Josey v. Impulse Dynamics (Usa) Inc.
| Decision Date | 05 March 2019 |
| Docket Number | No. CV-18-00589-PHX-DJH,CV-18-00589-PHX-DJH |
| Citation | 371 F.Supp.3d 603 |
| Parties | Lori JOSEY, Plaintiff, v. IMPULSE DYNAMICS (USA) INCORPORATED, et al., Defendants. |
| Court | U.S. District Court — District of Arizona |
Andrew Marc Adelman, Linda M. Correia, Correia & Puth PLC, Washington, DC, Bradley Hugh Schleier, Tod F. Schleier, Schleier Law Offices PC, Phoenix, AZ, for Plaintiff.
Alexander Thomas MacDonald, Maureen R. Knight, Constangy Brooks Smith & Prophete LLP, Fairfax, VA, Carolyn Sieve, Constangy Brooks Smith & Prophete LLP, Costa Mesa, CA, Gerard M. Clodomir, Constangy Brooks Smith & Prophete LLP, Winston-Salem, NC, Kylie Crawford TenBrook, Stephen Barry Coleman, Pierce Coleman PLLC, Scottsdale, AZ, for Defendants.
Plaintiff Lori Josey ("Plaintiff") brought this matter against Defendants Impulse Dynamics (USA), Inc. ("Impulse"), and Insperity PEO Services, L.P. ("Insperity") (collectively, "Defendants") raising a single claim of retaliation in violation of the federal False Claims Act ("FCA").1 Now before the Court is Defendants' Motion to Dismiss ("Mot.") (Doc. 9), to which Plaintiff has filed an Opposition ("Opp'n") (Doc. 11) and Defendants have filed a Reply (Doc. 12).2
This case concerns reports of alleged irregularities during clinical testing of the Optimizer, an investigational medical device used to treat chronic heart failure
. Impulse, the Optimizer's developer, remains in the final stages of the FDA approval process. Insperity is Impulse's human resources provider. (¶ 4.) Clinical testing of the Optimizer in the United States began in 2005, with the FIX-HF-5 study. (¶ 9.) When FIX-HF-5 failed to reach its primary efficacy endpoint, Impulse designed and sponsored a second study, FIX-HF-5C, to prospectively confirm its results. (¶¶ 9–12.) FIX-HF-5C's development included the submission of protocols to the FDA. (¶ 13.) The FDA approved, and Impulse affirmed that it would conduct the trial in accordance with those protocols. (Id. ) Among other things, the protocols prohibited Impulse employees from directly recruiting or administering testing to study participants. (¶ 14.) The protocols also included a metric, known as the Minnesota Living with Heart Failure Questionnaire ("MLHFQ"), used to measure the Optimizer's effect on quality of life. (¶¶ 15–16.)
On January 1, 2016, Plaintiff began working for Defendants as a Senior Field Clinical Engineer. (¶ 20.) One of Plaintiff's duties included the removal of barriers impeding site enrollments for FIX-HF-5C. (¶ 21.) This involved advocating for potential subject recruitment at clinical sites and helping to increase randomization of subjects for trial participation. (Id. ) Plaintiff trained site investigators and coordinators on the study protocols, provided case support for site surgeons and staff during implants, and followed up with subjects. (¶ 23.)
Plaintiff's retaliation claim concerns an incident at a clinical site in Mesa, Arizona. On August 9, Plaintiff witnessed another clinical engineer, Jason Kindler, verbally administer the MLHFQ to a subject and record the subject's responses. (¶ 26.) The protocols provided that a clinical site coordinator would administer the test, with the subject writing his or her answers on the questionnaire. (¶ 27.) Concerned that administration of the MLHFQ by an Impulse employee might skew test results, Plaintiff reported it to her supervisor, Anthony Caforio, who had also witnessed the incident. (¶¶ 28–29.) After Plaintiff said this "was not right," Kindler observed, "You do what you have to do to get patients randomized." (¶ 29.) Caforio did not respond. (Id. )
Plaintiff later learned that a site coordinator had also complained to Angela Stagg, Implulse's Clinical Manager, about Kindler. (¶ 30.) The site coordinator claimed that Kindler had pressured her to rush subjects through testing to get subjects randomized more quickly. (Id. )
Plaintiff believes she was subject to increased scrutiny and criticism for reasons unrelated to her job performance after she reported Kindler. (See ¶¶ 34–44.) On September 28, Caforio sent an email to Plaintiff placing her on a 30-day disciplinary notice period stating that failure to improve would lead to further disciplinary action or termination. (¶ 40.) The notice cited Plaintiff for insubordination related to expense reports, failure to split a $ 1,500 client dinner bill with Kindler, and unprofessional comments and behavior during that dinner. (¶ 40.) Copying members of upper management, Plaintiff responded with an email to Cafario disputing the underlying allegations. (¶ 42.)
Plaintiff then elevated her concerns to upper management at Impulse. On September 29, Plaintiff called Vice President of Human Resources Nitsan Mor. She reported that Caforio and Kindler had failed to follow applicable protocols at the Mesa site and that Caforio had since retaliated against her for reporting the issue. (¶ 45.) They also discussed the details of the 30-day warning. (Id. ) She raised the same issues in a discussion with Vice President of Clinical Operations Norbert Clemens on October 4. (See ¶ 46.) Clemens told Plaintiff they would discuss the issue further in person. (¶ 47.) On October 12, Plaintiff sent another email to Clemens, Mor, and Chief Executive Officer Simos Kedikoglou describing her concerns about Kindler and Caforio's protocol violations and reiterating her belief that Caforio was retaliating against her for reporting them. (¶¶ 48–49.) Plaintiff reported these concerns because she believed Impulse would submit unreliable data to the FDA for approval of the Optimizer. (¶ 50.) Clemens responded on October 19, stating that Impulse took her complaints seriously and would handle them with care. (¶ 51.)
Insperity Human Resources Specialist Erin Lau followed up with Plaintiff on November 9. In a phone call, Plaintiff and Lau discussed the conduct witnessed August 9, her immediate complaint to Caforio, her concerns about the impact of Kindler's conduct, and the alleged retaliation she experienced thereafter. (¶ 52.) The following day, Plaintiff met with Clemens and an outside auditor hired by Impulse to ensure all FDA-required paperwork was complete. (¶ 54.) During their conversation, Clemens suggested that Plaintiff's concerns were "made up." (Id. ) Clemens also concluded that the allegations underlying Caforio's 30-day warning were unfounded. (¶ 56.) Plaintiff is unaware of the extent of the auditor's investigation, though she questions its sufficiency. (See ¶¶ 57–60.)
Plaintiff was terminated on December 9. In a phone call, Caforio and Mor told Plaintiff she was being terminated in part for reporting false accusations about Caforio and Kindler. (¶ 63.) A termination letter dated December 12 and signed by Lau reiterated that a reason for termination included "[f]alse reporting of serious accusations" against Caforio and Kindler. (¶ 64.) On February 22, 2018, Plaintiff filed this matter alleging that Defendants violated the FCA's anti-retaliation provision. (See generally Compl.) Defendants now seek dismissal.
Defendants' motion focuses on a single issue—namely, whether Plaintiff's reports about protocol violations constitute protected activity under the FCA. Defendants think not. Defendants argue that (1) to the extent Plaintiff alleges Defendants' protocol violations run afoul of FDA regulations, Plaintiff's failure to specify a regulation is fatal to her claim; and (2) more fundamentally, Plaintiff has not shown that her complaints relate to conduct one might reasonably consider an FCA violation. The Court disagrees.
A motion to dismiss pursuant to Rule 12(b)(6) challenges the legal sufficiency of a complaint. Cook v. Brewer , 637 F.3d 1002, 1004 (9th Cir. 2011). Complaints must contain a "short and plain statement showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a). This requires "more than an unadorned, the-defendant-unlawfully-harmed me accusation." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). A complaint must plead "enough facts to state a claim to relief that is plausible on its face." Twombly , 550 U.S. at 570, 127 S.Ct. 1955. "Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (citing Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ) (internal quotation marks and citation omitted). "The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that defendant has acted unlawfully." Id. (citation omitted).
The Court must interpret facts alleged in the complaint in the light most favorable to the plaintiff, while also accepting all well-pleaded factual allegations as true. Shwarz v. United States , 234 F.3d 428, 435 (9th Cir. 2000). But that does not include legal conclusions. Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. A complaint that provides "labels and conclusions" or "a formulaic recitation of the elements of a cause of action will not do." Twombly , 550 U.S. at 555, 127 S.Ct. 1955. Nor will a complaint suffice if it presents nothing more than "naked assertions" without "further factual enhancement." Id. at 557, 127 S.Ct. 1955.
"Congress added 31 U.S.C. § 3730(h) to the FCA in 1986 to protect ‘whistleblowers,’ those who come forward with evidence their employer is defrauding the government, from retaliation by their employer." United States ex rel. Hopper v. Anton , 91 F.3d 1261, 1269 (9th Cir. 1996). The statute protects an employee who is "discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the...
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