United States ex rel. Dorsa v. Miraca Life Scis., Inc.

33 F.4th 352

UNITED STATES of America EX REL. Paul DORSA, Relator-Appellee,

v.MIRACA LIFE SCIENCES, INC., Defendant-Appellant.

No. 21-5228

United States Court of Appeals, Sixth Circuit.

Argued: December 8, 2021

Decided and Filed: May 4, 2022

ARGUED: David Barmak, MINTZ, LEVIN, COHN, FERRIS, GLOVSKY & POPEO, P.C., Washington, DC, for Appellant. Nathan C. Sanders, NEAL & HARWELL, PLC, Nashville, Tennessee, for Appellee. ON BRIEF: David Barmak, Jennifer R. Budoff, MINTZ, LEVIN, COHN, FERRIS, GLOVSKY & POPEO, P.C., Washington, DC, for Appellant. Nathan C. Sanders, James F. Sanders, William T. Ramsey, NEAL & HARWELL, PLC, Nashville, Tennessee, for Appellee.

Before: COLE, GIBBONS, and LARSEN, Circuit Judges.

OPINION

COLE, Circuit Judge.

Paul Dorsa filed a retaliation claim under the False Claims Act against his former employer, Miraca Life Sciences, Inc., in November 2013. Miraca sought to dismiss this claim because Dorsa had agreed to binding arbitration as part of his employment agreement with Miraca. The district court denied Miraca's motion to dismiss, finding that the arbitration clause did not cover Dorsa's retaliation claim. Miraca appealed, but this court dismissed the appeal for lack of jurisdiction. Miraca then filed a petition to stay the action and to compel arbitration. The district court also denied that petition. On appeal, Miraca contests the district court's authority to decide threshold questions of arbitrability and its ruling on the merits. But Miraca has forfeited and waived the arguments now before us, so we affirm.

I. BACKGROUND

In August 2012, Paul Dorsa joined Miraca Life Sciences, Inc.¹ as its Senior Vice President of Commercial Operations. Miraca is a laboratory company that offers pathology services for healthcare providers. When Dorsa was hired, he entered into an employment agreement with Miraca that contained a binding arbitration clause.

Dorsa describes that, during his employment with the company, he observed Miraca giving monetary donations and free consulting services to healthcare providers to induce pathology referrals to Miraca's lab. Dorsa learned that these "programs" violated the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), and the Stark Law, 42 U.S.C. § 1395nn. Because nearly a third of the tainted referrals led to claims for Medicare reimbursement, Dorsa also determined that Miraca had committed thousands of violations of the False Claims Act ("FCA"), 31 U.S.C. § 3729(a)(1). Dorsa decided to lodge internal complaints with Miraca's management about the illegal programs in September 2013.

When Dorsa confronted Miraca CEO Frank Basile about the donation and consulting programs, Basile told Dorsa that Miraca would not change its practices, and that if they ever "came to light," Miraca would "just settle with the Government." (Second Am. Compl., R. 59, PageID 339.) Miraca Business Analyst John Ripley echoed Basile's comments and told Dorsa that Ripley had "three file boxes in [his] office" containing evidence of Miraca's illegal donation program "that [would] put us in jail." (Id. ) Dorsa then reported his concerns to Miraca's compliance hotline on September 16, 2013.

Around this time, a friend within the company told Dorsa that Miraca management was "coming for him" because of the complaints he had been making. (Id. at PageID 340.) On September 18, 2013, Dorsa received a call informing him that a sexual harassment complaint had been made against him by another employee. Five days later, the Miraca employee who allegedly made the complaint told Dorsa that she did not file a complaint or report any sexual harassment to Miraca management.

Dorsa filed a qui tam action against Miraca on September 20, 2013. He alleged two FCA claims, as well as common law claims for payment by mistake of fact and unjust enrichment.

Four days after Dorsa filed suit—and the morning after he spoke to the coworker who denied filing the sexual harassment complaint—Miraca fired Dorsa via letter. The letter stated that Dorsa was terminated "[p]ursuant to the ... Employment Agreement ... for Cause on an immediate basis." (Sept. 24, 2013 Letter from Miraca to Paul Dorsa, R. 59-28, PageID 603.) More specifically, the letter explained that Miraca had conducted "a reasonable investigation" and "concluded that [Dorsa] violated the Company's policy against workplace harassment on several occasions and thereafter showed a complete lack of candor in response to Miraca's inquiries[.]" (Id. )

In November 2013, Dorsa amended his complaint first to include an FCA retaliation claim and then again to bring additional factual allegations. Dorsa alleges that Miraca terminated him in retaliation for the actions he took to stop the company's FCA violations. Dorsa also states that Miraca never conducted an investigation or made any inquiries about the purported harassment, that the employee at issue never made a sexual harassment complaint or even spoke to Miraca executives before Dorsa was terminated, and that Miraca's stated reason for terminating him was pretextual. He seeks back pay and front pay, including long term incentive payments he would have received under the employment agreement had he not been terminated. He also seeks damages and attorney fees.

The government investigated the claims against Miraca for several years, receiving twelve extensions of the FCA period while the government considered whether to intervene in Dorsa's case. As a result, Dorsa's complaints remained mostly sealed between September 20, 2013 and January 8, 2019. Eventually, on November 26, 2018, the government intervened for purposes of settlement. Under the settlement, Miraca agreed to pay $63.5 million plus interest to resolve FCA claims asserted in three separate actions, including Dorsa's. The settlement did not resolve Dorsa's retaliation claim or any claim he had to attorney fees.

A. Miraca's Motion to Dismiss

On September 26, 2019, Miraca moved to dismiss the retaliation claim with prejudice under Federal Rule of Civil Procedure 12(b)(6) or, in the alternative, under Rules 12(b)(1) and 12(b)(3). Miraca argued that Dorsa could not litigate his retaliation claim in court because the arbitration clause stipulated that "any dispute, claim or disagreement arising out of or in connection with" the employment agreement must be resolved through mediation and arbitration. (Employment Agreement, R. 95-1, PageID 758.) According to Miraca, Dorsa's retaliation claim arises "out of or in connection with" the employment agreement because that language "cover[s] all interactions between the employer and the employee." (Def.’s Mem. in Supp. of Mot. to Dismiss, R. 94, PageID 739–40 (emphasis added).) By advancing this argument, Miraca asked the district court to find that the arbitration clause encompassed Dorsa's retaliation claim. In other words, Miraca invited the district court to rule on the scope of the arbitration clause.

When Dorsa opposed Miraca's motion to dismiss, he argued that the arbitration clause did not cover his retaliation claim because the claim exists independently from the employment agreement. On reply, Miraca then asserted for the first time that the district court did not have the authority to rule on a threshold question of arbitrability, arguing the parties had agreed to delegate such questions to an arbitrator.

The district court ruled in favor of Dorsa. It found that the arbitration clause failed to cover the FCA retaliation claim because the claim has "nothing to do with" the employment agreement itself: "[T]he arbitration clause in the present case, which covers only disputes arising from or connected with the Employment Agreement, plainly does not cover plaintiff's FCA retaliation claim." United States ex rel. Dorsa v. Miraca Life Scis., Inc. , No. 3:13-CV-01025, 2019 WL 13130022, at *4 (M.D. Tenn. Dec. 11, 2019). Notably, the district court did not address Miraca's reply argument about the court's authority to decide threshold questions of arbitrability.

Miraca appealed the district court's decision on December 26, 2019. The Federal Arbitration Act ("FAA"), however, confers appellate jurisdiction only when a district court denies a request to stay the proceedings or to compel arbitration. 9 U.S.C. § 16(a)(1)(A)–(B). We found that "[t]he essence of Miraca's motion to the district court was a request that the court dismiss the action, not that the court stay the proceedings or issue an order compelling arbitration," so we dismissed the appeal for lack of jurisdiction. United States ex rel. Dorsa v. Miraca Life Scis., Inc. , 983 F.3d 885, 889 (6th Cir. 2020).

B. Miraca's Petition to Stay the Proceedings and Compel Arbitration

On remand, Miraca filed another motion, this time petitioning the district court to stay the proceedings and compel arbitration. Miraca argued that any threshold question regarding the arbitrability of Dorsa's retaliation claim must be resolved by an arbitrator, and not by the district court.

The district court denied Miraca's petition. The court echoed its previous determination that the arbitration clause fails to encompass the retaliation claim, again noting that the claim "does not aris[e] out of or in connection with" the employment agreement as the arbitration clause requires. United States ex rel. Dorsa v. Miraca Life Scis., Inc. , No. 3:13-CV-01025, 2021 WL 679275, at *3 (M.D. Tenn. Feb. 22, 2021). The district court also found that its holding was further supported by a carve-out sentence within the arbitration clause, which allows Dorsa to pursue equitable relief (like front and back pay related to his retaliation claim) in court rather than through arbitration. Id. (internal quotations omitted).

Additionally, the district court held that Miraca had waived its argument about its lacking authority to rule on threshold questions:

[Miraca] waived this argument by not presenting it in its motion to dismiss. In that motion, [Miraca] sought dismissal of the complaint and argued that the Court should determine the

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