Lead Opinion
Plaintiff-Appellant Sara Jane Jones-McNamara (“McNamara”) appeals the district court’s order granting summary judgment to Defendant-Appellee Holzer Health Systems, Inc. (“Holzer”) in her ac
I. BACKGROUND
A. Facts
Holzer is a health care delivery system comprised of several hospitals and care facilities in southeastern Ohio. ID # 3329-3331. McNamara began work for Holzer as Vice President for Corporate Compliance on March 1, 2010. ID # 79. Shortly after starting work, McNamara began investigating allegations that Holzer’s dealings with a patient transport company called Life Ambulance (“Life”) violated the Anti-Kickback Statute (“AKS”), 42 U.S.C. § 1320a-7b. Holzer and Life had a preferred supplier agreement under which Life promised to make its best efforts to be available upon Holzer’s request. ID #859. This agreement, however, is not what sparked McNamara’s concerns about potential AKS violations; in fact, McNamara assumed the contract was legal. ID # 861-62. McNamara’s concerns arose when she received a phone call on May 8 and an e-mail on May 11 from Tina Baker, a Holzer Emergency Room nurse, alleging that “certain hospital ER doctors” received embroidered jackets from Life. ID # 875-77, 4894, 5084. McNamara ultimately confirmed the receipt of only one such jacket, which she later valued at $23.50. ID #879-80, 2358. Baker also claimed that Holzer employees consistently called Life over its competitor MedFlight for ambulance services despite the fact that Life was “more than double the distance and time” from Holzer compared to MedFlight. ID #875-76, 4894. On May 10, after speaking to Baker on the phone but before receiving her e-mail, McNamara e-mailed James Phillippe, the President of one of Holzer’s hospitals, to inform him of an “[allegation of [a] potential kickback issue in [the] ER.” ID # 4899.
On May 13, McNamara learned from Holzer’s Director of Community and Wellness, Bonnie MacFarlane, that Life had provided free hotdogs and hamburgers at Holzer’s employee health and wellness fairs in 2008 and 2009, ID #888, 4888, 4890, 4903 (under seal), 5085. McNamara further discovered on May 18 that Life similarly would supply free hotdogs at Holzer’s upcoming health and wellness fair the following day. ID #865, 4889, 4903 (under seal), 5086. Despite McNamara’s objection that this event violated the AKS, she allowed the event to proceed. ID # 865.
Based on this collection of facts — Baker’s unverified allegation that Life was receiving preferential referrals, one doctor’s receipt of a $23.50 jacket, and Life’s provision of hotdogs at past wellness fairs and the upcoming wellness fair — McNamara sent the following May 18 e-mail to CEO Brent Saunders and Vice President of Human Resources Lisa Halley: “We definitely do have an anti-kickback issue with Life and after Wed [the 2010 health and wellness fair] I will not ever ok their donating, [sic], sponsoring or equipping, etc. anything at Holzer again.” ID # 4904. McNamara explained in the e-mail that she would allow the upcoming wellness fair to proceed because “I decided I should have a solid case before I start banning things.” Id. After sending this e-mail, McNamara met in person with Saunders, who instructed McNamara not to reduce her conclusions to writing before completing her investigation. ID # 892, 2617-18, 4934.
The following day, McNamara verbally reiterated to Saunders her concern that Holzer had violated the AKS and needed
McNamara never clarified for what items or services she believed Holzer needed to reimburse the government. At one point, McNamara testified she told Saunders that Holzer needed to pay back the government “for all these hot dogs, hamburgers, coats, jackets, and stuff.” ID # 1219 (sealed).
Sometime thereafter, McNamara determined based on records of patient transports that out of the 102 patient transports Holzer referred to an ambulance company between January and April 2010, Holzer referred 93 to Life. Appellant Br. 10; ID #4892, 4893. McNamara testified that she completed her investigation into the anti-kickback violations upon reporting these statistics to Saunders. ID # 864, 1005.
On June 30, 2010, Saunders and Halley terminated McNamara’s employment. ID # 3204.
B. Procedural History
McNamara’s amended complaint alleges she was terminated in retaliation for her investigation of Holzer’s FCA violations as prohibited by 31 U.S.C. § 3730(h) and raises five additional state law claims related to her termination. ID # 68-72. The district court granted Holzer’s motion for summary judgment on McNamara’s FCA retaliation claim and declined to exercise supplemental jurisdiction over McNamara’s remaining state law claims. ID # 5488-89.
The district court’s opinion rests on two primary grounds: lack of direct evidence of retaliation, and McNamara’s inability to prove that Holzer’s stated reasons for her termination are pretext. In its ruling, the district court assumed McNamara could establish the first two elements of her retaliatory discharge claim: 1) protected activity, and 2) Holzer’s knowledge that McNamara engaged in protected activity. ID # 5477. The district court instead focused on the third element of McNamara’s claim, causation, i.e. that Holzer terminated her because of her protected activity. Id. The district court rejected McNamara’s “direct” evidence because it demanded inferences to find that Holzer acted out of impermissible retaliation. ID # 5478-82. The district court then considered whether, viewing McNamara’s evidence as circumstantial, it satisfied the burden-shifting framework of McDonnell
McNamara filed a timely notice of appeal of the district court’s grant of summary judgment. ID # 5493-94. On appeal, McNamara challenges the district court’s rulings on the direct evidence and pretext issues. Appellant Br. 2. This panel has jurisdiction over McNamara’s appeal under 28 U.S.C. § 1291.
II. STANDARD OF REVIEW
We review the district court’s grant of summary judgment de novo. Kroll v. White Lake Ambulance Auth.,
III. ANALYSIS
A. Retaliatory Discharge Under the FCA
The FCA prohibits any person from “knowingly presenting], or causing] to be presented, a false or fraudulent claim for payment or approval.” 31 U.S.C. § 3729(a)(1)(A). To protect employees who expose fraud against the federal government, the FCA’s anti-retaliation provision forbids discharging an employee “because of lawful acts done ... 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).
Retaliatory discharge claims under the FCA proceed under the same rules applicable to other employment-related retalia
Direct evidence is “evidence, which if believed, does not require an inference that unlawful retaliation motivated an employer’s action.” Spengler,
Where a plaintiff proceeds with circumstantial evidence of retaliation, the burden-shifting framework articulated in McDonnell Douglas Corp. v. Green,
B. Protected Activity
McNamara contends that she engaged in protected activity by investigating Hol-zer’s ongoing violations of the AKS and the FCA and reporting those violations to Saunders, Phillippe, and Halley. Appellant Br. 19. As noted, the district court assumed McNamara had made out a prima facié case and held that McNamara failed to rebut Holzer’s non-discriminatory reasons for her discharge with evidence of pretext. ID #5482, 5485. We conclude that McNamara did not establish a prima facie case because she has not created a genuine issue of material fact as to whether she engaged in protected activity. Specifically, McNamara failed to produce sufficient evidence that her investigation and reports of Life’s provision of a jacket and hotdogs to Holzer employees rested on a reasonable belief in AKS or FCA violations.
1. Standard for Protected Activity
The Sixth Circuit held in McKenzie v. BellSouth Telecommunications, Inc.,
As McNamara asserts, an employee need not complete an investigation into potential fraud or uncover an actual FCA violation to undertake protected activity. See Graham Cnty. Soil & Water Conservation Dist. v. U.S. ex rel. Wilson,
That being said, these lenient standards for establishing protected activity remain subject to a reasonable belief requirement. This Court held in McKenzie that for an internal report to constitute protected activity under § 3730(h), it “must establish some nexus to the FCA to satisfy the ‘in furtherance’ prong of an FCA claim, by reasonably leading to a viable FCA action.” McKenzie,
2. Anti-kickback Violation
McNamara claims her e-mails to Hol-zer senior management constitute protected activity under § 3730(h) because they alleged violations of the AKS that also violated the FCA. AKS violations can constitute FCA violations where a claim submitted to the government for reimbursement includes items or services resulting from a violation of the AKS, 42 U.S.C. § 1320a-7b(g), or where cost reports submitted to the government for reimbursement include an express certification that the underlying claims comply with the AKS, see, e.g., U.S. ex rel. Wilkins v. United Health Grp., Inc.,
The AKS prohibits “knowingly and willfully solicit[ing] or receiving] any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or kind ... in return for referring an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program.” 42 U.S.C. § 1320a-7b(b)(l)(A). The statute defines “remuneration” as “transfers of items or services for free or for other than fair market value.” 42 U.S.C. § 1320a-7a(i)(6). The statute does not, however, define the phrase “in return for.” Yet courts widely agree that the “‘gravamen of Medicare fraud is inducement.’” See, e.g., U.S. ex rel. McDonough v. Symphony Diagnostic Servs., Inc.,
While not binding, the Office of the Inspector General (“OIG”) for the Department of Health and Human Services (“HHS”) has offered further guidance on the meaning of “remuneration” and “induce.” The OIG indicated in its Program Guidance for Ambulance Suppliers that the term “remuneration” means “virtually anything of value” including goods, meals, and gifts. OIG Compliance Program Guidance for Ambulance Suppliers, 68 Fed.Reg. 14245, 14252 (Mar. 24, 2003). Several courts have affirmed this expansive understanding of remuneration as “ ‘anything of value in any- form whatsoever.’ ” United States v. The Health Alliance of Greater Cincinnati No. 1:03-CV-00167,
An important aspect of inducement is that the remuneration be directed towards an individual or entity “in a position to generate Federal health care program business.” See OIG Supplemental Compliance Program Guidance for Hospitals, 70 Fed.Reg. 4858, 4864 (Jan. 31, 2005). In U.S. ex rel. Perales v. St Margaret’s Hospital,
In short, a kickback violation entails 1) remuneration to a person or entity in a position to refer Federal health care program patients 2) that could reasonably induce the person or entity to refer such patients. See OIG Supplemental Compliance Program Guidance for Hospitals, 70 Fed.Reg. at 4864. McNamara must demonstrate the reasonableness of her belief that these elements existed in Holzer’s relationship with Life.
3. Application to McNamara’s Investigation and Internal Reports
Even if we assume that McNamara had a subjective, good faith belief that Holzer employees accepted remuneration as an inducement to refer patients to Life, this belief was not objectively reasonable based on the facts in McNamara’s knowledge
First, McNamara identified only two gifts delivered to Holzer employees — one jacket
Indeed, some cases have ruled that free food and drinks can operate as an inducement for referrals, but in those cases the amount and quality of food provided far exceeded Life’s annua! provision of hotdogs and hamburgers to a miscellaneous set of Holzer employees at a health fair. See United States v. Perlstein,
Second, and more importantly perhaps, McNamara presented no evidence to suggest a connection between the gifts and the Life referrals. As indicated by the OIG guidance' and U.S. ex rel. Perales, remuneration cannot induce a referral unless it is directed towards a person with the power to make referrals. McNamara did not identify a single employee with authority to make referrals to Life, let alone one who also attended one of Holzer’s employee wellness fairs and consumed a Life-sponsored hotdog or hamburger. The only specific person McNamara confirmed received anything from Life was Dr. Mickunas, who admit
McNamara also attempts to demonstrate a connection between the gifts and referrals by relying on the statistics indicating Holzer called Life more than ninety percent of the time between January and April 2010. McNamara did not possess this knowledge when she first communicated anti-kickback allegations to Holzer management in the May 18 and 19 e-mails. Sometime after making these initial reports, McNamara analyzed the patient transport records and discovered the ninety percent referral rate to Life, at which point she considered her investigation complete. But that statistic is somewhat explained by Holzer’s preferred supplier agreement with Life, an agreement McNamara knew about and believed to be legal.
The dissent argues “[i]t is the province of a jury” to assess whether McNamara’s belief was reasonable and to weigh her failure to conduct a sensible investigation. Dissent at 406-07. There may be a jury question as to McNamara’s subjective, good faith belief, but there is no proof in the record to establish that McNamara’s belief was objectively reasonable. In concluding the paltry evidence McNamara presents could justify a jury finding that she reasonably believed Holzer committed fraud, the dissent conflates the subjective and objective components of the test for protected activity and diverges from our understanding of “objective reasonableness.” An objectively reasonable belief requires facts that exist independently of the plaintiffs personal, interior mentality. McNamara produces very few such independent facts to support her belief of anti-kickback violations, and those she does produce do not make her belief reasonable. A jury could not find McNamara engaged in protected activity when she based her allegations of illegal kickbacks solely on a high referral rate to a contractually (and legally) preferred supplier who gave a token jacket and hotdogs to unidentified Holzer employees that may or may not have had referral power.
In conclusion, because McNamara cannot meet her burden of demonstrating the reasonableness of her belief that Holzer violated the AKS, she cannot show she had a reasonable belief that Holzer presented or caused false claims to be presented in violation of the FCA. McNamara failed to create a genuine issue of material fact that her actions constituted protected activity. On this basis, we hold that summary judgment was properly granted to Holzer.
Because we conclude that McNamara did not engage in protected activity, we need not address the parties’ arguments on the remaining elements of McNamara’s prima facie case. See Yuhasz,
CONCLUSION
For these reasons, we AFFIRM the judgment of the district court.
Notes
. Saunders testifies he gave his second instruction not to reduce conclusions to writing after McNamara sent her May 19 e-mail. ID #2618, 4934. McNamara agrees Saunders gave her this instruction on May 19, but she does not say whether he gave it before or after she sent the May 19 e-mail. ID # 900, 906-07.
. This testimony is nonsensical since Holzer would not bill (and thus would not need to reimburse) Medicare for hotdogs or other goods received from Life,
. A slightly different version of § 3730(h) was in effect at the time of McNamara's termination that protected employees from retaliation for "lawful acts done ... in furtherance of other efforts to stop 1 or more violations of this subchapter.” 31 U.S.C. § 3730(h) (effective Mar. 23, 2010 to July 21, 2010). Congress amended the language to its present version in July 2010.
. McNamara submitted additional evidence of the alleged kickback arrangement between Holzer and Life in the form of declarations from Life employees Teresa and William Paugh. Because McNamara brings a claim for retaliation under § 3730(h) and not a qui tam action under § 3729, only the evidence in McNamara’s knowledge at the time of her investigation and internal reports are relevant for purposes of assessing whether she was engaged in protected activity. To the extent the Paugh declarations contain allegations beyond what McNamara heard and communicated in her e-mails, they will be disregarded.
. The dissent portrays McNamara's belief of AKS violations as based on gifts of multiple jackets, noting that Baker's e-mail stated, “SEVERAL people got them,” ID # 4894, and that McNamara testified Dr. Mickunas told her “he knew of a few people that had” jackets, ID # 880-81. The record, of course, contains no evidence outside McNamara’s subjective mindset to support these statements. Not only did McNamara admit she
.The dissent contends that Dr. Mickunas’ testimony about referral practices is "beside the point” in determining the reasonableness of McNamara’s belief that Holzer was violating the AK.S. Dissent at 407. This analysis ignores the objective component of the protected activity standard. Because the reasonable belief standard governing protected activity includes an objective component, evidence outside McNamara’s subjective point of view is not only on point but absolutely essential to assessing the reasonableness of her belief.
. McNamara does not argue that Life procured "its preferred supplier agreement through illegal kickbacks.
. Although McNamara conducted some investigation into Life’s and MedFlight’s respective credentials, ID #3162-71, 4907, McNamara testified that these efforts focused on evaluating the wisdom of a preferred supplier agreement with Life — not discerning whether the referral statistics supported an underlying kickback arrangement. ID # 858, 862.
. The dissent also attempts to reinforce the statistics by emphasizing McNamara's understanding of an anecdote relayed by Baker about a patient who died after a transportation delay because the nurse in the ER called Life instead of the closer ambulance service. Dissent at 407-08 (quoting ID # 875-76). McNamara’s subjective belief that this anecdote raised an anti-kickback issue with Life, however, is not only unsupported but subverted by external evidence: Baker stated in her deposition that it was MedFlight who transported the cardiac patient who had died — not Life. ID #4668-71,
Dissenting Opinion
dissenting.
I dissent because Sara Jones-McNamara (“McNamara”) established a prima facie case of retaliation and presented sufficient evidence to suggest that Holzer Health Systems’s (“Holzer”) reasons for firing her were pretextual. I would therefore vacate the district court’s entry of summary judgment and remand for trial.
As the majority recognizes, internal reports that “allege fraud on the government” constitute protected activity under 31 U.S.C. § 3730(h). See McKenzie v. BellSouth Telecomms., Inc.,
McNamara’s belief that she was investigating fraud under the FCA was based upon a belief that she had uncovered a violation of the AKS, which prohibits the receipt of remuneration as inducement for referral of an individual for federally funded health care services. See 42 U.S.C. § 1320a-7b(b)(l). As the majority recognizes, remuneration under the AKS may be “ ‘anything of value in any form whatsoever,’ ” United States v. The Health Alliance of Gtr. Cincinnati, No. 1:03-CV-00167,
Baker reported to McNamara in May 2010 that Life had given jackets with its logo on them “to certain hospital ER doctors,” stated that “SEVERAL people got them,”
It is also for a jury to determine the reasonableness of McNamara’s understanding that it was “the call of the doctor” to decide which ambulance provider to use, R. 50-1 (McNamara Dep. at 184:3-14) (Page ID #859) — and therefore that remuneration to doctors could induce a referral. The testimony of others that doctors did not usually refer in this manner, R. 99-1 (Mickunas Dep. at 27:17-28:6) (Page ID #4584-85), is beside the point. The issue is whether the information available to McNamara at the time could support a finding that she reasonably believed that the individuals she suspected were receiving remuneration from Life were in a position to refer business to Life. McNamara’s understanding that doctors were given referral authority was bolstered by the information she received from Baker that Life was giving jackets to doctors and receiving business from Holzer that Baker believed was unwarranted, R, 102-31 (Baker Email) (Page ID # 4894), including one situation in which a patient had died after a transportation delay, which Baker attributed “perhaps” to the fact that “the nurse in the ER was forced to not call the closest ambulance but to call Life.” R. 50-1 (McNamara Dep. at 200:21-201:10) (Page ID # 875-76). McNamara’s suspicion was also supported by her later discovery that Life received over 90 percent of Holzer’s business. See R. 102-29 (Chart) (Page ID #4892).
McNamara’s belief arose in the context of an apparently ongoing investigation,
I would therefore hold that McNamara demonstrated a sufficient basis for a jury to find that her belief that she was investigating a possible AKS violation was reasonable. McNamara also demonstrated a basis from which a jury could infer that she reasonably viewed that suspected AKS violation as an FCA violation, thereby triggering the protections of § 3730(h). Although AKS violations are not always FCA violations, “[a] claim that includes items or services resulting from a violation of [the AKS] constitutes a false or fraudulent claim for purposes of [the FCA].” 42 U.S.C. § 1320a-7b(g). McNamara testified that, at the time of the investigation and internal reporting, she “didn’t know if we were billing for these patients that flew, or the ambulance company was, or if we billed for part of them and they billed part of them.” R. 50-1 (McNamara Dep. at 226:24-227:2) (Page ID # 901-02). At least, her belief that Holzer might bill Medicare directly for ambulance services
McNamara also demonstrated genuine issues of fact relevant to the other elements of a prima facie case under § 3730(h). She pointed to sufficient evidence that she put Holzer on notice that she was undertaking activities to stop an FCA violation.
Finally, McNamara has created a genuine dispute of material fact whether Holzer’s asserted reasons for firing her were pretextual. It bears emphasizing that Holzer articulated primarily subjective reasons for McNamara’s termination — that she was not a “good fit.” We have held “that decisions made on the basis of subjective criteria, such as whether an employee is an effective manager, can provide a ready mechanism for discrimination, and thus such decisions are carefully scrutinized.” Idemudia v. J.P. Morgan Chase,
In sum, the evidence that McNamara introduced is sufficient to raise disputes of material fact regarding the elements of a prima facie case of retaliatory discharge and whether Holzer’s asserted reasons for terminating her were pretextual. I therefore dissent from the majority’s affirmance of the district court’s entry of summary judgment.
. The majority treats the issue as involving only one jacket, Maj. Op. at 401, and McNamara did testify that she ultimately confirmed the existence of only one such jacket, R. 711 (McNamara Dep. at 113:13-114:11) (Page ID # 2358-59), but the report from Baker was not so limited. See R, 102-31 (Baker Email) (Page ID # 4894). Moreover, McNamara testified that when she interviewed Dr. Mickunas during her investigation, he said that "he knew of a few people that had” jackets. R. 50-1 (McNamara Dep. at 205:23-206:1) (Page ID #880-81). The majority brushes aside this information, stating that "[t]he record, of course, contains no evidence outside McNamara's subjective mindset to support these statements,” Maj. Op, at 401 n. 5, but the record in fact contains such evidence. McNamara received an email from Baker and testified to having received a statement from Mic-kunas. Because the objective-reasonableness inquiry judges the reasonableness of an employee's belief based 'upon the information that was available to the employee at the time, Fanslow,
. As the majority notes, Maj. Op. at 404 n. 9, Baker testified during her deposition that it was a different ambulance provider that had been responsible for the transportation of the patient who died. See R. 100-1 (Baker Dep. at 29:2-31:18) (Page ID # 4669-71). But Bak
. The majority emphasizes that Holzer had a preferred-supplier agreement with Life, as a likely explanation for the disparity. Maj. Op. at 403. Even so, McNamara testified that the choice of whom to call remained nonetheless in the hands of the doctor. See R. 50-1 (McNamara Dep. at 184:3-14) (Page ID # 859).
. Although McNamara learned these statistics after her May 18 and May 19 emails, she reported them to Brent Saunders in person.
. McNamara testified that her investigation was "stopped," but then indicated that she "completed the anti-kickback violation” but "did not complete the investigation of the— the emergency room issues.” See R. 50-1 (McNamara Dep. at 188:18-189:18) (Page ID # 863-64). Later, she testified again that her investigation had been "interrupted.” Id. at 202:16-204:18 (Page ID # 877-79). She later stated that the investigation concluded when she "showed Mr. Saunders the chart ... showing that we had, in fact, been using [Life] six times more than others.” Id. at 347:16-20 (Page ID # 1005). In any event, her investigation remained unfinished at the time she engaged in the activity she claims was protected — reporting regarding what she viewed as AKS violations and looking into the issues she had uncovered.
. Our decision in Yuhasz,