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Beth A. Rhodes, M.D v. Sutter Health

May 21, 2012

BETH A. RHODES, M.D.,
PLAINTIFF,
v.
SUTTER HEALTH, A CALIFORNIA CORPORATION, SUTTER GOULD MEDICAL FOUNDATION, A CALIFORNIA CORPORATION, THE GOULD MEDICAL GROUP, INC., A CALIFORNIA CORPORATION, DEFENDANTS.



ORDER RE: MOTION TO DISMISS FIRST AMENDED COMPLAINT

Plaintiff Beth A. Rhodes brought this action against Sutter Health, Sutter Gould Medical Foundation ("SGMF"), and The Gould Medical Group, Inc. ("GMG") alleging unlawful retaliation, constructive discharge, gender harassment, gender discrimination, failure to prevent discrimination, violation of California Business and Professions Code section 2056, defamation, and intentional infliction of emotional distress. Currently before the court is the joint motion by Sutter Health and SGMF to dismiss all of plaintiff's causes of action as to Sutter Health and plaintiff's first through third causes of action as to SGMF for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6).

I. Factual and Procedural Background Plaintiff alleges that she was employed by GMG as a

radiologist specializing in breast and body imaging from January 2008 through May 2011. (First Am. Compl. ("FAC") ¶ 1.)

By the summer of 2008, she became concerned that a GMG protocol requiring pre-biopsy surgical consultations was medically unnecessary and delayed proper patient care. (FAC ¶

11.) She also believed that the protocol was "essentially self-referral to the GMG, SGMF and Sutter Health for monetary gain and amounted to Medicare fraud." (Id.) She further claims that, consistent with her obligation to the public to advocate for appropriate health care, she reported her concerns regarding the protocol to GMG's senior partners. (Id.)

According to plaintiff, GMG's chief partner retaliated against her for expressing her misgivings about the protocol by assigning her low value work. (Id. ¶ 43.) Because of this low value work, plaintiff alleges that she was forced to work longer hours, making it appear as though she had "developed time management issues." (Id.) She further contends that this low value work was one of the reasons she was denied an annual performance bonus. (Id. ¶ 68.)

In addition to the protocol requiring pre-biopsy consultations, plaintiff claims that she raised other patient care issues with senior GMG staff. (Id. ¶¶ 44-45, 51, 53.) She further alleges that, due to her advocacy for appropriate patient care, persons associated with GMG and SGMF engaged in a retaliatory campaign, creating a hostile working environment. (Id. ¶¶ 52-78.) Included in this campaign were threats, (id. ¶¶ 46, 57, 71), false accusations and unfair criticisms, (id. ¶¶ 55, 58, 62, 65), intentional interference with plaintiff's ability to care for patients, (id. ¶¶ 58-59), and assaultive behavior (id. ¶67). Plaintiff also heard about rumors being spread that she was guilty of "bad behavior," that there was a "big file" compiled on her, and that she was "on thin ice" and "on the way out." (Id. ¶¶ 60, 71, 77.)

In addition to the hostility directed at her personally, plaintiff also claims that GMG implemented a policy requiring shareholders and associates to live "in the vicinity" of the hospital in a gender discriminatory way, using it to fire two female radiologists but turning a blind eye to male members who lived in Dublin, San Ramon, Los Angeles, and Santa Fe, New Mexico. (Id. ¶¶ 47-48.) This, she alleges, was "typical of the preference given to male members of the GMG to the detriment of the female members of the GMG." (Id. ¶ 48.)

Plaintiff alleges that she eventually contacted the independent ombudsman service at Sutter Health to complain about "harassment, gender discrimination, Medicare fraud, time care [sic] fraud and inappropriate patient advocacy" and contacted Sutter Health chief compliance officer Eunice King to report the harassment being directed at her. (Id. ¶¶ 10, 69.) She also claims that she sent an email to GMG "that set out in no uncertain terms that the 'Surgical Consult Prior to Breast Needle Biopsy' protocol fraud had to stop as it constituted insurance billing fraud and Medicare and Medi-Cal billing fraud." (Id. ¶ 72.)

Due to the stress of her working environment, plaintiff contends that in December 2010, she was medically excused from work. (Id. ¶ 76.) Initially, her leave was scheduled to last through February 4, 2011, but was extended through May 27, 2011. (Id.) At the end of her medical leave, plaintiff resigned from her position with GMG, which she alleges had become intolerable due to hostile working conditions that caused her both physical and emotional distress. (Id. ¶ 78.)

Plaintiff brings claims against three defendants: GMG, SGMF, and Sutter Health. She alleges that GMG was her employer, (id. ¶ 14), and that "Sutter Health, SGMF, and GMG were her joint employers under the 'integrated enterprise' theory," (id. ¶ 10). The FAC alleges various ways in which SGMF and GMG were interrelated in matters of labor relations, financial control, and management, (id. ¶¶ 6-9, 19-40), and alleges that Sutter Health and SGMF had interrelated operations and common management, (id. ¶¶ 16-18). The FAC does not detail any alleged direct connection between GMG and Sutter Health other than Sutter Health employee Eunice King's role in investigating plaintiff's complaints. (Id. ¶¶ 10, 69).

Plaintiff's FAC contains claims for (1) retaliation in violation of the federal False Claims Act, (2) retaliation in violation of the California False Claims Act, (3) violation of California Business and Professions Code section 2056, (4) gender harassment in violation of the California Fair Employment and Housing Act ("FEHA"), (5) sex discrimination in violation of FEHA, (6) retaliation for reporting patient abuse in violation of FEHA, (7) retaliation in violation of FEHA, (8) failure to prevent discrimination in violation of FEHA, (9) constructive discharge in violation of public policy, (10) defamation, and (11) intentional infliction of emotional distress. (Docket No. 30.) The parties stipulated to dismiss claim six with prejudice as to all defendants. (Docket No. 37.)

Defendants Sutter Health and SGMF now move to dismiss claims one and two as to Sutter Health and SGMF on the ground that the integrated enterprise theory does not apply to these claims, claims four through nine as to Sutter Health on the ground that plaintiff failed to adequately plead an employment relationship or an alternate theory of liability, claim three as to Sutter Health and SGMF on the ground that there is no private cause of action for violation of Business and Professions Code section 2056, and claims ten and eleven as to Sutter Health on the ground that they do not state a claim. (Docket No. 40.)

II. Analysis

To survive a motion to dismiss, a plaintiff must plead "only enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This "plausibility standard," however, "asks for more than a sheer possibility that a defendant has acted unlawfully," Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), and "[w]here a complaint pleads facts that are 'merely consistent with' a defendant's liability, it 'stops short of the line between possibility and plausibility of entitlement to relief.'" Id. (quoting Twombly, 550 U.S. at 557). In deciding whether a plaintiff has stated a claim, the court must accept the allegations in the complaint as true and draw all reasonable ...


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