Thomas Mooney was employed as chief operating officer for Vivida Dermatology, which was Dr. Douglas Fife’s dermatology practice. Mooney had a three-year employment agreement. That agreement contained a confidentiality provision and allowed Vivida to immediately terminate Mooney’s employment for cause.
Mooney alleged improper billing practices at Vivida. Vivida terminated Mooney after he: 1) talked with Dr. Fife about the billing practices; and 2) told a doctor from another dermatology practice to talk to Dr. Fife about that doctor’s concerns about whether Vivida was also interested in acquiring a third doctor’s practice.
Mooney then sued Vivida and included a retaliation claim under the U.S. False Claims Act (FCA), among other claims. The FCA protects whistleblowers who try to stop fraud against the government. The U.S. District Court granted Vivida’s motion for summary judgment on Mooney’s FCA claims. Mooney appealed.
The U.S. Court of Appeals for the Ninth Circuit found for Mooney. It held that the district court applied the wrong legal standards on Mooney’s FCA retaliation claim.
The Ninth Circuit held that a FCA retaliation claim requires proof of three elements: 1) protected conduct; 2) notice; and 3) causation. The Court clarified that in analyzing a FCA retaliation claim, courts must use the McDonnell Douglas burden-shifting framework. Under that framework, once an employee establishes a prima facie case of retaliation, the burden shifts to the employer to produce a legitimate, non-retaliatory reason for the employee’s termination. Then, if the employer produces such a reason, the burden shifts to the employee to show that the employer’s explanation was pretextual.
The Ninth Circuit applied the McDonnell Douglas framework. The Court concluded that Mooney’s protected conduct — telling Dr. Fife of his good faith belief that Vivida was committing Medicare and Medicaid billing violations — satisfied the first element of a retaliation claim. Mooney submitted proof that he subjectively and objectively believed that Vivida was possibly committing fraud against the government by “upcoding” procedures and “unbundling” component parts of procedures, each of which increased the value of Vivida’s Medicare and Medicaid reimbursements.
The Ninth Circuit concluded that Mooney met the notice requirement of a prima facie case, which requires a showing that the employer must have known that Mooney was trying to stop one or more violations of fraud against the government. Mooney testified that he notified Dr. Fife several times about his concerns about Vivida’s billing practices.
Vivida did not challenge causation, the third element of a prima facie case, and so the burden shifted to Vivida to produce a legitimate, non-retaliatory reason for Mooney’s termination. Vivida claimed that Vivida terminated Mooney’s employment based on legitimate, non-retaliatory reason because Mooney materially breached his Employment Agreement by disclosing confidential information concerning Vivida’s expansion plans to another dermatologist. But Vivida also gave “soft” alternative reasons for the termination, including that Mooney was abrupt and disrespectful of other staff. Mooney disputed that he disclosed any expansion plans and the alternative reasons. The Court held that Mooney established genuine issues of material fact as to whether Vivida’s reasons for his termination were pretextual.
The Court of Appeal reversed the district court’s grant of summary judgment as to Mooney’s claim for FCA retaliation and remanded that claim for trial.
Mooney v. Fife, 2024 U.S.App. LEXIS 24622 (9/30/2024).