The district court denied a motion to dismiss a lawsuit alleging the defendants retaliated against the plaintiff for engaging in protected conduct, finding the plaintiff had plausibly alleged she inquired into misconduct that could have resulted in false claims, that her employer knew about the protected activity, and that her termination was directly connected to her complaints. The defendants argued the plaintiff could not show a connection between their contractual arrangements with a private company and any claims to the government, but the court found that the medical research studies subject to the misconduct were financed in part by federal funds, which was sufficient to place the defendant’s requests for payment to the prime contractor within the FCA’s definition of claim.
Molecular Microimaging LLC moved to dismiss a complaint alleging the company retaliated against a former employee for reporting fraudulent conduct by MNI and making efforts to halt such conduct.
According to the complaint, Meredith Bacewicz worked as an image processing associate for MNI, which provides services related to clinical research studies and drug development and is typically responsible for receiving and/or performing human brain scans, processing those scans, and reporting the resultant statistical data. MNI conduct research for companies that do business with federal agencies, including the National Institutes of Health. Bacewicz’s job responsibilities included analyzing, interpreting, and processing brain scans relevant to clinical studies researching Alzheimer’s disease.
Bacewicz alleged that during her employment, she noticed discrepancies between work instruction documents and directions from co-workers and superiors. She was directed to ignore some documents and told not to take notes on any changes. During her training, she was told that asking questions about the instructions and discrepancies was unprofessional and again cautioned not to put any of her observations in writing. She was told not to communicate any concerns in person, rather than email, because “the FDA can read that.”
Bacewicz claimed that MNI committed multiple forms of research misconduct including: failure to follow sponsor protocols, failure to implement and follow standardization practices, changing specific brain scan imaging processing steps, data manipulation and fabrication, and enrolling subjects with exclusionary conditions. According to Bacewicz, these errors rendered results useless. Further, she believed that if the study sponsor knew of the misconduct, it would not have paid MNI for the results. She reported these concerns to the director of human resources but MNI dismissed them, stating that was how business was done. In her complaint, Bacewicz provided examples from several studies to illustrate the alleged misconduct.
In June 2106, Eli Lilly became aware of MNI’s failure to follow protocol and directed the company to reanalyze every scan in accordance with their directions. However, the company did not do so. According to Bacewicz, company officials expressed grave concern about the possibility of losing business with Eli Lilly and the company used various data manipulation tactics to show that subjects were correctly deemed eligible and to make its failure to follow protocols less serious.
In another study, Bacewicz identified patients who were not eligible to participate. Though she brought this issue to the managing director, the patient was not removed from the study. Bacewicz asserted that MNI was financially motivated to enroll rather than exclude subjects because in some instances, payment was impacted by the number of enrolled subjects, and in ongoing studies, more subjects meant more future billable brain scans.
Bacewicz continued to object to the misconduct, and allegedly was told to ask fewer questions and accept the answers she was given. After a final meeting with her assistant director and human resources, Bacewicz alleged the retaliation began. Bacewicz alleged that MNI moved her desk, canceled meetings with her, limited her access to the data she needed to perform her job, and failed to take action when others made derogatory comments to her.
Bacewicz then reported her concerns to the FDA’s Office of Scientific Integrity. After MNI spoked with FDA OSI, the hostile conduct increased. Bacewicz alleged her superiors avoided her and canceled meetings and that she was assigned mundane tasks. The relator believed the escalation in hostile behavior was evidence the company knew she was responsible for the reporting to FDA OSI. During this period, Bacewicz continued to identify potential misconduct in various studies. Soon after, Bacewicz was terminated, being told that she failed to establish good relationships with her supervisors and had a lack of respect for MNI’s policies and procedures. Bacewicz filed this suit, alleging various FCA violations and unlawful retaliation. When the United States declined to intervene, the relator dropped her FCA allegations but retained her complaint of retaliation. MNI moved to dismiss.
The court denied the motion, first finding that Bacewicz had engaged in protected activity, even though she dropped her claims of FCA violations. The court found the plaintiff plausibly alleged that she engaged in investigations, inquiries, and reporting that reasonably could have led to an FCA action or other efforts to stop an FCA violation. For example, Bacewicz alleged MNI manipulated data to convince Eli Lilly that it had not violated contractual protocols and that MNI substituted test data from one subject for that of another, to make it appear that more of the enrolled subjects were eligible for the study. Bacewicz repeatedly raised her concerns and was repeatedly reprimanded for doing so, and eventually reported her concerns to FDA. The court found all of these actions constituted protected conduct under the FCA.
MNI argued that Bacewicz merely investigated policy violations, not fraud, but the court noted she specifically alleged MNI falsified data for financial gain. For example, the plaintiff alleged that MNI engaged in conduct to inflate the number of brain scans it processed and to cover up misconduct to placate Eli Lilly. The court held this conduct could reasonably have led to an FCA claim. Notably, the court explained that Bacewicz need not allege all the elements of an FCA claim—only conduct that could reasonably lead to one.
MNI also argued that Bacewicz was not aware of MNI’s billing practices and contractual arrangements and thus cannot show an adequate nexus to government funds. However, the court explained that the FCA’s definition of claim is expressly not limited to claims made directly to the U.S. government. Further, the court again noted that Bacewicz need not plead facts supporting an FCA claim, but only that her inquiries could reasonably have led to one. The studies at issue were funded in part by the federal government, which the court held was sufficient to place MNI’s requests for payment within the FCA’s definition of claim.
The court also found that MNI was aware of Bacewicz’s inquiries and that they represented protected conduct. The plaintiff reported her concerns to her supervisors and specifically expressed concern that the conduct was unethical and potentially fraudulent. In response, Bacewicz was reprimanded. She also stated that the hostile work environment worsened after her FDA report, presumably because her supervisor suspected Bacewicz of making the report.
MNI argued that to sustain a retaliation claim, Bacewicz must have told MNI that she was specifically concerned about fraud, but the court found no authority for this argument. Instead, the plaintiff must show only that the defendants knew she was engaged in protected activity. The court found Bacewicz had made this showing. Again, MNI argued that Bacewicz was concerned only about internal policy, not fraud, but the court found she clearly expressed concern about potential fraud and that MNI was on notice.
Finally, the court found the plaintiff had met the “but-for” causational requirement, showing that her employment was terminated due to her protected conduct. The court found she plausibly alleged that her supervisor became more hostile towards her after her FDA report. The plaintiff also alleged she overheard coworkers suggest that she had mad her supervisor angry due to her inquiries. Bacewicz was terminated within a month of these events. The court found the timing sufficiently close to support an inference of retaliatory intent. The court also held that Bacewicz plausibly alleged that some of the reasons given for her termination seemed pretextual.
