulaic recitation of the elements of a cause of action” are not sufficient to state a claim. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (citation and internal quotation marks omitted).

A. False Claims Act

Elkharwily first alleges retaliatory discharge in violation of the FCA. The FCA protects a whistleblower who is “discharged... because of lawful acts done ... in furtherance of [a civil action for false claims].” 31 U.S.C. § 3730(h). An FCA-retaliation claim has four elements: “(1) the plaintiff was engaged in conduct protected by the FCA; (2) the plaintiff's employer knew that the plaintiff engaged in the protected activity; (3) the employer retaliated against the plaintiff; and (4) the retaliation was motivated solely by the plaintiff's protected activity.” Schuhardt v. Wash. Univ., 390 F.3d 563, 566 (8th Cir.2004) (citation omitted). An FCA-retaliation claim does not require a showing of fraud and, as a result, need not be pleaded with specificity under Rule 9(b). See Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1103 (9th Cir.2008); U.S. ex rel. Karvelas v. MelroseWakefield Hosp., 360 F.3d 220, 238 n. 23 (1st Cir.2004), abrogation on other grounds recognized by U.S. ex rel. Gagne v. City of Worcester, 565 F.3d 40 (1st Cir.2009).

MCHSAL argues that Elkharwily has alleged neither protected conduct nor that the retaliation was motivated solely by the protected activity. The court addresses each argument.

1. Protected Activity

To establish protected activity, Elkharwily must show that (1) his conduct was in furtherance of an FCA action and (2) the conduct was aimed at matters that are calculated, or reasonably could lead, to a viable FCA action. Schuhardt, 390 F.3d at 567. At the time of the retaliatory action, the whistleblower need not “have filed an FCA lawsuit or ... have developed a winning claim,” but he must have done more than merely report wrongdoing to supervisors. Id. (citations omitted). Indeed, in examining whether the whistleblower has acted “in furtherance” of an FCA claim, the court examines whether the whistleblower undertook activity outside of his “job duties.” Id.

Here, Elkharwily alleges conduct in violation of Medicare and Medicaid, including unnecessary emergency room and hospital admissions, improper wound-care coding and the overbilling of patient contact time. See Second Am. Compl. ¶¶ 11–12. Such violations create viable causes of action under the FCA. See U.S. ex rel. Quirk v. Madonna Towers, Inc., 278 F.3d 765, 768 (8th Cir.2002) (noting that fraudulent Medicare billing can establish claim under FCA). Moreover, Elkharwily alleges that he reported these violations to numerous MCHSAL supervisors and “took notes of his observations, including case details” for numerous patients treated by other physicians. Id. ¶ 13; see id. ¶¶ 11(N), 15. Accepting these allegation as true, Elkharwily has alleged facts...