Wilson v. Alaska Native Tribal Health Consortium

399 F.Supp.3d 926

Joan WILSON and Paul Franke, M.D., Plaintiffs,

v.ALASKA NATIVE TRIBAL HEALTH CONSORTIUM; Andrew Teuber; and Roald Helgesen, Defendants.

Case No. 3:16-cv-00195-TMB

United States District Court, D. Alaska.

Signed July 3, 2019

Margaret Simonian, Molly C. Brown, Dillon & Findley, P.C., Anchorage, AK, for Plaintiffs

Richard D. Monkman, Sonosky, Chambers, Sachse, Miller & Munson, LLP, Juneau, AK, for Defendants.

ORDER ON MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION AND FAILURE TO STATE A CLAIM (DKT #50), CROSS MOTION FOR JURISDICTIONAL DISCOVERY (DKT #74) AND MOTION TO DISQUALIFY (DKT #32)

TIMOTHY M. BURGESS, UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

The matter comes before this Court on Defendants Alaska Native Tribal Health Consortium's ("ANTHC"), Andrew Teuber's ("Teuber") and Roald Helgesen's ("Helgesen") (collectively "Individual Defendants") Motion to Dismiss for Lack of Subject Matter Jurisdiction and Motion to Dismiss for Failure to State a Claim ("Motion to Dismiss").¹ Plaintiffs Joan Wilson ("Wilson") and Dr. Paul Franke ("Franke") opposed the Motion to Dismiss and cross-moved for Jurisdictional Discovery ("Discovery Motion").² This matter was fully briefed by the parties, and this Court heard oral argument on the Motion to Dismiss and Discovery Motion on June 12, 2019.³ Also pending before the Court is Defendants' Motion to Disqualify Counsel and Plaintiffs ("Motion to Disqualify"),⁴ which is fully briefed and ripe for adjudication. The Parties did not seek oral argument with respect to the Motion to Disqualify, and this Court does not find it necessary to its analysis. For the reasons explained below, Defendants' Motion to Dismiss at Docket 50 is GRANTED , Plaintiffs' Cross-motion for Jurisdictional Discovery at Docket 74 is DENIED , and Defendants' Motion to Disqualify at Docket 32 is DENIED AS MOOT .

II. BACKGROUND

A. Factual Background

ANTHC is a "Tribal Organization and inter-Tribal consortium of federally recognized Alaska Tribes and Tribal Organizations"⁵ which co-manages Alaska Native Medical Center ("ANMC"), a tertiary-care hospital that provides medical services in Anchorage, Alaska.⁶

From 2014 to 2016, ANTHC employed Wilson as Chief Ethics and Compliance Officer.⁷ From 2013 to 2016, ANTHC employed Franke by contract as the Chief Medical Officer of ANMC.⁸ Wilson and Franke assert that they have "intimate knowledge of the day-to-day operations" of ANTHC, including billing practices of ANMC.⁹ They repeatedly allege that Teuber, President of ANTHC,¹⁰ and Helgesen, Chief Executive Officer of ANTHC and Hospital Administrator of ANMC,¹¹ were "well-aware" that ANMC and ANTHC's various billing practices were fraudulent.¹² Specifically, Plaintiffs allege that ANTHC engaged in the following fraudulent practices: double billing for certain medical services;¹³ billing for services performed by ineligible providers;¹⁴ billing for unauthenticated services;¹⁵ and accepting incentive payments from Medicaid and Medicare without satisfying program requirements.¹⁶ Plaintiffs allege that Wilson "repeatedly brought these issues to the attention of ANTHC and Helgesen," "repeatedly attempted to reverse these [inappropriate] practices"¹⁷ and "urged ANTHC to return, report and repay overpayments that ANTHC wrongfully obtained"¹⁸ without success. Plaintiffs also allege that Helgesen and Teuber took "no action to stop [these inappropriate billing practices]"¹⁹ and even "buried Ms. Wilson's draft compliance plan designed to remedy billing concerns."²⁰

On May 6, 2016, Helgesen terminated Wilson's employment with approval from Teuber, his direct supervisor.²¹ In June 2016, ANTHC notified Franke that his contract, which was due to expire on June 7, 2016, would not be renewed.²²

B. Procedural History

On August 29, 2016, Plaintiffs initiated this action against ANTHC as a qui tam lawsuit on behalf of the government and under seal pursuant to the False Claims Act ("FCA").²³ On December 6, 2017, the United States declined to intervene in the action.²⁴ On June 21, 2018, Plaintiffs filed an Amended Complaint as a private action on behalf of themselves against ANTHC.²⁵ On December 3, 2018,²⁶ Plaintiffs filed the Second Amended Complaint ("SAC"), adding the Individual Defendants pursuant to federal question jurisdiction.²⁷ Plaintiffs allege that their employment at ANTHC was terminated as a result of Plaintiffs' opposition to ANTHC's fraudulent billing practices in violation of federal and state laws.

III. LEGAL STANDARD

Defendants move to dismiss the SAC pursuant to Fed. R. Civ. P. 12(b)(1) based on tribal sovereign immunity and 12(b)(6) based on a failure to state a claim upon which relief can be granted.

A. Motion to Dismiss Under Fed. R. Civ. P. 12(b)(1)

The issue of tribal sovereign immunity is quasi-jurisdictional. When properly raised in a 12(b)(1) motion, a district court is not bound to accept a plaintiff's allegations as true in resolving that issue,²⁸ nor is it bound by the four corners of the complaint; however, a Court may consider additional materials in resolving a 12(b)(1) motion.²⁹ Furthermore, once a party raises this defense, " ‘the party asserting subject matter jurisdiction has the burden of proving its existence,’ i.e. that immunity does not bar the suit."³⁰

B. Motion to Dismiss Under Fed. R. Civ. P. 12(b)(6)

Under Fed. R. Civ. P. 12(b)(6), a defendant may move to dismiss a claim for lacking a factual basis "upon which relief can be granted."³¹ Under the "facial plausibility" pleading standard set forth by the Supreme Court in Ashcroft v. Iqbal , "a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim for relief that is plausible on its face.’ "³² A district court must accept as true the material factual allegations contained in the complaint, draw all reasonable inferences in favor of the non-moving party, and only consider the allegations contained in the complaint without looking beyond its four corners.³³

IV. ANALYSIS

Plaintiffs assert the following four claims: (Count I) Defendants violated the FCA by terminating Plaintiffs' employment in retaliation for raising concerns about ANTHC and ANMC's fraudulent billing practices; (Count II) ANTHC wrongfully terminated Plaintiffs' employment in violation of Alaska's public policy to prevent Medicaid fraud in Alaska; (Count III) ANTHC breached the covenant of good faith and fair dealing under Alaska state law when it terminated Plaintiffs without cause; and (Count IV) ANTHC is vicariously liable for the acts of its employees.³⁴

A. Motion to Dismiss

Defendants move for dismissal of each of Plaintiffs' four claims.³⁵ ANTHC contends that dismissal is appropriate because ANTHC is an "arm of the tribe," which means it is both entitled to tribal sovereign immunity, which bars all claims against it, and is not "a person" subject to liability under the FCA retaliation provision. The Individual Defendants also contend that dismissal is appropriate because they do not have an employment, contractual or agency relationship with the Plaintiffs. The Court addresses each of these arguments.

1. Whether ANTHC is "An Arm of the Tribe"

The quasi-jurisdictional nature of sovereign immunity means that if ANTHC is found to maintain such immunity, this Court lacks jurisdiction to resolve this action as it pertains to ANTHC.³⁶ "Tribal sovereign immunity protects Indian tribes from suit absent express authorization by Congress or clear waiver by the tribe."³⁷ Tribal sovereign immunity extends to tribal governing bodies or entities acting as "an arm of the tribe"³⁸ as well as organizations comprised of multiple tribes.³⁹

In White v. University of California ,⁴⁰ the Ninth Circuit Court of Appeals set forth the appropriate analysis to determine whether an entity is an "arm of the tribe." If a Court finds that an entity is an "arm of the tribe," that entity is both (1) entitled to maintain tribal sovereign immunity, and (2) is not liable under the FCA retaliation provision, because it is not "a person" under the FCA.⁴¹ White , established a five-factor analysis to determine if an entity is an "arm of the tribe:"

(1) the method of creation of the economic entities; (2) their purpose; (3) their structure, ownership, and management, including the amount of control the tribe has over the entities; (4) the tribe's intent with respect to the sharing of its sovereign immunity; and (5) the financial relationship between the tribe and the entities.⁴²

The Court therefore considers whether ANTHC is an "arm of the tribe" under the five-factor analysis articulated in White.

a. Method of Creation of ANTHC

Plaintiffs argue that ANTHC is not an "arm of the tribe" because it was created by Congress, not directly by resolution of the tribes; and tribal status is not required in order to obtain federal funding through the Indian Self-Determination and Education Assistance Act ("ISDEAA").⁴³ Defendants assert that the ISDEAA supports tribal sovereign immunity by giving it the "same ‘rights and responsibilities’ of any tribe."⁴⁴ During oral argument, Defendants further highlighted that ANTHC was authorized by Congress and formed by the tribes because they needed an organization above the regional level to manage statewide health services in Alaska.

ANTHC was authorized by federal law and formed by thirteen Alaska Native regional health entities as a tribal organization and Inter-Tribal Consortia under authority of Alaska Native tribes.⁴⁵ In § 325 of Public Law 105-83, Congress authorized the following tribes and Alaska Native health entities to join together "without further resolution" to form ANTHC to provide comprehensive healthcare to the Alaska Native people: the Aleutian/Pribilof Islands Association, Inc., Bristol Bay Area Health Corporation, Chugachmiut, Copper River Native Association, Kodiak Area Native Area Association, Maniilaq Association, Metlakatla Indian Community, Arctic Slope Native Association, Ltd., Norton Sound Health Corporation,...