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U.S. EX REL. GRANDEAU v. CANCER TREATMENT CENTERS OF AM.

November 10, 2004.

UNITED STATES OF AMERICA and STATE OF ILLINOIS ex rel. JACKIE GRANDEAU, Plaintiff-Relator,
v.
CANCER TREATMENT CENTERS OF AMERICA, et al., Defendants.



The opinion of the court was delivered by: JAMES MORAN, Senior District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff-relator Jacqueline Grandeau (relator) brought this qui tam action on behalf of the governments of the United States and the State of Illinois, and alleges that defendant Cancer Treatment Centers of America (CTCA) engaged in fraudulent billing practices in violation of the False Claims Act, 31 U.S.C. §§ 3729-3733(FCA). Defendant Midwest Regional Medical Center (MRMC), a subsidiary of CTCA, filed a counterclaim against relator in which it claims relator is liable for breach of fiduciary duty, breach of a confidentiality agreement and conversion. These claims arise from relator's response to a subpoena issued by the government during its investigation of suspected healthcare fraud committed by defendant. Relator filed a motion to dismiss defendant's counterclaims on statutory and policy grounds, and the government has supported that motion by way of an amicus curiae submission. For the following reasons, relator's motion is granted in part and denied in part.

BACKGROUND

  For purposes of this order the factual background is taken from defendant's counterclaim. MRMC operates a hospital in Zion, Illinois, and in 1997 it hired relator to serve as a Quality Assurance Coordinator. In that role, relator's responsibilities included medical coding, which involves working with billing documents and assigning the proper medical treatment codes to the services that patients actually received. In carrying out her medical coding duties, relator was privy to confidential documents, and in a confidentiality agreement she agreed not to disclose proprietary or confidential information "for any reason or purpose whatsoever." Relator's access to confidential documents increased when she was promoted in November 1998.

  In or around early March 1999, relator received a subpoena issued by the United States Department of Justice (DOJ). The subpoena was mailed to her at defendant's business, addressed to her as "QA Coordinator, PCI," and requested production of documents necessary for the DOJ's investigation of federal health care offenses, such as "Medical records and billing records relating to suspected billing discrepancies, including excessive charges and improper billing." Defendant claims that relator never told any supervisor, director, officer or coworker that she received the subpoena. Neither did she disclose to anyone at MRMC that she had collected, copied and delivered to the government numerous documents containing confidential information. Defendant further alleges that relator collected and produced to the government numerous confidential and proprietary documents that were outside the scope of the subpoena.

  On December 20, 1999, relator filed a qui tam action, which remained under seal pursuant to the FCA. After reviewing the action, the government declined to intervene on March 13, 2002, and immediately thereafter Judge Aspen ordered the complaint be unsealed and served on defendant. Defendant filed its counterclaim on March 7, 2003, and relator moved to dismiss the counterclaim on April 30, 2003. On April 2, 2004, the government, as amicus curiae, filed a memorandum in support of relator's motion to dismiss.

  Defendant's counterclaim contains three counts. First, defendant alleges that relator breached her fiduciary duty by failing to disclose her receipt of and response to the subpoena. Defendant claims that relator's breach provided grounds for her termination and that it also led to the substantial sums it spent in the defense of the qui tam action. Second, defendant claims that by secretly responding to the subpoena, relator breached the confidentiality agreement. As in Count I, defendant claims that relator could have been fired for her breach of the confidentiality agreement, and that her breach led to substantial litigation expenses. Lastly, defendant asserts that the subpoena was addressed to relator in her official capacity and that by secretly responding to it she converted the subpoena for her own benefit. For this final count, defendant seeks the same relief that it requests in Counts I and II.

  In her motion to dismiss, relator insists that defendant has brought its counterclaim in retaliation for her qui tam action, and that allowing the counterclaim to proceed is contrary to the FCA's policy of encouraging qui tam actions and would chill future whistleblowers from shedding light on wrongdoings. The government asserts that policy interests, specifically those promoting truthful responses to subpoenas and protecting whistleblowers from retaliation, render the confidentiality agreement unenforceable. Relator also asserts that defendant fails to state a claim for conversion because subpoena is not property that is subject to conversion.

  DISCUSSION

  In deciding a motion to dismiss brought under Federal Rule of Civil Procedure 12(b)(6), we assume the truth of all well-pleaded allegations, making all inferences in the nonmovant's favor. Sidney S. Arst Co. v. Pipefitters Welfare Educ. Fund, 25 F.3d 417, 420 (7th Cir. 1994). The court should dismiss a claim only if it appears that the nonmovant can prove no set of facts in support of its claim that would entitle it to relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957). Complaints need not detail the specific facts involved in a claim and may plead conclusions. Higgs v. Carver, 286 F.3d 437, 439 (7th Cir. 2002).

  Prior to reaching defendant's counts, we must discuss several issues raised by relator and the government. The most important and complicated matter is the relationship between defendant's counterclaim and the FCA. We recognize the importance of the FCA, the purpose of which is to "enhance the Government's ability to recover losses sustained as a result of fraud against the Government." S. Rep. 99-345, at 1. Achieving that goal requires the "coordinated effort" between private citizens and the government. Id. at 2. From targeting massive contractor fraud during the Civil War to halting healthcare fraud today, the ability of individuals to serve as private attorneys general and to protect the interests of the government has and continues to serve vital purposes.

  Relator and the government focus on these policy concerns when they forcefully contend that defendant's counterclaims would chill future whistleblowers. In making that argument, relator and the government fail to distinguish relator's response to the subpoena from her filing of the qui tam action. Defendant could bring its counterclaim independent of relator's qui tam action and relator could have filed the qui tam action even if she disclosed the subpoena and made no attempt to respond to it. In its response to the government's amicus submission, defendant emphasizes that it does not assert that relator was required to inform it of her contemplated qui tam action, and its counterclaims are the direct result of relator's response to the subpoena. The FCA does encourage and protect individuals who file qui tam actions, but nowhere does it condone or shield individuals who receive and respond to subpoenas that are not theirs to address. Further, the purpose of FCA provisions that do provide for secrecy, namely § 3730(b), is to allow the government to evaluate a qui tam complaint without alerting the target. See S. Rep. 99-345, at 23-24. That provision does not apply to defendant's counterclaim, which focuses on relator's response to the subpoena, an event that occurred before her qui tam complaint.

  Further illustrating that the FCA has limited relevance to defendant's counterclaims is § 3730(h), the FCA's whistleblower protection provision that relator and the government contend bars defendant's counterclaim. The facts here are different than the typical § 3730(h) pattern, in which an employee takes protected action, the employer has notice of that action, in response to that action the employer takes some type of adverse action against the employee, and then the employee seeks to recover for the unlawful retaliation under § 3730(h). Here, relator took protected action. Defendant had no notice of that action and it also took no discriminatory response toward relator. Thus, the government's contention that § 3730(h) protects relator's conduct is misplaced. But the difference in factual patterns is not the only distinguishing factor between this case and other cases invoking § 3730(h). As cases applying § 3730(h) illustrate, the purpose of that subsection is not to supply employees with immunity but, instead, to enable them to seek compensation for retaliation. See, Fanslow v. Chicago Manufacturing Center, 384 F.3d 469 (7th Cir. 2004); Brandon v. Anesthesia & Pain Mgt. Associates, 277 F.3d 936, 943-44 (7th Cir. 2002); Neal v. Honeywell, 33 F.3d 860 (7th Cir. 1994); Brooks v. United States, 383 F.3d 521, 524 (6th Cir. 2004); United States ex rel. Wilson v. Graham County Soil & Water Conservation District, 367 F.3d 245 (4th Cir. 2004). We have already granted summary judgment for defendant on relator's unlawful retaliation claims. See United States ex rel. Grandeau v. Cancer Treatment Centers of America, 2004 U.S. Dist. LEXIS 2799, 2004 WL 755893 (N.D.Ill.). In sum, § 3730(h) does not help relator because she attempts to fashion a shield out of a provision that is designed as a sword and we are unwilling to interpret the statute in that manner. The FCA's protections are broad, but they are not infinite. We stretch those protections too far by imposing them on this situation, in which the government serves a subpoena on an individual employee who then collects the desired information and then, under shroud of secrecy, delivers documents to the government. By taking this secretive approach, the government has stripped defendant of its right to address the subpoena, either by providing the requested documents, seeking to quash it or taking another approach.

  In addition to portraying defendant's counterclaim as an assault on her exercise of rights protected by the FCA, the government contends that 18 U.S.C. § 3486(d) shields relator from liability for her good faith compliance with the subpoena.*fn1 Section 3486(d) provides:
Notwithstanding any Federal, State, or local law, any person, including officers, agents, and employees, receiving a subpoena under this section, who complies in good faith with the subpoena and thus produces the materials sought, shall not be liable in any court of any State or the United States to any customer or other person for such production or for nondisclosure of that production to the customer.
Defendant retorts that this section is inapplicable for several reasons. It first asserts that relator did not act in good faith when she secretly responded to the subpoena. It next argues that the statute only protects those who fail to disclose production from suits brought by "customers" and it is an employer, not a customer. Disagreeing with that interpretation, the government posits that since subpoena recipients who produce documents are immune from suits brought by customers and other persons, it would be inconsistent to expose to liability those who fail to disclose document production to customers, but not other persons. We see no such inconsistency and find that the statute is not susceptible to the government's interpretation. Section 3486 involves administrative subpoenas for investigations of healthcare offenses, during which the government seeks and obtains the medical records of customers, or patients. Under § 3486(d), the person who produces the documents containing a patient's information but does not inform the patient of that disclosure, cannot then be held liable by the patient. Statutory interpretation always begins with the plain language of the statute and we "assume that Congress intended what it wrote." United States v. Lange, 312 F.2d 263, 271 (7th Cir. 2002) (Ripple, J., ...

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