Neighorn v. Quest Health Care & Rotech Healthcare, Inc.

870 F.Supp.2d 1069

John NEIGHORN, Plaintiff,

v.QUEST HEALTH CARE and Rotech Healthcare, Inc., Defendants.

Case No. 1:10–cv–03105–CL.

United States District Court,

D. Oregon,

Medford Division.

May 2, 2012.

Thad M. Guyer, T.M. Guyer & Friends, PC, Medford, OR, for Plaintiff.

David G. Hosenpud, Jeremy S. Healey, Lane Powell, PC, Portland, OR, Robert Kimbark Lee, Rotech Healthcare Inc., Orlando, FL, for Defendants.

ORDER

CLARKE, United States Magistrate Judge.

This matter comes before the court on defendants' motion (# 40) for summary judgment. For the reasons stated below, the motion is granted in part and denied in part.

BACKGROUND

Plaintiff John Neighorn (“Neighorn”) filed this action on September 30, 2011, against defendants Quest Health Care (“Quest”) and Rotech Healthcare, Inc. (“Rotech”) (collectively, “Rotech”) ¹ alleging claims for retaliatory discharge in violation of the False Claims Act (“FCA”), 31 U.S.C. § 3729, et seq., and Oregon's whistleblower statute ORS § 659A.199; violation of ORS § 652.750 for failing to provide him a copy of his personnel file; and a claim for common law wrongful discharge.

I. Rotech

As its primary business, Rotech provides respiratory services, including the delivery of oxygen to patients' homes and the set up and maintenance of related equipment, as well as products and services for sleep apnea, such as CPAP and BiPAP devices. (Am. Compl., Dckt. # 72, ¶ 3; Defs' Corrected Mem. Supp. Mot. Summ. J. (“Defs' Corr. Mem.”), Dckt. # 51, pp. 2). Rotech provides these services to both private patients and patients whose care is paid for by the Department of Veterans Affairs (“VA”) and the Centers for Medicare & Medicaid Services (“CMS”), an agency of the Department of Health and Human Services (“DHHS”). (Defs' Corr. Mem., pp. 2). Rotech delivers its services through approximately 3,500 employees operating out of 450 locations in 48 states, including its office in Central Point, Oregon. (Am. Compl., ¶ 3; Pl's Mem. Opp'n Defs' Mot. Summ. J., Dckt. # 53, pp. 3).

A. The May 2008 Corporate Integrity Agreement

On April 6, 2004, a qui tam action was filed against Rotech in the United States District Court for the Eastern District of Texas, Texarkana Division, United States of America ex rel. Sheila Bell–Messier v. Ro–Tech Healthcare, Inc., et al., Civil Action No. 5:04–cv–0075. (Decl. Stephani L. Ayers (“Ayers Decl.”), Ex. 1, Dckt. # 54–7, pp. 2, & Ex. 2, Dckt. # 54–8). The Complaint alleged Rotech committed multiple ongoing violations of the FCA between February 22, 1996, and April 30, 2003, by fraudulently billing the government for durable medical equipment (“DME”) including respiratory devices; and further that Rotech fraudulently concealed these billing practices from the government in violation of a Corporate Integrity Agreement (“CIA”) entered into as the result of a 2002 settlement with the government for other compliance issues. ( Id., Ex. 1, Dckt. # 54–7, pp. 2, & Ex. 2, Dckt. # 54–8, pp. 6–7). In particular, the Complaint alleged Rotech failed to follow “[t]he proper procedures necessary to receive compensation for DME from Medicare,” including, in relevant part, the failure to obtain and retain delivery tickets signed by the patient evidencing delivery and receipt of the DME. ( Id., Ex. 2, Dckt. # 54–8, pp. 4–5).

On May 19, 2008, Rotech, without admitting any wrongdoing, entered into a settlement agreement with the government regarding the April 2004 qui tam action and contemporaneously entered into another CIA with the Office of the Inspector General (“OIG”) of the United States Department of Health and Human Services (“DHHS”). (Ayers Decl., Ex. 1, Dckt. # 54–7, pp. 2–3). The CIA requires that Rotech “promote compliance with the statutes, regulations, and written directives of Medicare, Medicaid, and all other Federal health care programs,” ( id., pp. 3), through compliance management and oversight, written standards, training and education, review procedures, a disclosure program, screening and removal of ineligible persons, and reporting, ( id., pp. 4–18).

As part of compliance management and oversight, the CIA requires that Rotech “continue to develop, implement and distribute a written Code of Conduct” stating Rotech's commitment to non-retaliation and its requirement that all owners, officers, directors, and employees (“Covered Persons”) comply with all federal health care program requirements and Rotech policies and procedures, and report all “suspected violations” to its Compliance department. ( Id., pp. 3, 6–7). The CIA further requires that Rotech “continue to maintain and implement” written policies and procedures addressing, in relevant part, all applicable federal health care program requirements governing coverage and reimbursement of oxygen and the proper documentation necessary for the submission and reimbursement of claims, as well as the expectation that all Covered Persons comply with Rotech's Code of Conduct, policies, procedures, and the CIA itself. ( Id., pp. 8).

As part of training and education, the CIA requires that Rotech describe its compliance program and provide all covered persons involved in billing, coding and claims submission, or the preparation or completion of documentation to support claims for reimbursement with annual training on “the federal health care program requirements governing coverage and reimbursement of oxygen, the proper completion of documentation necessary to support the reimbursement of claims; the personal obligation of each individual involved in the claims submission process to ensure that such claims are accurate; ... [and] examples of proper and improper claims submission practices.” ( Id., pp. 4, 9–10). The CIA requires that Rotech retain all documents and records relating to reimbursement from Federal health care programs and compliance with the CIA for at least six years. ( Id., pp. 25).

As part of review procedures, the CIA requires that Rotech retain an independent review organization (“IRO”) to, among other things, conduct annual claims review of 50 paid claims, and to repay any overpayment identified as a part of that review. ( Id., pp. 11–12). Overpayment is defined as “the amount of money Rotech has received in excess of the amount due and payable under any Federal health care program requirements.” ( Id., pp. 16). The definitions and procedures for the Claims Review process are documented in Appendix B of the CIA. ( Id., pp. 38–43). Appendix B provides, at Section A, subsection 5(a), provides that “any Paid Claim for which Rotech cannot produce documentation sufficient to support the Paid Claim shall be considered an error and the total reimbursement received by Rotech for such Paid Claim shall be deemed an Overpayment.” ( Id., pp. 40).

As a part of reporting, the CIA requires Rotech to notify OIG in writing within 30 days of identifying any reportable event. ( Id. at 18). “Reportable event” is defined to include both isolated and recurring instances of substantial overpayment as well as “a matter that a reasonable person would consider a probable violation of criminal, civil or administrative laws applicable to any Federal health care program for which penalties or exclusion may be authorized.” ( Id., pp. 17).

The CIA provides certain stipulated monetary penalties in the event that Rotech fails to comply with its obligations. ( Id., pp. 26–27). The CIA further provides that a failure by Rotech to report a Reportable Event, take corrective action, and make the appropriate refunds, or repeated or flagrant violation of its obligations under the CIA, is a material breach of the CIA and “constitutes an independent basis for Rotech's exclusion from participation in the Federal health care programs.” ( Id., pp. 28–29). In the event of a material breach, the CIA further provides that Rotech shall have 30 days in which to demonstrate that it is either in compliance with its obligations, that the material breach has been cured, or, if the breach cannot be cured within 30 days, that Rotech has taken action to cure, is diligently pursuing the cure, and has provided a reasonable timetable for curing the breach. ( Id., pp. 29).

B. Rotech's Compliance Department

Rotech's Compliance Department is responsible for conducting annual regulatory and compliance training related to Rotech policies and procedures, as well as federal and state laws and regulations, for all employees. (Decl. Robin Menchen Supp. Defs' Mot. Summ. J. (“Menchen Decl.”), Dckt. # 42, ¶ 5). Training is administered by area managers and LCMs through orientation programs and by the Compliance Department through individualized computerized training modules targeted to the individual employee's position. ( Id.; Thelen Decl., Ex. 3, Deposition of Robin Lynn Menchen (“Menchen Dep.”), Dckt. # 44–2, pp. 18–19). The Compliance Department monitors and verifies that employees complete the online training. (Thelen Decl., Ex. 4, Deposition of Jack McKenna (“McKenna Dep.”), Dckt. # 44–2, pp. 37).

C. Rotech's Code of Conduct

Rotech's Code of Conduct requires that all “owners, directors, officers, employees, contractors, subcontractors, and temporary employees shall comply with Rotech's Code of Conduct, all policies and procedures and Rotech's Corporate Integrity Agreement with the Office of the Inspector General,” as well as Rotech's Employee Handbook and periodically distributed memoranda and policy statements. (Decl. Christine E. Thelen Supp. Mot. Summ. J. (“Thelen Decl.”), Ex. 11, Dckt. # 44–2, pp. 84, 88–89).² Employees are required to certify in writing that they have received, read, and understand this policy. ( Id., pp. 88). The Code of Conduct explicitly states that failure to comply with its provisions may result in serious consequences to the employee including dismissal, criminal charges, and civil penalties. ( Id., pp. 88, 91). The Code of Conduct requires mandatory disclosure of known or suspected violations of “federal, state or local law or...