Foluso Fakorede v. Mid-South Heart Center, P.C. , 709 F. App'x 787 ( 2017 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 17a0538n.06
Case No. 16-5722
FILED
Sep 22, 2017
UNITED STATES COURT OF APPEALS
DEBORAH S. HUNT, Clerk
FOR THE SIXTH CIRCUIT
FALUSO FAKOREDE, )
)
Plaintiff-Appellant, )
) ON APPEAL FROM THE
v. ) UNITED STATES DISTRICT
) COURT FOR THE WESTERN
MID-SOUTH HEART CENTER, P.C., ) DISTRICT OF TENNESSEE
)
Defendant-Appellee. )
OPINION
BEFORE: McKEAGUE, KETHLEDGE, STRANCH, Circuit Judges.
McKEAGUE, Circuit Judge. Faluso Fakorede brings this claim alleging unlawful
retaliation in violation of the False Claims Act (FCA) following his termination from Mid-South
Heart Center in February of 2015. The district court found Fakorede failed to allege that he had
engaged in protected activity prior to his termination and thus granted Mid-South’s Rule 12(b)(6)
motion to dismiss. We agree and affirm.
I
Fakorede was a physician who worked as a cardiologist in Jackson, Tennessee from 2013
to 2015. He was recruited to work in the Jackson area by the Jackson-Madison County General
Hospital District—a Tennessee governmental entity—in order to fill a need for cardiologists in
the area.
Case No. 16-5722, Fakorede v. Mid-South Heart Center
As a result, Fakorede became an employee of Mid-South, a private corporation in
Jackson. Under a separate recruiting agreement, the Hospital District agreed to establish a
support account that ensured Fakorede was paid $500,000, no matter his total patient collections.
Essentially, the Hospital District permitted Fakorede to use the support account to draw the
difference between his net collections (total collections value minus any expenses attributed to
him) and $500,000. Instead, in accordance with its separate employment agreement, Mid-South
simply paid Fakorede $500,000, accounted for his collections, and then directed him to draw on
the support account based on those calculations. Fakorede then assigned the draw to Mid-South.
Additionally, Mid-South and Fakorede agreed that, if Fakorede did not stay for the full three-
year term outlined in the recruiting agreement, he would owe any draw amount back to the
Hospital District. However, Mid-South agreed to indemnify Fakorede if the Hospital District
determined “based on an accounting” that draws from the support fund had been improperly
calculated.
Approximately ten months into his first year, Fakorede asked for documentation related
to Mid-South’s calculations of the draw totals. Then, approximately fourteen months after
starting work at Mid-South—some four months after he first raised concerns about how expenses
had been calculated—Fakorede was terminated. It later came to light that Mid-South had
improperly attributed over $200,000 in expenses to Fakorede during his first year. He now
brings this retaliation claim under the FCA, 31 U.S.C. § 3730(h), based on his termination. The
district court granted Mid-South’s Rule 12(b)(6) motion to dismiss for failure to state a claim and
dismissed the complaint.
-2-
Case No. 16-5722, Fakorede v. Mid-South Heart Center
II
The district court’s grant of a motion to dismiss pursuant to Rule 12(b)(6) is reviewed de
novo. Goad v. Mitchell, 297 F.3d 497, 500 (6th Cir. 2002). We may affirm a decision of the
district court if correct for any reason, including one not considered below. U.S. Postal Serv. v.
Nat’l Ass’n of Letter Carriers, AFL-CIO, 330 F.3d 747, 750 (6th Cir. 2003).
Rule 12(b)(6) permits a court to dismiss a complaint for “failure to state a claim upon
which relief can be granted.” Fed. R. Civ. P. 12(b)(6). We construe the complaint in the light
most favorable to the plaintiff and accept all well-pleaded factual allegations as true. Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). To survive a Rule 12(b)(6) motion, the complaint must contain
“either direct or inferential allegations respecting all material elements necessary for recovery
under a viable legal theory.” D’Ambrosio v. Marino, 747 F.3d 378, 383 (6th Cir. 2014) (citation
omitted).
This case arises under the FCA’s anti-retaliation provision, 31 U.S.C. § 3730(h). The
provision provides relief for an employee who was:
. . . discharged, demoted, suspended, threatened, harassed, or in any other manner
discriminated against in the terms and conditions of employment because of
lawful acts done by the employee, contractor, agent or associated others in
furtherance of an action under this section or other efforts to stop 1 or more
violations of this subchapter.
31 U.S.C. § 3730(h). To succeed on a claim that § 3730(h) was violated, a plaintiff must show
that (1) she engaged in a protected activity, (2) the employer knew she engaged in the protected
activity, and (3) the employer discharged or otherwise discriminated against the employee as a
result of the protected activity. Yuhasz v. Brush Wellman, Inc., 341 F.3d 559, 566 (6th Cir.
2003); Jones-McNamara v. Holzer Health Sys., 630 F. App’x 394, 398 (6th Cir. 2015).
-3-
Case No. 16-5722, Fakorede v. Mid-South Heart Center
Dismissal of a retaliation claim is proper when a plaintiff fails to adequately plead any one of
these three elements. See Yuhasz, 341 F.3d at 566.
Our analysis begins and ends with the first element—whether Fakorede’s complaint
adequately alleges that he engaged in protected activity prior to his termination. Relevant
protected activity would be an “effort[] to stop 1 or more violations of [the FCA].” 31 U.S.C. §
3730(h). Such an effort must stem from a reasonable belief that fraud is being committed against
the federal government. Jones-McNamara, 630 F. App’x at 400. In other words, to plead
protected activity, Fakorede must allege conduct directed at stopping what he reasonably
believed to be fraud committed against the federal government. See Miller v. Abbott Labs.,
648 F. App’x 555, 560 (6th Cir. 2016) (quoting Jones-McNamara, 630 F. App’x at 399). In this,
Fakorede’s pleadings fall short.
Fakorede’s relevant pre-termination conduct was related to the calculation of costs
attributed to him by Mid-South for which it was effectively reimbursed by the Hospital District.
Fakorede requested information related to those expenses, including a year-end financial report
and underlying documents and data. After receiving the financial report, he “expressed
concerns” about some of the expenses attributed to him. Eventually, he requested an
independent review of the report and was told there would be a line-item audit. Although
Fakorede was “reassured by the line-item audit,” he nonetheless “reminded” the Hospital District
that “only expenses permitted by federal law for the [Hospital District] to cover” were properly
attributable to Fakorede under his recruiting agreement. He was terminated approximately one
week later. To tie his conduct to federal fraud, as is necessary for his claim to survive, Fakorede
asserts that, if Mid-South improperly calculated expenses to overdraw from the support account,
then any Medicare claims “tainted” by violations of the Stark Law and Anti-Kickback Statute
-4-
Case No. 16-5722, Fakorede v. Mid-South Heart Center
were submitted to Medicare in violation of the FCA. This legal conclusion itself is not
unfounded, as the connection between the Anti-Kickback Statute, the Stark Law, and the FCA is
statutory. See 42 U.S.C. § 1395nn(a)(1)(B); 42 U.S.C. § 1320a-7b(g). Nonetheless, one cannot
reasonably infer from Fakorede’s complaint that his efforts were directed toward preventing
what he reasonably believed was ongoing federal fraud.
In essence, Fakorede requested information related to expenses attributed to him by his
private employer, expressed concerns as to whether those expenses were correctly calculated and
reimbursed by a Tennessee entity, and reminded others that an audit should check for
compliance with federal law. This fails to allege conduct reasonably related to fraud against the
federal government. See McKenzie v. BellSouth Telecommunications, Inc., 219 F.3d 508, 516–
17 (6th Cir. 2000) (protected activity does not include “merely urging compliance with
regulations”) (citing U.S. ex rel. Yesudian v. Howard Univ., 153 F.3d 731, 744 (D.C. Cir. 1998);
see also Iqbal, 556 U.S. at 679 (we do not accept legal conclusions as true absent supporting
factual allegations). Accordingly, Fakorede has not pled that he engaged in protected activity.
However, Fakorede argues that his complaint should survive because it is reasonable to
infer that he was concerned about the violations of federal law because he knew that Mid-South,
like all major healthcare providers, submitted claims to Medicare for Fakorede’s services. But
this inference is not supported by any factual allegations in the complaint. At best, the
complaint—in its “governing law” section—shows that the FCA may be implicated by violations
of the Stark Law. While this may be true, there are no underlying allegations to support the
conclusion that Fakorede himself, at any time prior to his termination, understood the connection
between the FCA and other federal law, that his activity was motivated by this connection, or
that even a single Medicare claim was submitted by Mid-South during that time. We are not to
-5-
Case No. 16-5722, Fakorede v. Mid-South Heart Center
assume Fakorede’s conduct was directed at preventing possibly “tainted” claims from being
submitted to the federal government when nothing in the pleadings shows he understood, was
motivated by, or even aware of that possibility. See Iqbal, 556 U.S. at 679.
Still, it may be fair to infer that Fakorede’s alleged conduct arose out of a reasonable
belief that his employer was committing fraud against the Hospital District. Even so, it is
unreasonable to infer that Fakorede believed any fraud committed against the Hospital District—
a state entity—constituted fraud against the federal government. Indeed, the alleged fraud
committed against the Hospital District was precisely what Fakorede’s “concerns” seemed to
target: that Mid-South miscalculated expenses in order to induce the Hospital District to overpay.
However, the alleged fraud against the federal government—involving unspecified Medicare
claims “tainted” by violations of federal law—was indirect, complex, and nowhere facially
contemplated in Fakorede’s conduct as described in his complaint. Absent any supporting
factual allegations, it is unreasonable to infer that Fakorede’s conduct was directed toward
preventing federal fraud. Thus, Fakorede has failed to allege he was engaged in protected
activity under the FCA prior to his termination. He therefore has no retaliation claim under 31
U.S.C. § 3730(h).
III
For the foregoing reasons, we affirm the district court.
-6-
Case No. 16-5722, Fakorede v. Mid-South Heart Center
JANE B. STRANCH, Circuit Judge, dissenting. At issue in this case is whether Dr.
Fakorede stated a claim against his employer for retaliation in violation of the False Claims Act
(FCA). To make this determination, we accept as true the allegations of the complaint and
evaluate their viability under the provisions of the FCA in force at the time of the filing. Dr.
Fakorede filed his complaint after the FCA was amended in 2009 to expand the protections—and
therefore claims—available to qui tam relators. Because I believe that Dr. Fakorede’s complaint
states a claim under the amended FCA, I respectfully dissent.
The FCA is the key tool employed by the government to require that fraudulently claimed
funds be returned to the United States and its citizens. Many FCA cases rely on whistleblowers
within companies to find and report such fraud, collect evidence, and sometimes litigate the
claims. But whistleblowers face serious risks, as employers are unlikely to shrug off leaks of
incriminating information from within their own ranks. The FCA has long protected
whistleblowers by authorizing a cause of action for employees who have been retaliated against
for involvement with an FCA claim. Traditionally, civil relief for retaliatory actions could be
sought by those “in furtherance of an action under [the FCA].” 31 U.S.C. § 3730(h)(1). Because
judicial narrowing of the scope of the FCA led to a decline in such cases and a significant drop in
monies recovered, Congress sought to make the FCA more effective by expanding protection for
whistleblowers. S. Rep. 111-10, 4. Under the FCA as amended in 2009, the ability to seek relief
was made available not just to those acting “in furtherance of an action” under the FCA but also
to those who undertook “other efforts to stop 1 or more violations of this subchapter.” 31 U.S.C.
§ 3730(h)(1). The amended FCA and subsequent cases show that Dr. Fakorede states a claim
within the category of those protected by the FCA’s retaliation provision.
-7-
Case No. 16-5722, Fakorede v. Mid-South Heart Center
This claim arose in the context of Dr. Fakorede’s concern about expenses that were
attributed to his practice and thereby retained by his employer, Mid-South. In December 2014,
he began requesting financial information from the Hospital that was late and, upon its receipt,
raised issues with multiple executives and requested an audit. On January 30, 2015, he was told
that over $200,000 of expenses claimed by Mid-South were disallowed. In response, Dr.
Fakorede made multiple requests in early February for information about the audit he had
requested, emphasizing that his contract contains express language on expenses permitted by
federal law. The Hospital told him on February 9 that a line-item audit was in progress. Mid-
South terminated Dr. Fakorede on February 10. He was right to be concerned—the audit Dr.
Fakorede requested ultimately found that Mid-South claimed over $314,000 in expenses related
to his medical practice that were improper.
Dr. Fakorede had correctly warned that the improper expenses could constitute an “illegal
kickback scheme.” Healthcare providers who participate in Medicare and Medicaid—which
includes all major providers—certify that they are complying with the Stark Law and Anti-
Kickback Statute when they submit claims for payment. See CMS-1500,
https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/Downloads/CMS1500.pdf (last visited
Sept. 18, 2017) (“In submitting this claim for payment from federal funds, I certify that: . . . this
claim . . . complies with all applicable Medicare and/or Medicaid laws, regulations and program
instructions for payment including but not limited to the Federal anti-kickback statute and
Physician Self-Referral law (commonly known as Stark law) . . . .”). “Falsely certifying
compliance with the Stark or Anti-Kickback Acts in connection with a claim submitted to a
federally funded insurance program is actionable under the FCA.” United States ex rel.
Kosenske v. Carlisle HMA, Inc., 554 F.3d 88, 94 (3d Cir. 2009) (internal citations omitted).
-8-
Case No. 16-5722, Fakorede v. Mid-South Heart Center
The majority opinion finds that Dr. Fakorede did not adequately plead that he reasonably
believed he was engaged in conduct to prevent fraud against the federal government. Maj. Op. 4.
However, Dr. Fakorede pled that on multiple occasions, he pointed out his concerns over “an
illegal kickback scheme.” He specifically mentioned a “violation of Stark Laws” in an email to
executives in the immediate aftermath of his termination. Even the recruiting agreement that
was the basis for the claimed expenses stated that Mid-South would include “only those expenses
which are legally permitted by federal laws governing recruiting agreements.”
Dr. Fakorede’s statements and actions occurred within the context of the healthcare
industry, where sophisticated parties such as those involved here are well aware that claims
submitted to Medicare are paired with certifications of compliance with applicable laws. In the
complaint, Dr. Fakorede pointed out that Stark Law and Anti-Kickback Statute violations can
“taint” claims that are made for services covered by Medicare or Medicaid, federally funded
programs. Even if the factual basis for some of the steps could have been laid out in more detail,
an FCA retaliation claim does not require pleading with particularity. Graham Cty. Soil &
Water Conservation Dist. v. United States ex rel. Wilson, 545 U.S. 409, 416 & n.1 (2005). The
only question before us is whether Dr. Fakorede’s complaint states a claim. Drawing on
“judicial experience and common sense” to undertake the “context-specific task” of Rule
12(b)(6), Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009), I believe that Dr. Fakorede adequately
pled a reasonable belief that fraud was being committed against the federal government and that
Mid-South retaliated against him for acting on that belief. I therefore respectfully dissent.
-9-