Sheppard v. 265 Essex St. Operating Co.

299 F.Supp.3d 278

Kimberly SHEPPARD, Plaintiff,

v.265 ESSEX STREET OPERATING COMPANY, LLC, Healthbridge Management Company, Frank Silvia, and Beth Fearon, Defendants.

Civil Action No. 16–11514–PBS

United States District Court, D. Massachusetts.

Signed March 14, 2018

Michael A. Goldstein, Goldstein & Clegg, LLC, Lynnfield, MA, for Plaintiff.

Cheryl B. Pinarchick, Jeffrey A. Dretler, Fisher Phillips LLP, Boston, MA, for Defendants.

MEMORANDUM AND ORDER

Saris, C.J.

INTRODUCTION

Plaintiff Kimberly Sheppard was fired by Defendant 265 Essex Street Operating Company, LLC ("Essex") on January 5, 2015. She brought this action against Essex, two of her former supervisors, Frank Silvia and Beth Fearon, and HealthBridge Management Company.¹ See Docket No. 8 at 1.

In her original complaint, Sheppard alleged she was wrongfully terminated in violation of public policy—specifically, in retaliation for her internal complaints of ongoing Medicaid fraud. She also brought a promissory estoppel claim, alleging that she accepted employment in reliance on a promise by Essex that she could work a flexible schedule, and that two years later that promise was violated. Essex moved for summary judgment on both counts, arguing that (1) a retaliation claim over reports of Medicaid fraud must be brought under the Massachusetts False Claims Act ("MFCA"), not as a common-law wrongful termination claim; and (2) an at-will employee is not indefinitely entitled to a flexible schedule, notwithstanding accommodations for two years. Docket No. 49 at 1–2.

This Court granted Essex's motion for summary judgment (Docket No. 49) on September 18, 2017, as to the promissory estoppel count, and deferred on the retaliation count, "pending plaintiff's decision on whether to file a motion to amend" under the MFCA. Docket No. 59.

On September 25, 2017, Sheppard filed a motion for leave to amend her complaint (Docket No. 61). She included with her motion a proposed amended complaint. See Docket No. 61–1. In her proposed amended complaint, Sheppard alleges that Essex violated several specific provisions of the MFCA, including Sections 5B(1), 5B(2), and 5B(8), and brings her action "on behalf of the Commonwealth of Massachusetts" as permitted by Mass. Gen. Laws ch. 12, § 5C(2). Docket No. 61–1 ¶ 49. Sheppard also alleges her termination was wrongful and "in violation and retaliation of [the] False Claims Act," without citing Section 5J of the MFCA, which deals with individual retaliation actions. Docket No. 61–1 ¶ 55.

The motion to amend (Docket No. 61) is ALLOWED IN PART and DENIED IN PART, and the motion for summary judgment (Docket No. 49) is DENIED AS MOOT as to the common-law claim of wrongful termination.

FACTUAL BACKGROUND

The relevant factual background is taken from the summary judgment record, as the Court must consider the record when a motion to amend is filed at this stage of litigation. See Resolution Trust Corp. v. Gold, 30 F.3d 251, 253 (1st Cir. 1994). The facts are not in dispute except where stated.

In June 2012, Sheppard began working at Essex, a skilled nursing facility, as a Minimum Data Set ("MDS") Coordinator on an at-will basis. See Docket No. 51–3 at 2. As an MDS Coordinator, Sheppard's employment duties included "reporting missing documentation on [Certified Nursing Assistant] flow sheets, nursing treatment sheets as well as reporting missing documentation and errors that occur in the care plans, and other required MDS documentation." Docket No. 55 at 9; accord Docket No. 51 ¶ 15. The Wage and Benefits Summary, which she signed, noted that all employee wages, benefits, and other working conditions would be subject to change at any time at Essex's sole discretion. See Docket No. 51–3 at 2. Sheppard understood that, as an at-will employee, she could be terminated at any time, for any reason, with or without notice, and that the terms and conditions of her employment were subject to change at any time. Sheppard Dep. at 48:7–52:1.

Things heated up in the fall of 2014. In early fall 2014, Sheppard was asked to, and did, perform the job duties and responsibilities of a Management Minutes Questionnaire ("MMQ") Coordinator because the position was vacant. Docket No. 51–1 ¶ 11. Sheppard's Performance Appraisal, dated October 13, 2014, says that "[Sheppard] is taking on the role of MMQ," Docket No. 51–8 at 1, but Sheppard disputes that she actually accepted the position of MMQ Coordinator, which dealt with Medicaid reimbursements, Sheppard Dep. at 112:21–113:22; Docket No. 51–1 ¶ 12.

In October or November of 2014, Sheppard told Darlene Morris, the regional clinical reimbursement specialist, that she would not participate in Morris's "upscoring" of patients. Sheppard Dep. at 56:2–20. Upscoring "means to change the criteria of the MDS/MMQ reports so that a patient appears to need more services and [Essex] will be eligible for additional funding." Docket No. 51–5 at 13. Additionally, in an email from Stephen Hopkins, a medical records clerk, to Silvia, the administrator, dated October 31, 2014, Hopkins wrote that Sheppard "said that [Morris] has been going through the Medicaid charts and taking out documents that conflict with nursing as far as reimbursement so she doesn't lose points on the audit." Docket No. 51–13. At some point in time, Marcie Zarella, the regional director of clinical reimbursement, told Sheppard not to put any of her findings in an email because Essex was being audited by the Massachusetts Attorney General's Office for Medicaid fraud. Docket No. 51–5 at 17. Based on that directive, Sheppard entered her findings in a Word document, which she gave to her supervisors. Docket No. 51–5 at 17.

On October 13, 2014, Sheppard received a positive performance review for her job as MDS Coordinator. Docket No. 51–8. But, around the same time, Morris shared concerns with Zarella about Sheppard's performance. Docket No. 51–1 ¶ 16. On November 18, 2014, Essex presented Sheppard with a Performance Warning and Plan for Improvement ("PIP"), Docket No. 51–1 ¶ 20, which she did not sign because she disagreed with the way Essex characterized her responsibilities with respect to the MMQ project, Sheppard Dep. at 111:4–113:22. Sheppard's PIP expressly states that her failure to immediately improve her performance could lead to termination. Docket No. 51–9 at 2.

On November 30, 2014, the biannual internal audit of the MMQ documentation conducted by Morris revealed numerous deficiencies, which Sheppard failed to report, as required by the PIP. Docket No. 51–1 ¶ 22. Sheppard was then "re-educated on the process for completing and correcting the monthly nursing summaries." Docket No. 51–1 ¶ 23. The audit further showed that, on December 3, 2014, Sheppard had not completed her required tasks. Docket No. 51–1 ¶ 24.

Sheppard was suspended pending investigation on December 5, 2014. Docket No. 51–10. The reason indicated on the form was "Performance," and her job title as listed on the suspension form was "MMQ Coordinator." Docket No. 51–10.

On December 8, 2014, Sheppard wrote a letter to Essex disputing her suspension and arguing she had been unfairly suspended. Docket No. 51–11 at 1. In the letter, Sheppard indicated that Essex retaliated against her "because [she] would not agree to the ‘overscoring’ of certain residents." Docket No. 51–11 at 2. She also wrote that she had "been told to ‘look away’ while [Morris] marked up a nursing summary." Docket No. 51–11 at 2.

Upon receiving the letter, Zarella and Robert Clark undertook an investigation into Sheppard's allegations of fraudulent conduct by Morris. Docket No. 51–1 ¶ 29. Essex's investigation revealed no support for Sheppard's allegations. See Docket No. 51–1 ¶ 34.

Sheppard's employment was terminated on January 5, 2015. See Docket No. 51–14. The proffered reason for the termination was her "failure to meet expected performance standards." Docket No. 51–14. Sheppard maintains, however, that she was terminated in retaliation for reporting Morris's alleged Medicaid reimbursement manipulation. See Docket No. 51–5 at 17.

LEGAL STANDARD

Courts "should freely give leave [to amend pleadings] when justice so requires." Fed. R. Civ. P. 15(a)(2). However, courts may deny leave to amend for several reasons, including "futility of amendment." United States ex rel. Gagne v. City of Worcester, 565 F.3d 40, 48 (1st Cir. 2009) ; accord Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962) (motion for leave to amend may be denied where there is "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.").

If a plaintiff seeks leave to amend a complaint prior to the close of discovery, courts apply the motion to dismiss standard of Fed. R. Civ. P. 12(b)(6) to decide whether amendment would be futile. Hatch v. Dep't for Children, Youth & Their Families, 274 F.3d 12, 19 (1st Cir. 2001). However, when leave to amend a complaint is sought after discovery is complete and a party has already moved for summary judgment, a plaintiff must meet a more rigorous standard. See id. (citing Resolution Trust Corp., 30 F.3d at 253 ) (stating that, in that situation, "the proposed amendment must be not only theoretically viable but also solidly grounded in the record"). Here, since the discovery deadlines have passed, and there is a motion for summary judgment on the docket, Sheppard's amendments will be deemed futile "unless the allegations of the proposed amended complaint are supported by substantial evidence." Id. (citing Resolution Trust Corp., 30 F.3d at 253 ).

DISCUSSION

I. Qui Tam Claim

A qui tam action on behalf of the Commonwealth of Massachusetts alleging violations of the MFCA must meet the special pleading requirements of Fed. R. Civ. P. 9(b). See Lawton ex rel. United States v. Takeda Pharm. Co., 842 F.3d 125, 132 (1st Cir. 2016) (" ...