United States District Court, D. South Carolina, Charleston Division
OPINION AND ORDER
Howe Hendricks United States District Judge
matter is before the Court on Defendant Stephen C. Miller,
M.D. and Palmetto Cardiology and Vein, LLC's motion to
dismiss or, in the alternative, motion for summary judgment
(the "Motion"). (ECF No. 17). For the reasons
discussed below, the Court denies in part and grants in part
Melanie Anne Herman filed this action asserting two counts of
retaliatory discharge in violation of 31 U.S.C. §
3730(h), one count as to Defendants Stephen C. Miller, M.D.
(Dr. Miller) and Palmetto Cardiology and Vein, LLC (Palmetto
Cardiology) and a second count as to Defendant Walterboro
Community Hospital, Inc. d/b/a Colleton Medical Center
("CMC"). (ECF No. 1). Plaintiff thereafter amended
her complaint twice. The second amended complaint
("SAC") is the operative pleading and asserts
additional claims for intentional interference with
contractual relations as to Dr. Miller, civil conspiracy as
to all Defendants, and violation of S.C. Code Ann. §
33-44-407. (ECF No. 15). All but the claim for statutory
violation arise from Plaintiffs employment with Palmetto
Cardiology and CMC and her ultimate termination. The Court
has subject matter jurisdiction pursuant to 28 U.S.C. §
1331 and exercises supplemental jurisdiction over the state
law claims pursuant to 28 U.S.C. § 1367.
filed an answer to the SAC. (ECF No. 18). The same day, Dr.
Miller and Palmetto Cardiology filed the Motion, arguing that
the SAC fails to state a claim for violation of §
3730(h), intentional interference with contractual relations,
and civil conspiracy. (ECF No. 17). The Motion also argues
that Plaintiff lacks standing to assert a violation of §
33-44-407, and that the claim is moot in any event. In the
alternative, the Motion asks the Court to enter judgment in
favor of Dr. Miller and Palmetto Cardiology on the basis that
there is no dispute of fact as to the non-pretextual reason
why Palmetto Cardiology fired Plaintiff, and on the basis
that the doctrine of collateral estoppel operates to bar the
claim. Plaintiff filed a response, (ECF No. 22), to which Dr.
Miller and Palmetto Cardiology filed a reply, (ECF No. 23).
was employed as an accredited Nuclear Medicine Technologist
by Palmetto Cardiology from April 2, 2007 until her
termination on June 2, 2015. (ECF No. 15 at ¶ 3).
Plaintiff was simultaneously employed by CMC for part of that
time. She worked as an employee of CMC from 1997 through 1999
and again from 2005 until her termination on June 10, 2016.
Id. During the relevant time, Dr. Miller was
licensed as a cardiologist and "billed himself as a
cardiologist, " but, Plaintiff asserts, Palmetto
Cardiology operated "as a family or internal medicine
practice, " and provided "a broad range of
care." (Id. at ¶¶ 8-9). Dr. Miller
had hospital privileges at CMC, and many of Dr. Miller's
patients received government medical benefits, including
Medicare, Medicaid, and TRICARE. (Id. at ¶ 11).
Plaintiff alleges in relevant part as follows.
course of her employment at Palmetto Cardiology,
"Plaintiff became aware that Miller was performing or
causing to be performed certain medical tests and procedures
on patients that were unnecessary." (ECF No. 15 at
¶ 12). These tests and procedures included "Nuclear
Stress Tests (NST), Echocardiograms, Electrocardiograms
(ECGs), Carotid Dopplars (Carotids) and Venous Ablations
(Ablations)." Id. Plaintiff became aware that
"for many patients who tested normal on NSTs, " Dr.
Miller was "referring them out for unnecessary
Catheterizations and 128 Slice CT Scans." Id.
Dr. Miller would use his hospital privileges with CMC
"to refer patients to his own practice at Palmetto
Cardiology, where he would perform or cause to be
performed" testing that, for many patients, was not
medically necessary. (Id. at ¶ 13). Dr. Miller
"treated many patients who were addicted to opioid pain
killers, and he continued to prescribe such drugs to those
patients, keeping them addicted, and Miller required those
patients to submit to the above testing before he would renew
their prescriptions." (Id. at ¶ 19).
"For his patients receiving medical benefits under
Medicare, Medicaid and TRICARE, Miller billed the government
for the unnecessary tests and procedures." (Id.
at¶20). Additionally, Dr. Miller "performed
unnecessary NSTs and other procedures on patients who were
participating in clinical drug studies." (Id.
at ¶ 21). Plaintiff was aware that "several of
Miller's drug study participants had been treated at
CMC's emergency room and [had] died shortly
thereafter"; Plaintiff became "concerned that the
deaths of those patients may have been related to the
experimental drugs and that the circumstances of their deaths
needed to be investigated." (Id. at ¶ 22).
about the summer of 2014, Plaintiff reported her concerns
about Dr. Miller to CMC's Ethics and Compliance Officer,
who responded that Plaintiffs concerns would be passed along
to the appropriate people. (ECF No. 15 at ¶ 23).
Approximately one year later, Plaintiff "contacted
Medicare" with her belief that Dr. Miller was committing
Medicare and Medicaid fraud by "performing or causing to
be performed certain medical tests and procedures on patients
that were unnecessary and billing the federal government for
those tests and procedures." (Id. at ¶
24). Plaintiff also believed that Dr. Miller "was
placing patients at risk of harm and that his unnecessary
invasive testing had actually harmed some patients."
(Id. at ¶ 25). In addition to Medicare,
Plaintiff reported her concerns to "the South Carolina
Professional Licensing Board and the FDA." (Id.
at ¶ 26). An FDA investigator subsequently visited
Palmetto Cardiology in May 2015 for an inspection and review
of records belonging to patients who were participating in
Dr. Miller's clinical drug studies. The investigator also
met with Dr. Miller. (Id. at ¶ 27). Plaintiff
observed that shortly after the FDA inspection Dr.
Miller's behavior toward her changed and she believed he
suspected her of reporting him to the FDA. (Id. at
1, 2015, Plaintiff received an email from a State Licensing
Board investigator, who asked for certain patient records
from Dr. Miller's office. During a telephone conversation
with Plaintiff, the investigator stated she had spoken with
Dr. Miller and informed him she was investigating a complaint
against him. (ECF No. 15 at ¶ 35). Dr. Miller fired
Plaintiff the following day, stating that he based the
termination on the following: Plaintiff had used a homosexual
slur in reference to a co-worker; Plaintiff left work early
on May 14, 2015 before completing her NST patient reports;
Plaintiff used the office internet for personal purposes;
Plaintiff left work on May 18, 2015 before finishing a Stress
Echocardiogram. (Id. At ¶¶ 36, 37).
Plaintiff believes that "Miller's conversation with
the investigator alerted Miller that Plaintiff was the one
who reported his actions." (Id. at ¶ 35).
"After she was terminated from Palmetto Cardiology,
Plaintiff was informed from several sources that Miller had
complained that she had reported him to regulatory agencies
and that he had to fire her because of her reports."
(Id. at ¶ 38).
was still employed with CMC at the time. Plaintiff
"spoke with officers at CMC, including its CEO and its
CFO, and explained that she believed she had been terminated
by Miller for providing information to the federal government
about her concerns, and that she had voiced concerns about
Miller a year earlier to CMC's Ethics and Compliance
Officer"; she asked CMC to "look into her
allegations and conduct its own investigation." (ECF No.
15 at ¶ 39). Plaintiff alleges that on information and
belief, Dr. Miller had meanwhile complained to management at
CMC that Plaintiff had reported him to Medicare and "was
out to destroy him, " and had asked CMC to fire
Plaintiff. (Id. at ¶ 40). On or about August
14, 2015, CMC's supervisor of radiology advised Plaintiff
that she "was prohibited from speaking about her
concerns about Miller and that if she continued to do so, she
would be fired." (Id. at ¶ 41).
spring of 2016, CMC demoted Plaintiff from her position as a
Nuclear Stress Test Technologist to a receptionist.
(Id. at ¶ 42). Plaintiff alleges the demotion
was in retaliation for "reporting Miller's
unnecessary tests and procedures to Medicare, " for
"reporting such conduct to CMC, " and for
"asking CMC to investigate [Miller's] treatment and
billing of patients using his hospital privileges."
Id. On June 10, 2016, CMC fired Plaintiff, stating
as a basis for the termination that Plaintiff had allowed a
patient to undergo an ultrasound without first formally
registering with the hospital. (Id. at¶43). The
patient was a physician who had hospital privileges, and
Plaintiff believed the patient had been registered, which is
a function performed by a different department. When
Plaintiff understood the patient had not been registered,
"she alerted her supervisors to the fact that the
registration department had not processed the
physician/patient." Id. Plaintiff alleges the
basis for her termination from both positions is pretextual.
addition, Plaintiff asserts that Dr. Miller has closed
Palmetto Cardiology and is in the process of winding up the
limited liability company. She alleges that during this
process, Dr. Miller directed Palmetto Cardiology to make
distributions to himself the effect of which was to cause
Palmetto Cardiology to carry more liabilities than assets, in
violation of S.C. Code Ann. § 33-44-406. (ECF No. 15 at
Federal Rule of Civil Procedure 12(b)(1)
Miller and Palmetto Cardiology move to dismiss the claim for
violation of S.C. Code Ann. § 33-44-407 for mootness and
lack of standing. Under Federal Rule of Civil Procedure
12(b)(1), a party may move to dismiss a cause of action based
on lack of subject-matter jurisdiction. "Federal courts
are not courts of general jurisdiction; they have only the
power that is authorized by Article III of the Constitution
and the statutes enacted by Congress pursuant thereto."
Brickwood Contractors, Inc. v. DatanetEngineering,
Inc., 369 F.3d 385, 390 (4th Cir. 2004) (quoting
Bender v. Williamsport Area Sch. Dist, 475 U.S. 534,
541 (1986)). Challenges to jurisdiction under Rule 12(b)(1)
can be raised in two different ways: facial attacks and
factual attacks. Thigpen v. United States, 800 F.2d
393, 401 n.15 (4th Cir. 1986) (citing Adams v. Bain,
697 F.2d 1213, 1219 (4th Cir. 1982)), disagreed with on
other grounds, Sheridan v. United States, 487 U.S. 392
(1988). A facial attack questions the sufficiency of the
complaint. Id. When presented with this argument,
the court must accept the allegations in the complaint
"as true, and materials outside the pleadings are not
Federal Rule of Civil Procedure 12(b)(6)
Miller and Palmetto Cardiology also move to dismiss the
claims asserted against them as insufficient as a matter of
law. A motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6) examines the legal sufficiency of the
facts alleged on the face of a plaintiffs complaint.
Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th
Cir. 1999). To survive a Rule 12(b)(6) motion,
"[f]actual allegations must be enough to raise a right
to relief above the speculative level." Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). The
"complaint must contain sufficient factual matter,
accepted as true, to 'state a claim to relief that is
plausible on its face.'" Ashcroftv. Iqbal,
556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S.
at 570). A claim is facially plausible when the factual
content allows the court to reasonably infer that the
defendant is liable for the misconduct alleged. Id.
When considering a motion to dismiss, the court must accept
as true all of the factual allegations contained in the
complaint. Erickson v. Pardus, 551 U.S. 89,
under Federal Rule of Civil Procedure 8(a)(2), a pleading
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). As the Supreme Court held in
Twombly, the pleading standard set forth in Rule 8
"does not require 'detailed factual allegations,
' but it demands more than an unadorned,
Iqbal, 556 U.S. at 678 (quoting Twombly,
550 U.S. at 555). Thus, "[a] pleading that offers
'labels and conclusions' or 'a formulaic
recitation of the elements of a cause of action will not
do.'" Id. "Nor does a ...