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Herman v. Miller

United States District Court, D. South Carolina, Charleston Division

September 24, 2019



          Bruce Howe Hendricks United States District Judge

         This 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 the Motion.


         Plaintiff 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.[1]

         CMC 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).


         Plaintiff 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.

         In the 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).

         In or 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 ¶ 28).

         On June 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).

         Plaintiff 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).

         In the 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.

         In 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 ¶¶ 69-73).


         A. Federal Rule of Civil Procedure 12(b)(1)

         Defendants 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 considered." Id.

         B. Federal Rule of Civil Procedure 12(b)(6)

         Defendants 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, 94(2007).

         Additionally, 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, the-defendant-unlawfully-harmed-me accusation." 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 ...

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