The dispute centers on Dr. Jonathan Adelstein's allegations that PeaceHealth, Inc. and its supervisor, Robert Axelrod, retaliated against him for reporting fraudulent billing practices at Saint John's Medical Center.
Adelstein claimed he raised concerns about a colleague, Dr. Shoemaker, who allegedly billed for patients he had not seen. Adelstein cited perfunctory patient notes and the high volume of involuntarily committed Medicaid patients at the facility as evidence of a pattern of false reporting.
The Ninth Circuit held that Adelstein's internal complaints and comments to Axelrod regarding "Medicaid fraud" constituted protected activity under the False Claims Act. The court found the evidence sufficient to raise a genuine dispute that Adelstein reasonably and in good faith believed Shoemaker was regularly billing for patients he had not seen.
The panel vacated the district court's ruling on the retaliation claim, noting that email records and testimony showed Axelrod refused to retain Adelstein to fill staffing shortages after learning of his protected activity. The court emphasized that nonrenewal of an employment contract can constitute retaliation even if the renewal was discretionary.
The court also found that Adelstein raised a genuine dispute that PeaceHealth's stated reasons for nonrenewal were pretextual. Although Defendants argued Adelstein created a "patient care crisis" by temporarily refusing to see seven patients, Adelstein ultimately saw all assigned patients with no evidence of impact on care.
Similarly, the court held that a reasonable jury could conclude Axelrod no longer believed Adelstein was "blackmailing" him. Because Adelstein worked his remaining shifts in July and August, a reasonable jury could conclude Axelrod no longer held that belief by the time he refused to extend Adelstein's contract.
The Ninth Circuit also vacated summary judgment on Adelstein's retaliation claim under the Washington Law Against Discrimination, applying the same burden-shifting analysis. The court declined to address Defendants' argument that reporting billing issues is not protected conduct under WLAD, as the issue was forfeited by concession at the district court level.