Mendiondo v. Centinela Hosp. Medical Center

• Citation: 521 F.3d 1097
• Decision Date: 01 April 2008
• Docket Number: No. 06-55981.,06-55981.
• Parties: Marie Bernadette MENDIONDO, a/k/a Seal 3, Plaintiff-Appellant, v. CENTINELA HOSPITAL MEDICAL CENTER, a/k/a Seal A; Tenet Healthcare Corporation, aka Seal 3, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

521 F.3d 1097

Marie Bernadette MENDIONDO, a/k/a Seal 3, Plaintiff-Appellant, v. CENTINELA HOSPITAL MEDICAL CENTER, a/k/a Seal A; Tenet Healthcare Corporation, aka Seal 3, Defendants-Appellees.

No. 06-55981.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 15, 2008.

Filed April 1, 2008.

Gerald M. Serlin (briefed and argued), Douglas G. Benedon (briefed); Marcus A. Mancini (briefed), Sherman Oaks and Woodland Hills, CA, for the appellant.

Jennifer Blair (briefed); Susan S. Azad (briefed and argued), Los Angeles, CA, for the appellees.

Appeal from the United States District Court for the Central District of California; Terry J. Hatter, District Judge, Presiding. D.C. No. CV-03-05757-TJH.

Before: STEPHEN S. TROTT, RICHARD R. CLIFTON, and CONSUELO M. CALLAHAN, Circuit Judges.

CALLAHAN, Circuit Judge:

Marie Bernadette Mendiondo appeals from the district court's order dismissing her complaint. Mendiondo worked as a nurse at Centinela Hospital Medical Center ("CHMC") and alleged that, following her complaints regarding false billing and reimbursement practices and substandard patient care, she was wrongfully terminated in violation of the Federal False Claims Act ("FCA") (31 U.S.C. § 3730(h)), the California False Claims Act ("CFCA") (California Government Code § 12653(b)), California Health and Safety Code § 1278.5, and the public policies embodied by these laws.

This appeal requires that we decide whether a claim for wrongful termination under the FCA and CFCA, brought in federal court, must meet the notice pleading standard in Federal Rule of Civil Procedure 8(a) or the heightened pleading standard in Rule 9(b). We hold that the Rule 8(a) standard applies. Because Mendiondo's complaint, though inartfully drafted, meets the Rule 8(a) notice pleading standard with respect to all of her claims, we reverse and remand.

I. BACKGROUND

A. Factual History¹

Mendiondo began her nursing career in 1975 and specialized in critical care. In 2000, she accepted a nursing position in the cardiovascular department at GHMC. Mendiondo detected certain practices at CHMC that were intended to inflate Medicare reimbursements and alleges that she was investigating these practices. She alleges, for example, that one of the doctors at CHMC ordered and performed numerous unnecessary cardiac catheterizations, including repeat catheterizations on the same patients. Additionally, Mendiondo claims that the hospital insisted on implanting single ventricular pacemakers, even when patients needed biventricular pacemakers, because the single pacemakers resulted in higher Medicare reimbursements. Mendiondo asserts that CHMC also obtained reimbursement for more catheterization and radiologic procedures than were actually performed by having billing personnel manually change the billing records. Further, Mendiondo alleges the hospital manipulated the length of time it kept patients on observation status or as inpatients in order to maximize Medicare reimbursements, without regard to the medical necessities and in violation of Medicare reimbursement guidelines.

Mendiondo further alleges that from the time she started working there, CHMC pressured her to cut costs and reduce services. For example, she asserts that CHMC refused to use the safest drug for heart attacks because of cost reasons and used outdated cardiac equipment.

In 2001, Mendiondo informed the Chief Executive Officer ("CEO") of CHMC, Harry Koening, that her supervisors expected her to engage in actions that were below the standard of care, would put her nursing license in jeopardy, and could lead to civil and criminal violations. In November 2001, Mendiondo started reporting to a new supervisor, Ziporah Frankel, who demanded that Mendiondo cut costs or be fired. When Mendiondo objected that the cost-cutting measures would jeopardize patient care, Frankel instructed her to follow the measures regardless.

On August 19, 2002, CHMC terminated Mendiondo. CHMC explained that the termination was the result of Mendiondo's inadequate job performance. Mendiondo believes CHMC terminated her because she demanded that minimum state and federal standards of health care be maintained, and because of her investigation into facts relating to CHMC's submission of false claims and false records to the government.

B. Procedural History

On August 13, 2003, Mendiondo and two colleagues filed this action against CHMC, Tenet Healthcare Corporation ("Tenet"), and three other associated health care groups.² The complaint alleged causes of action for (1) violations of the FCA and CFCA; (2) retaliation in violation of the whistleblower provisions in the FCA and CFCA; (3) retaliation in violation of the California Health and Safety Code Section 1278.5; and (4) wrongful termination in violation of the public policies embodied in these laws.

Pursuant to 31 U.S.C. § 3730(b), which governs private actions under the FCA, plaintiffs filed the complaint under seal and served a copy on the federal government. The government declined to intervene, the court unsealed the complaint, and plaintiffs served CHMC and Tenet.

Plaintiffs stipulated to dismiss with prejudice the FCA and CFCA violation claims, leaving their retaliation and wrongful termination claims, CHMC then moved to dismiss the action under Federal Rules of Civil Procedure 8(e), 9(b), and/or 12(b)(6). In their opposition, plaintiffs argued that they had properly pleaded all of their remaining claims, and, in the alternative, requested leave to amend any pleading deficiencies. The district court granted the motion to dismiss without discussion and without indicating whether Mendiondo had leave to amend. Mendiondo filed a timely notice of appeal from the order. A judgment, however, was never entered.

II. STANDARD OF REVIEW

We review de novo a dismissal for failure to state a claim pursuant to Rule 12(b)(6) and for failure to allege fraud with particularity pursuant to Rule 9(b). United States ex rel. Lee v. SmithKline Beecham, Inc., 245 F.3d 1048, 1051 (9th Cir. 2001).

III. JURISDICTION

We have jurisdiction over appeals from "all final decisions" of the district court. 28 U.S.C. § 1291. The district court granted defendants' motion to dismiss, disposing of all the claims in plaintiffs' complaint, and did not address plaintiffs' request for leave to amend. The court, however, did not enter final judgment. An order dismissing all of the claims in a complaint, but not the action itself, is not a final, appealable order. Knevelbaard Dairies v. Kraft Foods, Inc., 232 F.3d 979, 983 (9th Cir.2000). "However, if it appears that the district court intended the dismissal to dispose of the action, it may be considered final and appealable." Id. (internal citations and quotation marks omitted). We must decide whether the court intended its order to be final.

By not addressing plaintiffs' request for leave to amend, the district court's order "necessarily entailed a denial of the [request] and a determination ... that the pleading could not possibly be cured by the allegation of other facts." id. (internal citation and quotation marks omitted). Accordingly, we infer that the district court intended to make the dismissal final for purposes of § 1291. Id.

The district court entered the order of dismissal on June 28, 2006, and Mendiondo filed a notice of appeal on July 13, 2006, within the 30-day period for filing as prescribed by Federal Rule of Appellate Procedure 4(a)(1)(A). Accordingly, Mendiondo filed a timely notice of appeal.

Thus, we conclude that this Court has jurisdiction over the appeal.

IV. DISCUSSION

A. Rule 8(a) Notice Pleading Applies to FCA Retaliation Claims³

The parties dispute whether a FCA retaliation claim must meet the notice pleading standard in Rule 8(a) or the heightened pleading standard in Rule 9(b). Rule 8(a) requires that a pleading contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). Rule 8(a) applies to all civil claims except those containing averments of "fraud or mistake," which must be pleaded with particularity under Rule 9(b). Fed.R.Civ.P. 8, 9. The Supreme Court has narrowly construed Rule 9(b) to apply only to the types of actions enumerated in the rule — those alleging fraud or mistake — and has not extended the heightened pleading standard to other legal theories. See Swierkiewicz v. Sorema N.A, 534 U.S. 506, 513, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002) (declining to apply Rule 9(b) to claims for violations of 42 U.S.C. § 1983 or employment discrimination claims).

Because the FCA is an antifraud statute and requires fraud allegations, complaints alleging a FCA violation must fulfill the requirements of Rule 9(b). Bly-Magee v. California, 236 F.3d 1014, 1018 (9th Cir.2001). In this case, however, we are presented only with Mendiondo's FCA retaliation claim, not a FCA violation claim. In the only federal appellate decision addressing the pleading standard for a FCA retaliation claim, the First Circuit concluded that, unlike a FCA violation claim, a FCA retaliation claim "does not require a showing of fraud and therefore need not meet the heightened pleading requirements of Rule 9(b)." United States ex rel. Karvelas v. Melrose-Wakefield Hosp., 360 F.3d 220, 238 n. 23 (1st Cir. 2004). We agree.

The elements differ for a FCA violation claim and a FCA retaliation claim. To state a claim for a FCA violation, a plaintiff must allege that the defendant actually violated the FCA by knowingly submitting a false claim or providing faulty goods to the government. See 31 U.S.C. § 3729(a) (describing acts that constitute violations of the FCA). In contrast, to state a FCA retaliation claim, a plaintiff must show that he or she suspected that the defendant submitted a false claim — not that the defendant actually submitted one. See Graham County Soil & Water Conservation Dist. v. United States ex rel Wilson, 545 U.S. 409, 416-17, ...