Marilyn K. Hammond v. Northland Counseling ( 2000 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 99-1672
___________
Marilynn K. Hammond, M.D., *
*
Appellant, *
*
v. * Appeal from the United States
* District Court for the
Northland Counseling Center, Inc.; * District of Minnesota
Greg Walker, *
*
Appellees. *
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Submitted: December 13, 1999
Filed: July 17, 2000
___________
Before WOLLMAN, Chief Judge, McMILLIAN, Circuit Judge, and BATTEY,1
District Judge.
___________
McMILLIAN, Circuit Judge.
Dr. Marilynn K. Hammond appeals from a final order entered in the United
States District Court for the District of Minnesota granting summary judgment in favor
of Northland Counseling Center, Inc. ("Northland"), on her claim pursuant to the
1
The Honorable Richard H. Battey, United States District Judge for the District
of South Dakota, sitting by designation.
whistleblower provision of the False Claims Act, 31 U.S.C. § 3730(h), and dismissing
her remaining pendent state claims without prejudice. See Hammond v. Northland
Counseling Ctr., Inc., No. 5-96-353 (D. Minn. Jan. 15, 1999) (summary judgment
order) (hereinafter "slip op.").2 For reversal, Hammond argues that summary judgment
was improper because there was a genuine issue of material fact as to whether she was
entitled to damages or other relief under the False Claims Act. For the reasons
discussed below, we reverse the district court's order and remand for further
proceedings consistent with this opinion.
Jurisdiction
Jurisdiction in the district court was proper based upon 28 U.S.C. §§ 1331 and
1367. Jurisdiction in the court of appeals is proper based upon 28 U.S.C. § 1291. The
notice of appeal was timely filed pursuant to Fed. R. App. P. 4(a).
Background
The following statement of facts is drawn from the district court order and the
record on appeal. Hammond, a Minnesota board-certified psychiatrist, was employed
as Medical Director of Northland from October 1994 to September 1996. In January
1996, Hammond became concerned that Northland was improperly billing day
2
Hammond also argues that the district court abused its discretion in denying her
leave to amend her complaint to include a claim for punitive damages. See Hammond
v. Northland Counseling Ctr., Inc., No. 5-96-353 (D. Minn. Apr. 23, 1998) (order).
Notably, Hammond's notice of appeal did not specifically designate this order as being
appealed; the notice simply stated that Hammond appealed the aforementioned
summary judgment order. Even if this matter were properly on appeal before this court,
we would find Hammond's arguments to be without merit.
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treatment programming to Medicare3 as a partial hospitalization program, thereby
yielding a higher level of reimbursement for Northland.4 Hammond contends that she
repeatedly expressed concern about the propriety of these billings to Northland
officials, including Greg Walker, Chief Executive Officer of Northland. Hammond
asserts that, despite her efforts, Northland's billing practices were not corrected.
On April 1, 1996, after purportedly conducting her own inquiries into the billing
practices of other local mental health facilities to determine if Northland's billings were
in compliance with Medicare requirements, Hammond rescinded her authorization for
Northland to bill partial hospitalization expenses under her license. See Appellant's
Appendix at 17-18 (Hammond affidavit); id. at 26-29 (letter from Hammond to
Walker). Hammond then scheduled a meeting for April 12, 1996, with officials from
the United States Department of Health and Human Services ("HHS"), so that
Hammond could report her concerns about Northland's allegedly irregular billing
3
The Medicare Act, 42 U.S.C. §§ 1395-1395ccc, creates a system of
comprehensive health insurance for the disabled and the elderly. Funded by federal
employment taxes, Medicare reimburses hospitals and skilled nursing facilities for the
costs of providing hospital and post-hospital care to program beneficiaries. See 42
U.S.C. §§ 1395d(a), 1395f. Administration of Medicare falls within the purview of the
Health Care Financing Administration, a federal agency within the U.S. Department of
Health and Human Services.
4
Without citing statutory or regulatory authority, Hammond asserts that Medicare
has implemented a Partial Hospitalization Program "which allows for a higher level of
reimbursement for certain patients who are acutely ill, and are in the program in lieu of
either admission to an inpatient hospital or a continued inpatient course of treatment";
that "Medicare requires that mental health services be provided through a
comprehensive, structured program that uses a multi-disciplinary team to provide
coordinated services within an individual treatment plan"; and that "[t]he regulations
also require that the services be ordered by and rendered under the personal supervision
of a physician who is treating the patient." Appellant's Appendix at 43 (Amended
Complaint, ¶ 14).
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practices. On April 11, 1996, Walker met with Hammond and allegedly told her that
she had no right or authority to present her concerns to HHS officials. See id. at 44-45
(Amended Complaint, ¶ 20). Nevertheless, Hammond met with the HHS officials as
scheduled. She notified Walker and other Northland employees that the meeting had
taken place and claimed that the federal officials had said they would investigate the
matter and contact her in the future. See id. at 45.
On May 29, 1996, Walker notified Hammond, in compliance with the notice
provision of Hammond's employment contract, that Northland did not intend to renew
her year-to-year contract when it expired on September 30, 1996. See Appellee's
Appendix at 22 (letter from Walker to Hammond). Walker allegedly told her that he
did not know whether Northland would be able to support the services of a psychiatrist,
now that HHS had been notified of the alleged billing irregularities. See Appellant's
Appendix at 20 (Hammond affidavit).
During the summer of 1996, Hammond continued to meet with representatives
of HHS, as well as the Federal Bureau of Investigation and the United States Attorney
for the District of Minnesota, regarding her allegations of Medicare fraud. Hammond
purportedly kept Walker and other Northland employees informed of her activities in
this regard. During this same period of time, Hammond claims that she was virtually
excluded from Northland's administration, that she no longer received internal
memoranda, and that she was no longer authorized to attend continuing medical
education seminars. See id. at 49 (Amended Complaint, ¶ 34).
At 5:10 p.m. on September 18, 1996, Walker notified Hammond by
memorandum that her position at Northland was terminated as of 5:30 p.m. that day.
Walker's memorandum allegedly stated in part: "After 5:30 p.m. today your presence
on the Northland premises is not allowed and we will take whatever action is necessary
in order to remove you from the property should you trespass." Id. at 49-50 (Amended
Complaint, ¶ 38). Although she had scheduled 25 patients for mental health care
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services the following day (in addition to a full schedule for the remainder of the
month), Hammond was forced to vacate her work area immediately and to meet with
her patients the next day in the hallways and auditorium of the nearby Itasca Medical
Center ("IMC"). See id. at 49-50 (Amended Complaint, ¶¶ 39-40).
Hammond became the new Medical Director of IMC's Department of Behavioral
Health effective October 1, 1996. See id. at 50 (Amended Complaint, ¶ 40). However,
IMC paid Hammond retroactively to September 19, 1996, see Hammond deposition,
vol. III, at 95, and provided her with salary and benefits equal to or greater than those
which she received from Northland. Hammond worked at IMC for more than a year
until her department closed in mid-November 1997. See id., vol. III, at 49. Hammond
and her family subsequently moved out of state. See id., vol. III, at 117.
Hammond further claims that, both before and after her termination from
Northland, Walker and other Northland officials engaged in a campaign of character
assassination against her. Among other things, Hammond alleges that Walker and other
Northland officials encouraged patients and mental health advocacy groups to file
unfounded complaints against Hammond. See id. at 50 (Amended Complaint, ¶ 42).
On December 5, 1996, Hammond commenced this action against Walker and
Northland. As amended on April 30, 1997, Hammond's complaint included a federal
claim for violation of the whistleblower provision of the False Claims Act (FCA),
31 U.S.C. § 3730(h),5 as well as state law claims of defamation, tortious interference
5
31 U.S.C. § 3730(h) provides:
Any employee who is discharged, demoted, suspended, threatened,
harassed, or in any other manner discriminated against in the terms and
conditions of employment by his or her employer because of lawful acts
done by the employee on behalf of the employee or others in furtherance
of an action under this section, including investigation for, initiation of,
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with a business relationship, breach of contract, and violation of the Minnesota
Whistleblower Act, Minn. Stat. § 181.932. On August 4, 1997, the district court
granted a motion to dismiss the FCA claim with regard to Walker. Northland
subsequently moved for summary judgment on the claims remaining against it.
On January 15, 1999, the district court granted summary judgment in favor of
Northland on the FCA claim and dismissed the remaining pendent state claims against
Northland and Walker without prejudice. Initially concluding that damages were an
essential element of an FCA whistleblower claim, see slip op. at 3-4, the district court
determined that Hammond had failed to generate a genuine issue of material fact as to
whether she was entitled to any relief under the FCA. See id. at 9-10. As stated above,
the district court had previously determined that Hammond could not seek punitive
damages under the FCA. See supra note 2 (citing district court order affirming
magistrate judge's order denying Hammond leave to amend her complaint to include
claim for punitive damages). The district court reasoned that, based on the undisputed
facts, no compensatory remedies were available to Hammond under the FCA because:
(1) reinstatement was not an appropriate remedy in the instant case; (2) "2 times the
amount of back pay" would result in a net pecuniary loss of zero for Hammond, given
that her mitigating pay from IMC wholly canceled out lost wages from Northland; (3)
interest on back pay was accordingly not applicable; and (4) damages for emotional
distress were not warranted. See slip op. at 5-10. This appeal followed.
testimony for, or assistance in an action filed or to be filed under this
section, shall be entitled to all relief necessary to make the employee
whole. Such relief shall include reinstatement with the same seniority
status such employee would have had but for the discrimination, 2 times
the amount of back pay, interest on the back pay, and compensation for
any special damages sustained as a result of the discrimination, including
litigation costs and reasonable attorneys' fees. An employee may bring an
action in the appropriate district court of the United States for the relief
provided in this subsection.
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Discussion
We review decisions to grant summary judgment de novo, applying the same
standards as did the district court, see Wooten v. Farmland Foods, 58 F.3d 382, 385
(8th Cir. 1995), and affirming only when no genuine issue of material fact remains and
the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c);
Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986) (Celotex); Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 249-50 (1986). We view all evidence in the light most
favorable to the non-moving party, drawing all inferences most favorable to that party.
See Burnham v. Ianni, 119 F.3d 668, 673 (8th Cir. 1997) (en banc). However,
summary judgment is proper if "the nonmoving party has failed to make a sufficient
showing on an essential element of her [or his] case with respect to which she [or he]
has the burden of proof." Celotex, 477 U.S. at 323.
Double back pay
Hammond contends that there is a genuine issue of material fact as to whether
she proved damages as an essential element of her federal whistleblower claim against
Northland and that summary judgment in favor of Northland was therefore improper.6
6
Noting that § 3730(h) does not explicitly mandate proof of damages as an
essential element of a whistleblower's claim, the district court assumed that damages
must be established, in light of statutory requirements for the government. See slip op.
at 3-4 & n.1 (citing 31 U.S.C. § 3731(c) ("In any action brought under section 3730,
the United States shall be required to prove all essential elements of the cause of action,
including damages, by a preponderance of the evidence.")). Although we do not
necessarily agree with such an analysis, we assume for the purposes of this case only
that such proof is required, given Hammond's concession at oral argument that damages
are an essential element of her claim. We also assume for the purposes of this appeal
that Hammond has generated a genuine issue of material fact as to all other essential
elements of her claim under 31 U.S.C. § 3730(h).
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Hammond initially argues that the FCA requires doubling of back pay prior to any
consideration of mitigation. See Brief for Appellant at 24-27 (citing Neal v.
Honeywell, Inc., 995 F. Supp. 889, 896 (N.D. Ill. 1998) ("Under [31 U.S.C. § 3730(h)]
we double that $50,000 [back pay] and subtract $10,000 [mitigating pay] for a
beginning figure of $90,000."), aff'd, 191 F.3d 827 (7th Cir. 1999) (Neal); United
States v. Bornstein, 423 U.S. 303, 316 (1976) ("[I]n computing the double damages
authorized by the [predecessor FCA], the Government's actual damages are to be
doubled before any subtractions are made for compensatory payments previously
received by the Government from any source.")). Accordingly, under this method of
calculation, Hammond would be entitled to net damages equal to twelve days' pay from
Northland. See Reply Brief for Appellant at 5. We disagree.
At the outset, we note that neither the FCA nor its legislative history specifically
addresses the question of how to calculate "2 times the amount of back pay."
Nevertheless, the overarching purpose of the statute is clear: to provide an aggrieved
plaintiff with complete compensation for any injuries incurred as a result of the
employer's retaliatory conduct, namely "all relief necessary to make the employee
whole." 31 U.S.C. § 3730(h). It is undisputed that, in the instant case, Hammond
suffered no pecuniary injury warranting a back pay award as a result of her termination
from Northland. Instead, she started work at IMC the very next day with an equal (if
not better) salary and benefits package. In light of these facts and the statute's explicit
aim of compensatory relief, we reject Hammond's proposed method of calculation,
which would award damages for an injury that in fact never occurred and thus would
give Hammond a windfall, rather than compensation.7
7
The cases cited by Hammond in support of her argument are inapposite. In
Neal v. Honeywell, Inc., 995 F. Supp. 889, 896 (N.D. Ill. 1998), aff'd, 191 F.3d 827(7th Cir. 1999), the district court neither confronted a situation where mitigation
earnings matched wages accrued post-discharge nor offered analysis or justification for
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Reinstatement
Hammond next asserts that the district court erred in holding that reinstatement
was not an appropriate remedy in the instant case; Hammond argues that such a
determination should have been left for the jury as factfinder. See Gibson v. Mohawk
Rubber Co., 695 F.2d 1093 (8th Cir. 1982). Alternatively, Hammond claims that she
is eligible for front pay and lost future earnings damages.
We agree with the district court that reinstatement was not an appropriate
remedy for Hammond, especially in light of the level of alleged acrimony between
Hammond and Northland, see Brief for Appellant at 13-19 (detailing purported
attempts by Northland employees to intimidate and harass Hammond); see also United
Paperworkers Int'l Union, AFL-CIO, Local 274 v. Champion Int'l Corp., 81 F.3d 798,
805 (8th Cir.1996) (observing that "[s]ubstantial hostility, above that normally incident
to litigation, is a sound basis for denying reinstatement."); Standley v. Chilhowee R-IV
Sch. Dist., 5 F.3d 319, 322 (8th Cir.1993) (noting that "the friction that precipitated this
lawsuit and that would dog the [employer] if appellants were returned to their teaching
positions makes reinstatement an ill-advised remedy in this case."), as well as the
anticipated length of reinstatement. See Duke v. Uniroyal, Inc., 928 F.2d 1413, 1423
(4th Cir. 1991) (noting that reinstatement may be inappropriate "when the period for
reinstatement was expected to be a relatively short one"). Thus, Hammond has failed
its method of calculation. In United States v. Bornstein, 423 U.S. 303, 316 (1976)
(Bornstein), the Supreme Court did face a scenario where compensatory payments
nearly offset government damages under the predecessor FCA. However, the
Bornstein Court based its calculation choice in large part on the fact that the
government incurred additional "costs, delays, and inconveniences occasioned by
fraudulent claims," thus warranting additional damages. See id. at 315. No such costs
are alleged in the instant case.
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to generate a genuine issue of material fact as to the practicability of reinstatement.
Moreover, based on the record below, Hammond has not provided sufficient factual
support for her alternative claim for prospective relief, see Fed. R. Civ. P. 56(e), even
assuming arguendo that such front pay damages and lost future earnings are available
under the FCA, which does not explicitly authorize such relief. See 31 U.S.C.
§3730(h).
Emotional distress
Finally, Hammond contends that she submitted sufficient evidence to create a
genuine issue of material fact as to whether she is entitled to damages for emotional
distress. We agree.
The FCA whistleblower provision explicitly mandates "compensation for any
special damages sustained as a result of the discrimination." Id. Damages for
emotional distress caused by an employer's retaliatory conduct plainly fall within this
category of "special damages." See Neal, 191 F.3d at 831-32 (concluding that
compensation for emotional distress is available under § 3730(h) and can be classified
as "special damages"). Providing compensation for such harms comports with the
statute's requirement that a whistleblowing employee "be entitled to all relief necessary
to make the employee whole." 31 U.S.C. § 3730(h).
To prove emotional distress, medical or other expert evidence is not required.
See Kim v. Nash Finch Co., 123 F.3d 1046, 1065 (8th Cir. 1997). Instead, "[a]
plaintiff's own testimony, along with the circumstances of a particular case, can suffice
to sustain the plaintiff's burden in this regard." Id. (quoting Turic v. Holland
Hospitality, Inc., 85 F.3d 1211, 1215 (6th Cir. 1996)); see also Wilmington v. J.I. Case
Co., 793 F.2d 909, 922 (8th Cir. 1986) (noting testimony of plaintiff and other
witnesses about plaintiff's health deterioration, mental anxiety, humiliation, and
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emotional distress resulting from working conditions and discharge); Williams v. Trans
World Airlines, Inc., 660 F.2d 1267, 1272-73 (8th Cir. 1981) (referring to testimony
from plaintiff about humiliation or mental distress). However, a plaintiff must offer
specific facts as to the nature of his or her claimed emotional distress and its causal
connection to the allegedly violative actions. See Browning v. President Riverboat
Casino-Missouri, Inc., 139 F.3d 631, 636 (8th Cir. 1998) (noting that "claims with
respect to emotional distress damages require proof of evidence of the nature and
extent of emotional harm caused by the alleged violation."); cf. Carey v. Piphus, 435
U.S. 247, 263 (1978) (Carey) (plaintiffs seeking emotional distress damages under 42
U.S.C. § 1983 must "produc[e] evidence that mental and emotional distress actually
was caused by the denial of procedural due process itself.").
In the instant case, Hammond presented testimonial evidence that she had
suffered from severe emotional distress as a result of the allegedly retaliatory actions
of her employer. See Hammond deposition, vol. III, at 5 (Q: "In your testimony that
you've given us, you've indicated some degree of distress over the events that were
taking place. Is that fair to say?" A: "Oh, yes."); id., vol. III, at 6 ("I believe I have
extreme distress, which is a normal reaction to having my [Medicare provider] number
used fraudulently, to having my career destroyed, having to leave my home, having my
husband's career destroyed, having my children leave their home, their community, their
friends, and their state. I think every human being would understand that degree of
distress. That's a normal reaction, both emotional and physiological."); id., vol. III, at
83, 88 ("As things became more and more acrimonious in the last couple of months [at
Northland] . . . when we made the change from 'Yeah, maybe we can work this out' and
'Maybe we'll have enough money to hire a psychiatrist' to a very hostile environment
. . . . [that period] was pretty traumatic for me, and it was pretty time-consuming and
overwhelming.").
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Based on this deposition testimony, Hammond has created a genuine issue of
material fact as to whether she is entitled to damages for emotional distress resulting
from Northland's allegedly retaliatory actions. Specifically, Hammond offers evidence
that she suffered emotional distress stemming from purported workplace discrimination
and harassment, her unexpectedly early termination, her sudden transition to the IMC
job, and the overall impact of Northland's alleged actions on her reputation, practice,
and career. Thus, these allegations are sufficient to create a genuine issue of material
fact as to her entitlement to emotional distress damages under her FCA claim.8
Litigation costs and attorneys' fees
The district court further erred in granting summary judgment for Northland
because other relief besides emotional distress damages was available to Hammond
under the FCA. Specifically, Hammond has created a genuine issue of material fact as
to whether she was eligible for "litigation costs and reasonable attorneys' fees," which
are included under § 3730(h) as "special damages sustained as a result of the
discrimination" and which Hammond specifically requested in her amended complaint.
See Appellant's Appendix at 53 (Amended Complaint).
8
Granted, Hammond's testimony only attributes some of her emotional distress
to Northland's purported retaliation. While Northland's allegedly wrongful use of
Hammond's Medicare number may have caused Hammond some emotional distress,
this unpermitted usage stands apart from any alleged retaliation against Hammond;
thus, damages would not be available under 31 U.S.C. § 3730(h) for this emotional
distress. Similarly, Hammond's decision to move out of state (which purportedly
yielded distress relating to her husband's job and her children's well-being) occurred
more than a year after her Northland termination and thus is too attenuated and
removed from Northland's alleged retaliatory actions to warrant an award of emotional
distress damages.
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As the Seventh Circuit noted in Neal, 191 F.3d at 833, "[s]ection 3730(h) is
unusual among fee-shifting laws" in that attorneys' fees and litigation costs are
categorized as a subset of damages. Apparently, only two other federal statutes
classify these fees and costs in the exact same fashion and neither has been the subject
of litigation. See 18 U.S.C. § 1031(h) (authorizing whistleblower claim for certain
employees reporting fraud against the United States); id. § 3059A(e) (authorizing
whistleblower claim for certain employees reporting fraud against federally insured
financial institutions). Under the so-called "American Rule," attorneys' fees are
ordinarily not recoverable by the prevailing party in federal litigation in the absence of
statutory authorization. See Alyeska Pipeline Serv. Co. v. Wilderness Soc'y, 421 U.S.
240, 263-64 (1975). Typically, when such fee-shifting does occur, attorneys' fees are
awarded as part of the prevailing party's costs. See, e.g., 29 U.S.C. § 216(b) ("The
court in such action [under the Fair Labor Standards Act] shall, in addition to any
judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney's fee to be
paid by the defendant, and costs of the action."); 42 U.S.C. § 1988(b) ("In any action
[under Title VI, Title IX, 42 U.S.C. §§ 1981-1986, or certain other statutes] . . . the
court, in its discretion, may allow the prevailing party, other than the United States, a
reasonable attorney's fee as part of the costs . . . ."); id. § 9659(f) ("The court, in issuing
any final order in any action brought pursuant to this section [of the Comprehensive
Environmental Response, Compensation, and Liability Act], may award costs of
litigation (including reasonable attorney and expert witness fees) to the prevailing or
the substantially prevailing party . . . ."). Under the FCA, however, attorneys' fees and
litigation costs are part and parcel of the "special damages sustained as a result of the
discrimination." 31 U.S.C. § 3730(h). Although neither the FCA nor its legislative
history provide any explanation for Congress's decision to include these fees and costs
within "special damages," we assume that Congress intended such compensation as
"necessary to make the employee whole." Id. Given the presumptive availability of
these special damages to Hammond (provided she succeeds at trial on her § 3730
whistleblower claim), we conclude that the district court erred in holding that
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Hammond failed to create a genuine issue of material fact as to whether she was
entitled to any special damages under § 3730(h).
Finally, we note that, even if Hammond were not entitled to these special
damages under § 3730(h), there is a genuine issue of material fact concerning her
eligibility for an award of nominal damages. See Carey, 435 U.S. at 266 (holding that
denial of procedural due process is actionable for nominal damages without proof of
actual injury) ("By making the deprivation of such ["absolute"] rights actionable for
nominal damages without proof of actual injury, the law recognizes the importance of
organized society that those rights be scrupulously observed . . . ."); Welch v. Spangler,
939 F.2d 570, 573 (8th Cir. 1991) (affirming award of nominal damages for violation
of a consent decree, even though plaintiff had not proven actual injury or damages);
Dean v. Civiletti, 670 F.2d 99, 101 (8th Cir. 1982) (per curiam) (allowing recovery of
nominal damages in action where plaintiff had established elements of Title VII claim
but was unable to show actual damages). Therefore, summary judgment should not
have been granted in favor of Northland.
Conclusion
We therefore reverse the district court's order and remand the case to the district
court for further proceedings consistent with this opinion.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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