Liss v. Heritage Health & Hous. Inc.

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JANE LISS, Plaintiff, v. HERITAGE HEALTH & HOUSING, INC., Defendant.

No. 1:19-cv-4797-LTS-SDA

United States District Court, S.D. New York

February 28, 2023

MEMORANDUM ORDER AND OPINION

LAURA TAYLOR SWAIN, Chief United States District Judge.

Plaintiff Jane Liss (“Plaintiff” or “Liss”) brings this action against Defendant Heritage Health &amp Housing, inc. (“Defendant” or “Heritage”) under the federal False Claims Act (31 U.S.C. sections 3729 and 3730) and the New York False Claims Act (N.Y. Fin. Law sections 189 and 191), alleging that Heritage unlawfully terminated her employment in retaliation for her actions as a whistleblower in uncovering financial mismanagement at Heritage. (Docket entry no. 1 (“Compl.”).) The Court has jurisdiction of this action pursuant to 28 U.S.C. sections 1331 and 1367.

Heritage moves, pursuant to Federal Rule of Civil Procedure 56, for summary judgment on all of Plaintiff's claims against it arguing that Plaintiff is unable to satisfy the elements of her False Claims actions as a matter of law. The Court has considered carefully all of the parties' submissions and arguments. For the reasons explained below, Heritage's motion for summary judgment is granted.

Background

Unless otherwise indicated, the following facts are undisputed.^[1] Heritage Health & Housing is a not-for-profit organization located in Harlem which provides housing, health care, and social support services to the community. (Heritage 56.1 St. ¶ 1.) Heritage is managed by a nine-person Board of Directors (“the Board”), and regularly receives Government grants to funds its operations-including grants from the U.S. Health Resources and Services Administration (“HRSA”) the New York City Department of Homeless Services, and the New York City Department of Health and Mental Hygiene. (Liss Add. 56.1 St. ¶ 1-9.)

In early 2018, the Board began to search for a new CEO, and Jane Liss applied for the position. (Heritage 56.1 St. ¶ 2-3.) The Board had decided to hire a new CEO to help improve the organization's image, oversight, and financial practices. (Id.) In May 2018, the Board extended Liss an offer of employment with a six-month probationary period, and she accepted. (Heritage 56.1 St. ¶ 4; Liss Add. 56.1 St. ¶ 39.) As CEO, her duties included overseeing the operations and finances of the organization and acting as the point of contact between the Board and Heritage's staff. (Liss Counter 56.1 St. ¶ 4.) In the years leading up to Liss' hiring, Heritage had experienced significant employee layoffs and management turnover (with 3 different CEOs from 2016-2018); a publicized whistleblower lawsuit (in which an employee accused Board member Saundra Alexander of misappropriating funds from the organization); and a state of general financial mismanagement and disorganization (which caused the organization to lose several valuable government grants and contracts in 2017 and 2018).^[2] (Heritage 56.1 St. ¶ 2-4; Liss Add. 56.1 St. ¶ 12-14, 18-19 21-24, 31.)

In the months after Liss began as CEO, Heritage staff made a number of complaints^[3] that characterized Liss' management style as harsh and her behavior as insensitive. In July 2018, HR Director Jamela Irvin reported that Liss would not listen when she tried to explain union work rules, that Liss “spoke down to her in a derogatory way,” and that Liss was “very rude and dismissive” with staff members. (Docket entry no. 39-3, ¶ 11; docket entry no 39-17.) Also in July 2018, Director of Operations Jennifer Martinez reported that Liss rudely denied her request to attend a work conference, told Martinez to “stay in [your] lane,” and remarked that she was “a typical Hispanic.” (Docket entry no. 39-4, ¶ 3.) Martinez stated that she found Liss to be “incredibly insensitive,” and that Liss would refer to Heritage's “mostly minority staff and patient base” as “these people.” (Id. ¶ 2.) Martinez also reported that in September 2018, after staff had complained about a delay in their paychecks, Liss told staff that “you people should not live paycheck to paycheck.” (Id. ¶ 4.)

In August 2018, staff member Felishea Velazquez Sanchez filed a complaint about Liss, stating that Liss had “created an uncomfortable atmosphere” amongst the staff, that Liss “lacks professionalism,” and that Liss made her feel “bullied, picked on, and harassed.” (Docket entry no. 39-18.) Sanchez felt that she was “being racially profiled in the way [Liss] speaks down to me” and that her interactions with Liss were “degrading.” (Id.) In September 2018, Facilities Director Norman Rodgers made a complaint about Liss, detailing what he characterized as several “irrational decisions [by Liss] that put Heritage at risk,” as well as describing how he “witnessed Liss make offensive and racially insensitive comments about me and about others.” (Docket entry no. 39-5, ¶ 1-8.) He described how Liss spoke in demeaning terms about Heritage's housing tenants, stating that they were “hanging out like animals” outside of the building. (Id. ¶ 4-6.) On another occasion, Liss speculated that “those people” were probably stripping parts from Heritage's maintenance vehicles, and told Rodgers that “they must be your cousins”-Rodgers was “sickened and humiliated” by this encounter. (Id. ¶ 4-6.) In September 2018, staff member Erica Hutchek complained that Liss berated her for being unable to timely commute into the office due to late-issued paychecks, with Liss telling Hutchek she was “disloyal” and that she should have saved up more money. (Docket entry no. 39-6, ¶ 1-7.) In total, 5 staff members at Heritage lodged complaints about Liss from July to September 2018.

Amidst these ongoing staff complaints, Liss was engaging in her financial oversight duties as the new CEO. Liss initially had some difficulties in gaining access to Heritage's bank accounts, but in August 2018 she managed to transfer authority over the bank accounts into her name. (Liss Add. 56.1 St. ¶ 41-50.) After receiving full access to Heritage's bank statements, Liss gave the bank statements to Douglas Blomberg (the CFO), who was in the process of reconciling Heritage's accounts. (Id. ¶ 51-52.) Blomberg soon discovered some suspicious activity in Heritage's accounts (including some suspicious checks and suspicious wire transfers), and brought these matters to Liss' attention. (Id. ¶ 58.) The three suspicious checks had all been drawn from the same account number, and all three were made out to Alvaro Simmons (a former CEO of Heritage) in amounts ranging from $12,000 to $18,000. (Id. ¶ 5960.) The checks were dated January 2018, February 2018, and June 2018, and bore the signatures of either Saundra Alexander or Adrienne Thomas (who were both Board members). (Id.) As for the suspicious wire transfers, some were made in 2017, but the most recent transfers occurred in June 2018 for $13,000 and in July 2018 for $8,800. (Id. ¶ 61-65.) After consulting with Heritage's bank in early October 2018, Liss discovered that the transfers had both been sent to accounts bearing the name of Saundra Alexander. (Id. ¶ 61-65.) Liss suspected that these transactions might be indicia of fraud, and began preparing to present her findings on these financial irregularities to the Board. (Id. ¶ 65-70.)

Meanwhile, some Board members were beginning to take action regarding the staff complaints about Liss' behavior. In late September 2018, several Board members (including Adrienne Thomas) attended a Heritage staff meeting “to give staff some assurance that the Board was aware that things were not right, and that [they] would be addressing the problems” with Liss. (Docket entry no. 39-3, ¶ 17.) Though Thomas “did not mention Liss by name” at this meeting, staff members “understood that Thomas was referring to Liss' behavior.” (Id.; docket entry no. 39-4, ¶ 4-6.) Thomas told staff that “I am here; we hear you; and we will fix this.” (Docket entry no. 39-6, ¶ 8.)

A regularly scheduled Board meeting was set to occur on October 17, 2018. In anticipation of this upcoming meeting, Thomas began to prepare a presentation advocating for Liss' termination, and also began to discuss her concerns with certain board members. (Docket entry no. 39-3, ¶ 17-19.) Board members Monica Braggs, John Cardwell, and Earl Washington all state (in declarations) that Thomas spoke with them privately during early October 2018 to share her concerns regarding Liss, and to inform them that she planned to ask the Board to terminate Liss. (Docket entry nos. 39-9, ¶ 6; 39-10, ¶ 4; 39-11, ¶ 6.)

On October 15, 2018, Liss had a private meeting with Board member Noel Weekes to discuss the suspicious financial transactions she and Blomberg had discovered- Weekes likewise found the checks to be concerning and advised Liss to bring this information to the full Board's attention. (Docket entry nos. 39-16, at 55-57; 39-14 at 49-51.) According to Liss, at this same meeting, Weekes also told Liss that Adrienne Thomas had begun to advocate for Liss' termination as CEO. (Liss Add. 56.1 St. ¶ 66-67.)

On October 17, 2018, at the regularly scheduled meeting of the Board, several notable events took place. First, Liss made her report to the Board about the financial irregularities she had discovered (the suspicious checks and wire transfers), and the Board agreed unanimously that Liss should bring this matter to the attention of law enforcement as soon as possible. (Docket entry no. 39-21, at 5.) Second, after Liss had left the meeting, the Board began its “executive session,” during which Thomas formally recommended that the Board terminate Liss, summarized her concerns about Liss' behavior, and distributed to the Board folders of materials documenting all of the staff complaints lodged against Liss. (Id. at 6; Heritage 56.1 St. ¶ 10-11; ...