Opinion
Case No. 2:99CV86K
March 28, 2003
MEMORANDUM DECISION AND ORDER
This matter is before the court on Defendants Regence BlueCross and BlueShield of Utah ("Regence"), and John P. Mitchell's (collectively, "the Regence Defendants") motion for judgment on the pleadings. A hearing on the motion was held on March 17, 2003. At the hearing, the Regence Defendants were represented by Randy L. Dryer and Plaintiffs were represented by Daniel L. Day. After carefully considering the pleadings, memoranda, and other materials submitted by the parties and the law and facts relating to this matter, and now being fully advised, the court renders the following Memorandum Decision and Order.
BACKGROUND
Regence has been the major Medicare Part B Carrier for Utah since 1987. Regence processes and pays Medicare Part B claims submitted by providers. Regence employed the Relator, Edyth Sikkenga, in its Medicare Part B operations from June 20, 1990, until she was terminated on April 4, 1995. John Mitchell was Sikkenga's supervisor while she was employed at Regence. ARUP is a national reference clinical laboratory in Salt Lake City, Utah, and one of the providers that submits claims to Regence under Medicare Part B.
Sikkenga's original Complaint asserted four causes of action under the False Claims Act. This court dismissed with prejudice all but the first cause of action, and allowed Sikkenga to amend her first cause of action against Regence and ARUP to plead fraud specifically and to plead facts that would support a claim that Regence caused ARUP to present false claims. The court again dismissed the first cause of action against the Regence Defendants. The court reaffirmed that Regence is entitled to statutory immunity for its payment of claims as the Medicare Part B carrier. The court also dismissed the first cause of action against Regence with prejudice because Sikkenga could not plead facts to support a claim that Regence caused ARUP to present false claims.
Sikkenga's Amended Complaint asserts three state law causes of action against Regence: wrongful termination in violation of public policy; breach of contract for failure to pay accrued vacation pay; and intentional infliction of emotional distress.
DISCUSSION
Pursuant to Rule 12(c) of the Federal Rules of Civil Procedure, the Regence Defendants seek judgment on the pleadings with respect to the Second and Fourth Claims for Relief in Sikkenga's Amended Complaint. The claims are for wrongful termination in violation of public policy and intentional infliction of emotional distress, respectively.
I. Wrongful Termination
Sikkenga's wrongful termination in violation of public policy claim alleges that the Regence Defendants took adverse employment actions against her in violation of public policy for "reasonably opposing, reporting and refusing to participate in and ignore the payment of false Medicare claims." Am. Compl. ¶ 150. To allege a prima facie case of wrongful termination in violation of public policy, a plaintiff "must show (i) that his employer terminated him; (ii) that a clear and substantial policy existed; (iii) that the employee's conduct brought the policy into play; and (iv) that the discharge and the conduct bringing the policy into play are causally connected." Ryan v. Dan's Food Stores, Inc., 972 P.2d 395, 404 (Utah 1998).
The Regence Defendants argue that Sikkenga's wrongful termination claim does not advance a "clear and substantial" public policy because it expressly contravenes the federal statutory scheme immunizing Medicare Part B carriers from liability for payment of claims. Defendants also argue that Plaintiff's wrongful termination claim can be dismissed against Defendant Mitchell on the additional ground that he was not Sikkenga's employer and, therefore, incapable of committing the tort of wrongful termination.
A. Clear and Substantial Public Policy
Whether an alleged public policy constitutes a clear and substantial public policy is a pure question of law for the court to decide." Rackley v. Fairview Care Ctr., Inc., 2001 UT 32 ¶ 11, 23 P.3d 1022. The policy in question must be "defined by one of three sources: (1) legislative enactments; (2) constitutional standards; or (3) judicial decisions." Id. ¶ 16, 23 P.3d 1022. The Utah Supreme Court has also expressly stated that a court must narrowly construe the public policies on which a wrongful termination action may be based. Peterson v. Browning, 832 P.2d 1280, 1282 (Utah 1992).
In this case, Sikkenga argues that there are two clear and substantial public policies alleged in her Amended Complaint: 1) the policy of securing the fiscal integrity of Medicare funds, which is found in several federal statutes; and 2) the policy of encouraging employees to resist pressures to engage in and cover up illegal activity; which has been established in Utah case law.
First, the public policy of preventing the distribution of Medicare funds for procedures that are not documented as medically necessary are set forth in several portions of the Social Security Act ("SSA"). This court dismissed Sikkenga's false claims act claims against the Regence Defendants because Regence is entitled to statutory immunity for its payment of claims as the Medicare Part B carrier because it is effectively discharging the functions of federal administrative agencies in that regard. This court also found that Sikkenga had failed to allege sufficient facts to demonstrate that the Regence Defendants caused ARUP to submit false claims.
The Utah Supreme Court has refused to allow a wrongful termination in violation of public policy claim to stand when the employer was expressly exempt from statutory prohibitions against age discrimination. Burton v. Exam Ctr. Indus. Gen. Med. Clinic, Inc., 2000 UT 18, 994 P.2d 1261. In Burton, the plaintiff attempted to sue his employer for wrongful termination, alleging that even though the employer was not statutorily liable under the Utah Anti-Discrimination Act because it had fewer than fifteen employees, it could still be liable under the common law for violating the allegedly clear and substantial public policy against age discrimination in employment. Id. ¶¶ 5, 12. The Burton court rejected plaintiff's argument stating that the legislature had made a decision to prohibit age discrimination only by large employers. The court quoted from a California Supreme Court case, which held "It would be unreasonable to expect employers who are expressly exempted from the FEHA ban on age discrimination to nonetheless realize that they must comply with the law from which they are exempted under the pain of possible tort liability." Id. ¶ 17 (quoting Jennings v. Marralle, 876 P.2d 1074, 1083 (Cal. 1994)).
Similarly, Sikkenga's wrongful termination claim would allow her to seek damages based on an allegation that she furthered a substantial public policy by refusing to condone activities for which Regence enjoys statutory immunity. Sikkenga contends that Defendants' immunity from liability cannot extend beyond the act of payment of Medicare claims to liability for common law tort liability. However, Defendants are not attempting to get immunity from all common law tort liability. Rather, they claim that Sikkenga has not stated a clear and substantial public policy for purposes of a wrongful termination claim because Regence has immunity for the activity underlying the alleged public policy. Sikkenga's Amended Complaint states that "[p]ublic policy prohibits the discharge of an employee for reasonably opposing, reporting and refusing to participate in and ignore the payment of false Medicare claims." It would be inconsistent with the limited immunity Regence enjoys regarding the payment of claims to allow this alleged conduct to furnish the clear and substantial public policy necessary to hold Regence liable under a common law wrongful termination claim.
Sikkenga also disputes that her claim for wrongful termination is an end-run around the dismissal of her False Claims Act claims because she does not have the potential of recovering the same award for this claim as she would have been entitled to under the False Claims Act. Sikkenga argues that it is the difference in remedies that sets this case apart from Burton. Under the False Claims Act, she would have been entitled to government funds paid for false claims, treble damages, and penalties on those false claims. However, under her wrongful termination claim Sikkenga is entitled to compensatory and punitive damages.
This court does not view the distinction between available remedies as relevant to a determination of whether a clear and substantial public policy has been implicated. Sikkenga bases her wrongful termination claim on the very same allegation that underpinned her primary False Claims Act claim — that Regence allegedly made or caused the payment of false Medicare claims. All of the civil statutory policies that Sikkenga relies upon are contained in the SSA and are part of the same statutory scheme that includes Regence's immunity from liability for payments.
Another federal district court has held that a state law wrongful termination claim necessarily fails when the alleged public policy upon which it is premised is a legally insufficient False Claims Act claim. Yuhasz v. Brush Wellman, Inc., 181 F. Supp.2d 785, 796 (N.D.Ohio 2001) ("Because relator's claim under the FCA, which provides the public policy for relator's wrongful discharge claim, must be dismissed, relator's wrongful discharge claim also must be dismissed.").
Sikkenga distinguishes Yuhasz because her FCA claim has not been dismissed against ARUP. In addition, Sikkenga claims that Defendants do not argue that their conduct was not wrongful, only that they are immune from liability for their wrongful conduct. In Yuhasz, the plaintiffs claim was dismissed under Rule 9(b) for failure to state fraud with particularity, whereas, Sikkenga has stated a claim in this case against ARUP. However, Sikkenga fails to acknowledge that not only did this court find that Regence was immune from liability for the payment of claims, it also found that she had not pleaded a sufficient case that Regence caused ARUP to submit false claims. Without a valid False Claims Act claim against Regence, this court concludes that Sikkenga has not demonstrated a clear and substantial public policy for her wrongful termination claim against Regence.
Sikkenga also claims that her Amended Complaint asserts the public policy of encouraging employees to resist pressure to engage in, facilitate, or conceal illegal activity as established by Utah Supreme Court case law. In Peterson v. Browning, the court stated that "[t]o hold that one's continued employment could be made contingent upon his commission of a felonious act at the instance of his employer would be to encourage criminal conduct on the part of both the employee and employer and would serve to contaminate the honest administration of public affairs." 832 P.2d 1280, 1283 (Utah 1992).
Defendants argue that Sikkenga's assertions of illegal conduct are not contained in her Amended Complaint. Sikkenga's Amended Complaint only alleges that Regence engaged in civil wrongdoing by approving ARUP claims without supporting information, it never cites or refers to criminal conduct. Second, Defendants argue that she now asserts that Defendants insisted that she engage in criminal activity and then fired her for refusing to participate in illegal activities, which is affirmatively inconsistent with the allegations in her Amended Complaint that Defendants told her to "stay out of it" and to "leave ARUP alone."
The Tenth Circuit has expressly refused to allow counsel to overcome deficiencies in stating a claim "by making arguments that extend beyond the allegations in the complaint." Jojola v. Chavez, 55 F.3d 488, 494 (10th Cir. 1995) ("It is well-established, however, that in determining whether to grant a motion to dismiss, the district court, and consequently this court, are limited to assessing the legal sufficiency of the allegations contained within the four corners of the complaint.").
Sikkenga argues that she was not required to plead the applicable public policies with particularity. The court agrees that a heightened particularity is not required. However, a clear and substantial public policy is an element of a prima facie case that must be present for a claim to be made. In this case, Sikkenga has not specifically alleged these public policies in her Amended Complaint. Even if this court were to liberally construe her complaint as alleging these public policies, she has not alleged any criminal conduct in her Amended Complaint. Therefore, her Amended Complaint does not state a claim for wrongful termination in violation of public policy based on these common law public policies.
B. Supervisor's Liability for Wrongful Termination
With respect to the additional ground for dismissing Defendant Mitchell from the wrongful termination claim, Defendants acknowledge that no Utah court has specifically addressed the issue. However, Defendants assert that because Mitchell was not Sikkenga's employer, and merely acting on behalf of her employer, he was legally incapable of committing the tort of wrongful termination in violation of public policy.
Although Utah courts have not addressed this issue, a series of cases from the California appellate courts hold that only employers, and not individual managerial employees, can be held liable under the common law tort of wrongful discharge in violation of public policy. In Jacobs v. Universal Development Corp., 62 Cal.Rptr.2d 446 (Cal App. 1997), the court held that "[o]nly an employer can be liable for tortious discharge, and fellow employees cannot be held accountable for tortious discharge on a conspiracy theory." Id. at 452.
Sikkenga argues that although managers are legally incapable of committing the tort of wrongful termination in violation of public policy in California, such holdings are bad public policy. Sikkenga contends that if managers were exempt from liability for discharging employees in violation of public policy, the object of deterring corrupt individuals from doing things that injure the public would be undermined.
This court concludes that Utah courts would likely adopt the reasoning of the California courts. The Utah Supreme Court has often looked to California case law in this area and Utah case law, itself, states that "the public policy exception to the employment-at-will doctrine restricts an employer's right to terminate an employee for any reason." Peterson, 832 P.2d at 1281. Sikkenga's policy concerns are equally addressed by attributing liability to the employer. Additional liability against an individual manager would be redundant. It is typical in employment law for liability to be imposed only on employers and not on individual supervisory employees. See Butler v. City of Prairie Village, Kan., 172 F.3d 736, 744 (10th Cir. 1999) (supervisory employees are not employers and, therefore, not individually liable under the ADA, Title VII, or the ADEA). Therefore, this court dismisses Defendant Mitchell from the wrongful termination claim.
II. Intentional Infliction of Emotional Distress
Sikkenga bases her emotional distress claim on the same allegations as her wrongful termination claim — that the Regence Defendants allegedly pressured her to leave ARUP alone and that they demoted her and termination her when she refused to condone Regence's payment of ARUP's allegedly false claims. The Regence Defendants allege that this conduct does not rise to the requisite level of outrageousness to sustain a claim for intentional infliction of emotional distress under Utah law. Sikkenga, however, contends that ARUP's submission of improperly documented claims to Regence for Medicare reimbursement violated numerous criminal provisions and the initial purpose of Defendants' retaliatory conduct was to compel Sikkenga to assist in its criminal conduct.
Utah law requires a plaintiff to prove that the defendant engaged in actions "of such a nature as to be considered outrageous and intolerable in that they offend against the generally accepted standards of decency and morality." Schuurman v. Shingleton, 2001 UT 52 P. 23, 26 P.3d 227. "It is for the court to determine in the first instance whether the defendant's conduct may reasonably be regarded as so extreme and outrageous to permit recovery." Id.
In Boisjoly v. Morton Thiokol, Inc., 706 F. Supp. 802 (D.Utah 1988), the court held that "[w]hile threatening an employee's job, discrediting his reputation, and removing him from a position of importance is certainly not desirable behavior, this court does not find it to be so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized society." Id. at 802.
Sikkenga admits that the emotional distress that naturally accompanies employment termination is insufficient to support an emotional distress claim. However, she contends that when the termination is for an illegal reason, the act of termination is considered outrageous. Defendants assert that nothing in the conduct associated with Regence's adverse employment actions against Sikkenga, such as reprimands, demotions, and terminations are outside the bounds of decency and intolerable in a civilized society, nor were they illegal. Because this court has found Sikkenga's wrongful termination in violation of public policy claim to be insufficient, there is no illegal reason upon which to base this emotional distress claim.
As discussed above, Sikkenga's allegations that she was forced to engage in criminal conduct are not supported by her Amended Complaint. The allegations in this case involve conduct that more typically accompanies the termination of employment. Such conduct has been routinely dismissed by courts as insufficient. This case does not present the kind of extreme conduct that was present in Retherford v. ATT Communications of the Mountain States, Inc., 844 P.2d 949, 977-79 (Utah 1992), and Richardson v. Valley Asphalt, Inc., 109 F. Supp.2d 1332 (D.Utah 2000).
Sikkenga's allegations in her Amended Complaint state that when she refused to remove herself from the ARUP issue as instructed, her supervisor allegedly retaliated against her by "intimidating her, falsely accusing her of performance problems, and encouraging other employees to make false complaints about her." It has been held that termination of a plaintiff based on "fabrication of misconduct" is insufficiently outrageous as a matter of law. O'Driscoll v. Hercules, 54 Fair Empl. Prac. Case (BNA) 314 (D.Utah 1990). In light of the case law in this area, Sikkenga's allegations are not sufficiently outrageous to be actionable.
CONCLUSION
Based on the above reasoning, the Regence Defendants' Motion for Judgment on the Pleadings is GRANTED.