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Nichols v. Baylor Research Institute

United States District Court, N.D. Texas, Dallas Division

November 19, 2019




         Before the Court is Defendant Baylor Research Institute d/b/a Baylor Scott & White Research Institute's (Baylor's) Motion to Dismiss (Doc. 9). For the reasons that follow, the Court GRANTS in part and DENIES in part Defendant's Motion.


         This is a whistleblower case. Plaintiff Christy Nichols alleges that her employer retaliated against her for engaging in “protected activity.”[1] Ms. Nichols was employed as an Abdominal Transplant Research Registered Nurse by Defendant Baylor, from January 29, 2018 until March 8, 2019. Doc. 8, First Amend. Compl., ¶¶ 2, 5. Starting in or around June 2018, Ms. Nichols began expressing her concerns to Baylor management about several of its practices. Id. ¶¶ 6-7. The First Amended Complaint (Complaint) details various instances where Ms. Nichols reported her concerns to Baylor management. They are as follows:

         First, in June 2018, Ms. Nichols met with supervisors and explained that she had discovered double-billing practices in two doctors' studies. Id. Specifically, Ms. Nichols “discovered that Baylor was receiving payment from pharmaceutical companies as well as insurance companies, including billing Medicare.” Id. ¶ 7. Baylor had billed procedures or tests to insurance companies “that [were] not standard of care and not covered in the Medicare-required Coverage Analysis.” Id. Baylor would then receive payment from the pharmaceutical companies. Id.

         Second, in November and December of 2018, Ms. Nichols reported to Baylor that it “was creating medical records without consent and using Social Security Numbers in violation of IRS requirements, ” and “Baylor was not clearly disclosing to [test] subjects nor adequately differentiating between non-taxable reimbursements of expenses and taxable compensation to be reported on IRS 1099-MISC forms.” Id. ¶ 14. As a result, nontaxable reimbursements were included in the 1099 forms to subjects. Id. In doing so, Baylor failed to follow federal law, which was a condition for “receiving federal grants for its research programs . . . .” Id. Baylor was also required to “immediately notify the National Institutes of Health (NIH) of noncompliance with federal law.” Id.

         Third, in December 2018, Ms. Nichols reported to Baylor that the current storage temperature was minus 80 degrees Fahrenheit, which was lower than the minus 20 degrees protocol. Baylor's receipt of federal funds was conditioned on an agreement to store specimens at minus 20 degrees, and therefore “the release of these specimens to the NIH would result in false information being provided to the NIH.” Id. ¶¶ 11, 17.

         Fourth, again in December 2018, Ms. Nichols reported that she and a co-worker had “discovered a pattern of negligence and mismanagement” at Baylor. Id. ¶ 25. Specifically, one doctor had been forced to submit incomplete and inaccurate information to Baylor's Institutional Review Board (IRB); physicians responsible for a study were not consulted about their opinion “and direction”; and patients were not given proper notice of the risks of a study. Id. The Complaint notes how “[t]hese actions violated requirements to comply with Federal Drug Administration (FDA) and NIH rules with respect to study applications and compliance, which were requirements for the receipt of federal funds.” Id. Fifth, in January 2019, Ms. Nichols spoke to human resources about her “concerns regarding study conduct and that her previous complaints made to managerial staff had not been addressed.” Id. ¶ 30. The Complaint alleges that the “studies were . . . not in compliance with requirements to meet NIH requirements for the receipt of federal grants and/or would result in improper Medicare billing.” Id. ¶ 29.

         Sixth, in February 2019, Ms. Nichols again voiced her concerns about the double-billing procedures through emails and during meetings. Id. ¶ 33.

         Seventh, again in February 2019, presumably dissatisfied with Baylor's response to her complaints, Ms. Nichols emailed the Office of Human Research Protection (OHRP) and the FDA to report her concerns about pharmaceutical and NIH-funded studies. Id. ¶ 34.

         Eighth, later that February, Ms. Nichols notified Baylor of her report to the FDA. Id. ¶ 35. This began a long process by which Baylor asked Ms. Nichols about her report, and subsequently put her employment on “pause.” Id. ¶¶ 36-37. Shortly after a meeting between Baylor and Ms. Nichols on March 5, 2019, Ms. Nichols was notified that “it was [Baylor's] opinion that [Ms. Nichols] would continue to have concerns if she were to return to work, and management did not feel that [Ms.

         Nichols] would be successful if she returned.” Id. ¶¶ 48-52. Ms. Nichols was offered a severance package, which she did not sign. Id. ¶ 54. Ms. Nichols was subsequently terminated. Id. ¶ 62.

         Ms. Nichols then brought this civil action, alleging that her discharge was an unlawful retaliation in violation of 31 U.S.C. § 3730(h)(1). Id. at 11 -12. Baylor then filed a motion to dismiss (Doc. 9). All briefing has been filed in relation to this motion, and the motion is now ripe for review.


         Under Federal Rule of Civil Procedure Rule 8(a)(2), a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief . . . .” Fed.R.Civ.P. 8(a)(2). Rule 12(b)(6) authorizes the Court to dismiss a complaint for “failure to state a claim upon which relief can be granted . . . .” Id. 12(b)(6). To survive a 12(b)(6) motion, “enough facts to state a claim to relief that is plausible on its face” must be pled. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. At this stage, a court “must accept all well-pleaded facts alleged in the complaint as true and must construe the allegations in the light that is most favorable to the plaintiff.” J&J Sports Prods., Inc. v. Live Oak Cnty. Post No. 6119 Veterans of Foreign Wars, 2009 WL 483157, at *3 (S.D. Tex. Feb. 24, 2009) (quoting Cent. Laborers' Pension Fund v. Integrated Elec. Servs., 497 F.3d 546, 550 (5th Cir. 2007)).

         The Fifth Circuit has held that dismissal is appropriate “if the complaint lacks an allegation regarding a required element necessary to obtain relief.” Blackburn v. City of Marshall, 42 F.3d 925, 931 (5th Cir. 1995) (internal citation omitted). Essentially, “the complaint must contain either direct allegations on every material point necessary to sustain a recovery . . . or contain allegations from which an inference fairly may be drawn that evidence on these material points will be introduced at trial.” Campbell v. City of San Antonio, 43 F.3d 973, 975 (5th Cir. 1995) (internal citation omitted).

         III. ANALYSIS

         Under the False Claims Act (FCA), a private person can sue any person who has submitted false claims for payment to the United States Government. 31 U.S.C. §§ 3729(a), 3730(b)(1). The suit is a qui tam action in which “[t]he suit is brought in the Government's name, and the Government has the exclusive opportunity to intervene.” United States ex rel. Johnson v. Kaner Med. Grp., P.A., 641 Fed.Appx. 391, 393 (5th Cir. 2016) (per curiam) (citing 31 U.S.C. § 3730(b)(1), (4)-(5)).

         The FCA protects these private whistleblowers who bring qui tam actions. The act gives a private cause of action to a whistleblower employee who is “discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms of conditions of employment” in response to their acts done “in furtherance of an action under this section or other efforts to stop 1 or more violations of” the FCA. 31 U.S.C. § 3730(h)(1). This cause of action “is intended to encourage those with knowledge of fraud to come forward.” Roberston v. Bell Helicopter Textron, Inc., 32 F.3d 948, 951 (5th Cir. 1994).

         “To establish a claim under § 3730(h), a party must show (1) that she was engaged in protected activity with respect to the False Claims Act; (2) that her employer knew she was engaged in protected activity; and (3) that she was discharged because she was engaged in protected activity.” Thomas v. ITT Educ. Serv., Inc., 517 Fed.Appx. 259, 262 (5th Cir. 2013) (per curiam) (citing Robertson, 32 F.3d at 951).

         As a threshold matter, Ms. Nichols argues that at the motion-to- dismiss stage, she need not plead these three elements. Doc. 12, Pl.'s Opp. to Def.'s Mot. to Dismiss and Br. in Supp. (“Pl.'s Br.”), 3 n.1. However, this Court has previously required that a plaintiff adequately plead all three elements at the motion-to-dismiss stage. See Jamison v. Fluor Fed. Sols., LLC, 2017 WL 3215289, at *5 (N.D. Tex. July 28, 2017) (Boyle, J.). Additionally, United States ex. rel. George v. Boston Scientific Corporation, a case upon which Ms. Nichols heavily relies, analyzed all three elements of a retaliation claim at this stage of litigation. 864 F.Supp.2d 597, 603-04 (S.D. Tex. 2012).

         Thus, the Court will consider whether Ms. Nichols adequately pled all three elements of an FCA retaliation claim. In brief, this Court finds that, as pled, Ms. Nichols' internal complaints concerning the double billing, were protected activity of which Baylor had notice, while her other complaints were not protected activity.

         A. Prote ...

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