Scott M. DRISCOLL, Petitioner,
The SUPERIOR COURT of Madera County, Respondent; Todd Spencer et al., Real Parties in Interest.
ORIGINAL PROCEEDINGS; petition for writ of mandate. James E. Oakley, Judge. (Super. Ct. No. MCV057183)
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Bartley Law Offices, Daniel R. Bartley, Novato, for Petitioner.
No appearance for Respondent.
McCormick, Barstow, Sheppard, Wayte & Carruth, Jerry D. Casheros, Todd W. Baxter, and Scott M. Reddie, Fresno, for Real Parties in Interest.
Petitioner Scott M. Driscoll, M.D., is the defendant and cross-complainant in a civil lawsuit filed in state court. Driscoll filed an amended cross-complaint against plaintiffs Todd Spencer, M.D. Medical Group, Inc., and Todd Spencer, M.D. (hereafter referred to collectively as Spencer or real parties in interest). Driscoll alleged a claim of retaliation in violation of title 31 United States Code section 3730(h), which is part of the federal False Claims Act (FCA) (31 U.S.C. § 3729 et seq.). Spencer filed a demurrer asserting the trial court had no jurisdiction over the FCA claim, and the trial court sustained the demurrer to the claim without leave to amend.
Driscoll petitioned this court for a writ of mandate directing the trial court to vacate its order sustaining the demurrer to his FCA claim. We asked for an informal response from real parties in interest and then issued an order to show cause why the relief prayed for in the petition should not be granted. We now conclude that state courts have concurrent jurisdiction over FCA retaliation claims such as Driscoll's and, consequently, we grant the requested relief.
FACTUAL AND PROCEDURAL HISTORIES
Spencer initiated this state court action by filing a complaint against Driscoll in Madera County Superior Court. ( Todd Spencer, M.D. Medical Group, Inc., and Todd Spencer, M.D. v. Scott M. Driscoll, M.D. (Super.Ct.Madera, 2011, No. MCV057183).) Spencer alleged claims of defamation, corporate disparagement, interference with contract, interference with prospective economic advantage, fraud, slander, breach of contract, and breach of the implied covenant of good faith and fair dealing.
Subsequently, Driscoll filed a complaint, under seal, in the United States District Court for the Eastern District of California. Driscoll named Spencer and two hospitals as defendants and asserted, among other claims, a cause of action for retaliation under the FCA.
At the time an answer was due in the state court action, Driscoll filed a cross-complaint alleging whistleblower retaliation and wrongful termination. His first cause of action was for retaliation under the FCA. Spencer filed a demurrer to certain causes of action. The trial court overruled the demurrer in part and sustained the demurrer in part with leave to amend.
On September 29, 2012, Driscoll filed a first-amended cross-complaint. Driscoll alleged he had worked for the M.D. Medical Group, Inc., as a
radiologist for over two years when he was demoted and then terminated. He alleged the primary motivating [167 Cal.Rptr.3d 367] factors in these employment actions were (1) his demands that he be paid for excess hours worked and (2) his complaints about billing practices that he believed to be fraud against Medicare and Medi-Cal. Again, his first cause of action was for retaliation under the FCA.
On November 2, 2012, Spencer filed a second demurrer. With respect to the first cause of action, they alleged the trial court lacked subject matter jurisdiction. Spencer argued: " It does not appear that a claim under the Federal False Claims Act for retaliation in violation of 31 U.S.C. Section 3730(h) has ever been resolved in a state court, and the express language of the statute providing for action in an ‘ appropriate district court’ makes clear that this Court has no jurisdiction of the claim."
The trial court heard argument on Spencer's demurrer on December 3, 2012. Driscoll's attorney argued there must be an explicit statement of exclusive federal jurisdiction in the statute in order to find that state courts lack subject matter jurisdiction over claims brought under that statute. As an example of an explicit statement, he cited the Employment Retirement Income Security Act (ERISA) (29 U.S.C. § 1001 et seq.). Driscoll's attorney asserted the FCA has no similar statement of exclusive jurisdiction. He further argued that, " case law all indicates that an action ... may be brought in state court."
The trial court indicated that it was inclined to sustain the demurrer to the first cause of action. The court explained:
" I think you stated that it has to be an express statement of sole jurisdiction in the statute which may be an example of ERISA, but I think the ... standard is really different. It needs to be either express or implied. And to me this would have been really superfluous language to be included in there specifically with respect to directing that it be filed in the district court. And as counsel pointed out in her points and authorities there really are no cases. This has been around for a while and there are no cases which directly deal with it. There are some general proposition[s], of course, that the [state] courts have concurrent jurisdiction and there is some dicta. I think the case ... cited on that was [ United States ex rel. Hindo v. University of Health Sciences [ ]]....
It [167 Cal.Rptr.3d 368] does not appear to have directly addressed this issue and so I would be surprised, I think, that this Court would have jurisdiction in light of the wording of the statute and in light of the fact that there ...