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Brandon v. Anesthesia & Pain Management Associates

January 18, 2002

MICHAEL BRANDON, M.D., PLAINTIFF-APPELLANT,
v.
ANESTHESIA & PAIN MANAGEMENT ASSOCIATES, LTD., KUMAR S. RAVI, M.D., JAMES R. BOIVIN, M.D., AND KATHLEEN H. SLOCUM, M.D., DEFENDANTS-APPELLEES.



Appeal from the United States District Court for the Southern District of Illinois. No. 97-CV-1004--G. Patrick Murphy, Chief Judge.

Before Harlington Wood, Jr., Diane P. Wood, and Williams, Circuit Judges.

The opinion of the court was delivered by: Diane P. Wood, Circuit Judge

Argued April 18, 2001

Dr. Michael Brandon was employed as an anesthesiologist by Anesthesia & Pain Management Associates (APMA). After discovering that certain APMA doctors seemed to be falsifying the bills they submitted to Medicare, he brought his concerns to the attention of the APMA shareholders. This led in short order first to problems at work and later to his discharge. Believing that the discharge was in retaliation for his airing of the Medicare issue, Brandon filed a lawsuit claiming that the defendants had committed the Illinois tort of retaliatory discharge. A jury found in his favor, but not long afterward the district court granted APMA's motion for judgment as a matter of law and vacated the jury verdict. The court found as a matter of law that the Illinois Supreme Court would not recognize a retaliatory discharge claim under the circumstances of Brandon's case. In our view, the district court was mistaken on this critical question of Illinois law; we therefore reverse the grant of the Rule 50 motion and order the jury's verdict to be reinstated. Furthermore, we conclude that the trial court should not have dismissed the punitive damage claims, which we remand for further proceedings.

I.

Brandon began working as an anesthesiologist for APMA in September 1993. APMA provides anesthesia services to patients at St. Elizabeth's Hospital in Belleville, Illinois; approximately 45% of its patients are Medicare recipients. When Brandon was hired, APMA had four shareholder/ anesthesiologists: Dr. Kumar Ravi, Dr. Kathleen Slocum, Dr. James Boivin, and Dr. Maurice Boivin. (Maurice Boivin was no longer a shareholder at the time Brandon filed his complaint, which accounts for his absence in the list of defendants.) After two years on the job, Brandon was promoted to an associate position. Along with the promotion came a 42% pay raise and the ability to begin the process of becoming an APMA shareholder. Brandon also received a substantial bonus at the end of 1995.

As an associate, Brandon was now responsible (along with the shareholder-doctors) for filling out Medicare billing reports. He soon began to suspect that several of the shareholders were making alterations to reports or otherwise falsifying reports in order to receive Medicare reimbursement at rates higher than the rates to which APMA was entitled by law. Under the governing regulations, Medicare allows for more generous reimbursements for procedures that an anesthesiologist "medically directs" (because the bill includes both the doctor's services and the services of various assistants), than for procedures that the doctor "personally performs." There are limits, however, to the use of the "medically directed" rate; most importantly for present purposes, an anesthesiologist may not oversee more than four surgeries at a time. If she does, then the provider may bill (at a much lower rate) only for the services of the assistants who are actually performing the work.

In May or June 1996, Brandon contacted Medicare to obtain a copy of its regulations. After reviewing them, he became convinced that his colleagues' practices were improper. Some, he thought, were falsifying the number of operations they were supervising, so that they could bill at the highest "medically directed" rate; others were altering the billing sheets to indicate that they were performing work, even though they had left the hospital for the day. Accordingly, at the shareholders' meeting held in early July 1996, he brought these issues to their attention and showed them copies of the relevant Medicare rules. The doctors seemed upset that he had contacted Medicare and worried about what he had told the Medicare authorities. Brandon assured them that he had asked Medicare only generic questions and had not divulged any information about APMA's billing procedures. He also suggested that the shareholders should hire another anesthesiologist, which would make it easier for them legitimately to meet the Medicare requirements for billing at higher rates. The shareholders told Brandon that they would look into the problem. (At trial, the shareholders argued that Brandon did not complain about Medicare fraud until November 1996. But since the jury found in Brandon's favor, we are taking his version of the facts as true.)

A few weeks later, on July 24, 1996, the shareholders told Brandon that his job performance was unsatisfactory, that they had received complaints about him, and that he should start looking for other work. Brandon found this suspicious, as no formal complaint had ever been filed against him, he had recently been promoted, and he had recently received a substantial raise.

He pressed the shareholders for details about the alleged complaints against him, but they did not furnish any particulars. Around the same time, Brandon began keeping a journal documenting all of the cases in which he thought that APMA shareholders were improperly billing Medicare. He periodically brought these occurrences to the shareholders' attention, but he took no other action at that time.

On October 4, 1996, Slocum told Brandon that the shareholders had decided that he had to leave his job by the end of the year. Brandon protested that the shareholders were firing him only because of his challenges to their Medicare claims and that he planned to "take them to court." Slocum answered, "We can do what we want with you. You don't have a contract."

On October 21 and 22, Brandon again brought his complaints to the attention of the shareholders. His effort did nothing but bring about a letter from the shareholders dated October 23, 1996, formally notifying him that he was discharged effective at the end of the year, but also giving him the option to resign. On November 1, 1996, Brandon met with the shareholders to discuss the termination; he again accused the shareholders of retaliating against him for pointing out the billing fraud. With strong, vulgar language, Slocum made it plain that Brandon was finished, and bluntly added, "You don't have a signed contract." At this time, Brandon, for the first time, threatened to report the alleged fraud to the government.

On November 4, the shareholders sent Brandon another letter making his termination effective immediately, but still urging him to resign. They suggested that if he did not resign, they could make it very difficult for him to find another job. Brandon refused to resign, and so he was terminated. Ten months after his termination, he reported APMA's billing practices to the U.S. Attorney's Office. (The record does not reflect what use, if any, the U.S. Attorney's Office made of his report.)

Brandon (a citizen of Missouri) then filed this diversity suit against APMA and its current shareholders (all Illinois citizens), alleging retaliatory discharge under Illinois law. The trial began on October 26, 1999. Two days later, at the close of Brandon's evidence, the defendants filed a motion for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50(a); they renewed their motion at the close of all the evidence. The court reserved its ruling on the motions; it also refused Brandon's request for a punitive damages instruction. On November 3, 1999, the jury returned a verdict in favor of Brandon, awarding him $1,034,000 for lost earnings and $1,000,000 for pain and suffering and emotional distress.

But Brandon's victory was short-lived. About six months after the jury verdict, the district court entered a final judgment granting the defendants' motion for judgment as a matter of law, vacating the jury ...


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