United States v. William Beaumont Hospitals

          OPINION AND ORDER GRANTING DEFENDANT WILLIAM BEAUMONT HOSPITALS' MOTION TO PARTIALLY DISMISS RELATOR FELTEN'S FIRST AMENDMENT TO COMPLAINT [114]

          STEPHEN J. MURPHY, III UNITED STATES DISTRICT JUDGE

         On August 27, 2018, after the parties settled and stipulated to dismissing the majority of the case, Relator David Felten, M.D., Ph.D., filed an amended complaint and added more recent allegations to his retaliation claim. ECF 97.^[1] On October 26, 2018, Defendant William Beaumont Hospitals ("Beaumont") filed a motion to partially dismiss Felten's amended complaint. ECF 114. Beaumont argues that the majority of the allegations in Felten's amended complaint are either (1) untimely, or (2) beyond the scope of conduct that 31 U.S.C. § 3730(h) covers. Id. at 1770-71. Beaumont does not seek to dismiss Felten's claim for retaliation based on Beaumont allegedly halving Felten's budget while still expecting him to accomplish the same goals prior to Felten filing the complaint. See Id. at 1771. The Court reviewed the briefs and finds that a hearing is unnecessary. See E.D. Mich. LR 7.1(f). For the reasons below, the Court will grant the motion.

         BACKGROUND

         On August 30, 2010, Felten filed a qui tam complaint and alleged that Beaumont was violating the federal False Claims Act ("FCA") and the Michigan Medicaid False Claims Act ("MMFCA") and was retaliating against him in violation of both federal and Michigan law. See generally ECF 1. Felten alleged that Beaumont paid improper remuneration to various physicians and physicians' groups in exchange for referrals of Medicare, Medicaid, and TRICARE patients to Beaumont in violation of the Anti-Kickback Statute ("AKS")^[2] and Stark Laws. Id. He also alleged that Beaumont retaliated against him in violation of 31 U.S.C. § 3730(h) and Mich. Comp. Laws § 400.610c by "continuously and increasingly marginaliz[ing him] due to his insistence that the laws and regulations of the United States be complied with." Id. at 91, 95-96.

         The Government intervened, and the parties settled most of the case. The Court, on stipulation of the parties, dismissed all claims except the Relators' claims for attorneys' fees and costs and for retaliation. ECF 87, 88. Felten then amended his complaint to add allegations to his retaliation claim regarding conduct that occurred after he filed his initial complaint. ECF 97. Beaumont filed a motion to partially dismiss the amended complaint. ECF 114. Beaumont now seeks to dismiss all of Felten's claims except his claim for retaliation based on his marginalization before he filed the qui tam complaint, which is similar to the retaliation claim in his initial complaint. See Id. at 1771.

         STANDARD OF REVIEW

         When analyzing a motion to dismiss under Civil Rule 12(b)(6), the Court views the complaint in the light most favorable to the plaintiff, presumes the truth of all well-pleaded factual assertions, and draws every reasonable inference in favor of the non-moving party. Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008). To survive a motion to dismiss, "the complaint must contain either direct or inferential allegations respecting all the material elements to sustain a recovery under some viable legal theory." Nat'l Hockey League Players Ass'n v. Plymouth Whalers Hockey Club, 419 F.3d 462, 468 (6th Cir. 2005) (citation omitted). It must allege facts "sufficient 'to raise a right to relief above the speculative level,' and to 'state a claim to relief that is plausible on its face.'" Hensley Mfg. v. ProPride, Inc., 579 F.3d 603, 609 (6th Cir. 2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007)).

         The Court must analyze a Rule 12(c) motion for judgment on the pleadings with the same standard it would employ for a 12(b)(6) motion to dismiss. Tucker v. Middleburg-Legacy Place, LLC, 539 F.3d 545, 549 (6th Cir. 2008) (citation omitted). The Court accepts as true all well-pleaded material allegations and draws reasonable factual inferences in favor of the non-moving party, but "need not accept as true legal conclusions or unwarranted factual inferences." JPMorgan Chase Bank, N.A. v. Winget, 510 F.3d 577, 581-82 (6th Cir. 2007) (quoting Mixon v. Ohio, 193 F.3d 389, 400 (6th Cir. 1999)). The complaint must not only "give the defendant fair notice of what the claim is and the grounds upon which it rests," Nader v. Blackwell, 545 F.3d 459, 470 (6th Cir. 2008) (quoting Erickson v. Pardus, 551 U.S. 89, 93 (2007)), but also "'raise a right to relief above the speculative level,' and . . . 'state a claim to relief that is plausible on its face.'" Hensley, 579 F.3d at 609 (quoting Twombly, 550 U.S. at 555, 570). It is not enough to merely offer "'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action[.]'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555).

         DISCUSSION

         Beaumont seeks judgment on the pleadings as to several of Felten's retaliation allegations because the allegations are time-barred. ECF 114, PgID 1770-71. Beaumont also seeks to dismiss several of Felten's additional retaliation allegations for failure to state a claim under Rule 12(b)(6) because the allegations include conduct after the end of Felten's employment at Beaumont and the relevant retaliation statute covers only current employees. Id. at 1771. The Court will address each argument in turn.

         I. Relation Back

         First, Beaumont seeks judgment on the pleadings as to certain retaliation allegations in Felten's amended complaint because they are time-barred. The statute of limitations for a retaliation claim under 31 U.S.C. § 3730(h) and under Mich. Comp. Laws § 400.610c is three years. See 31 U.S.C. 3730(h)(3); United States ex rel. Yanity v. J&B Med. Supply Co., No. 08-11825, 2012 WL 4811288, at *5 (E.D. Mich. Oct. 10, 2012) (finding that when the state false claims act lacks a limitations period it is governed by the state's general tort statute of limitations, and concluding that in Michigan the applicable limitations period is three years).^[3] Felten filed his amended complaint on August 27, 2018. ECF 97. Any allegations that predate August 27, 2015 are therefore time-barred unless they relate back to Felten's initial 2010 complaint.

         "An amendment to a pleading relates back to the date of the original pleading when . . . the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out-or attempted to be set out-in the original pleading." Fed.R.Civ.P. 15(c)(1)(B). The Sixth Circuit analyzes questions of relation back "not by generic or ideal notions of what constitutes a 'conduct, transaction, or occurrence,' but instead by asking whether the party asserting the statute of limitations defense had been placed on notice that he could be called to answer for the allegations in the amended pleading." United States ex rel. Bledsoe v. Cmty. Health Sys., Inc., 501 F.3d 493, 516 (6th Cir. 2007). And here, there are several reasons why Felten's original complaint did not adequately put Beaumont on notice about the new retaliation allegations he added in his amended complaint.

         First, the original complaint was sealed, so it is unclear whether that provided Beaumont sufficient notice of any of Felten's claims for purposes of relation back. See, e.g., Hayes v. Dept. of Educ. of New York City, 20 F.Supp.3d 438, 449-51 (S.D.N.Y. 2014). Second, the new retaliation allegations in Felten's amended complaint are based on actions taken after the original complaint was filed. See Kellett v. Memphis Light, Gas & Water, No. 2:11-cv-3045-JTF-tmp, 2013 WL 6418997, at *4 (W.D. Tenn. Dec. 9, 2013) (adopting report and recommendation of the magistrate judge holding that relation back does not apply to a new retaliation claim when the ...