Arthurs v. Global TPA LLC
208 F. Supp. 3d 1260
M.D. Fla.2015Background
- Plaintiff Alan Arthurs was a sales representative for Freedom Health (a Medicare Advantage plan) who alleges pervasive violations of Medicare marketing rules (use of age-in lists, unauthorized materials, upselling using confidential records, unsolicited contacts).
- Arthurs repeatedly complained internally (meetings, emails, to outside counsel, asked for CMS liaison), starting in 2009 and continuing through 2011.
- While on medical leave in July 2011, Arthurs attended a required Walgreens marketing event but left early due to back pain; he was later admonished and then terminated two days after complaining to HR about his supervisor’s conduct.
- Arthurs filed a one-count complaint alleging retaliation under the False Claims Act (31 U.S.C. § 3730(h)(1)) on July 24, 2014; Freedom moved to dismiss for failure to state a claim.
- The court evaluated whether Arthurs’s internal complaints constitute "protected conduct" under the FCA as amended in 2009, which added protection for efforts to stop violations of the subchapter (not only litigation-related acts).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 3730(h)(1)’s pre-2009 "distinct possibility" standard still governs opposition conduct | Arthurs argues the 2009 amendment protects internal, non‑litigation efforts to stop FCA violations, so the distinct‑possibility test should not apply to opposition clause claims | Freedom argues longstanding Eleventh Circuit standards require a distinct possibility of litigation to show protected conduct | Court held the amendment expanded protection; the distinct‑possibility standard does not apply to opposition‑clause (internal) conduct |
| Whether internal complaints about Medicare marketing violations are "protected conduct" | Arthurs contends his repeated internal reports and refusal to participate were efforts to stop violations of the FCA because Medicare participation is conditioned on compliance with marketing rules | Freedom contends these are mere regulatory violations unconnected to fraudulent claims for payment and thus outside the FCA’s scope | Court held Arthurs plausibly alleged opposition‑clause protected conduct because compliance with marketing regs is a condition of participation in Medicare Advantage, permitting an inference of a connection to claims for payment |
| Whether regulatory noncompliance can support FCA liability/protected activity post‑2009 | Arthurs relies on the 2009 amendment and legislative history showing Congress intended to cover efforts to stop program‑condition violations | Freedom relies on pre‑amendment Eleventh Circuit cases requiring a nexus to claims for payment | Court explained the 2009 amendment and legislative history allow regulatory violations to be cognizable where participation in a government program is conditioned on compliance, so regulatory complaints can be protected |
| Disposition of Motion to Dismiss | Arthurs seeks denial so the case can proceed to discovery on retaliation | Freedom seeks dismissal for failure to plead protected conduct | Court denied the motion to dismiss and ordered Freedom to answer within 14 days |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for pleading)
- Ashcroft v. Iqbal, 556 U.S. 662 (legal conclusions insufficient at pleading stage)
- Halasa v. ITT Educ. Servs., Inc., 690 F.3d 844 (7th Cir. 2012) (recognizing § 3730(h)(1) protects internal reporting)
- United States ex rel. Tran v. Computer Sciences Corp., 53 F. Supp. 3d 104 (D.D.C. 2014) (district court recognizing non‑litigation activities protected under the amendment)
- McNutt ex rel. United States v. Haleyville Med. Supplies, Inc., 423 F.3d 1256 (11th Cir. 2005) (pre‑amendment case linking regulatory violations to fraudulent claims where program participation depends on compliance)
- Clausen v. Laboratory Corp. of America, 290 F.3d 1301 (11th Cir. 2002) (pre‑amendment holding that mere regulatory noncompliance, without a link to claims, does not state an FCA claim)