Dr. Jonathan Adelstein, a physician at PeaceHealth, Inc.'s Saint John's Medical Center in Washington, raised concerns about a colleague's alleged fraudulent billing practices — specifically, that the colleague had billed for patients he had not seen and appeared to have a pattern of false reporting. A significant portion of the affected patients were involuntarily committed individuals covered by Medicaid. After Adelstein complained internally and raised the issue of Medicaid fraud with his supervisor, Robert Axelrod, his contract was not renewed. He sued PeaceHealth and Axelrod for retaliation under the FCA and the Washington Law Against Discrimination.
The U.S. District Court for the Western District of Washington granted summary judgment to the defendants. The Ninth Circuit, reviewing de novo, vacated that ruling and remanded.
The panel held that Adelstein's internal complaint and his comments to Axelrod about Medicaid fraud constituted protected activity under 31 U.S.C. § 3730(h). On appeal, the defendants did not dispute that they knew of Adelstein's protected activity as of July 12, 2021.
The central dispute on appeal was whether the nonrenewal amounted to retaliation. The court held that nonrenewal of an employment contract can constitute retaliation even if the plaintiff had no entitlement to renewal and the decision was purely discretionary, citing MacIntyre v. Carroll Coll., 48 F.4th 950, 955 (9th Cir. 2022). Deposition testimony, declarations, and email records showed that Axelrod was unwilling to consider retaining Adelstein to fill staffing shortages after learning of his protected activity, and that Axelrod rejected multiple administrators' suggestions that Adelstein continue working at the facility.
The panel also held that a reasonable jury could find the defendants' proffered justifications pretextual. The defendants argued that Adelstein created a patient care crisis on July 12, 2021, by temporarily refusing to see seven patients, and that Axelrod believed Adelstein was "blackmailing" him by conditioning patient care on restoration of his September and October shifts. The court held that both rationales were vulnerable to a pretext finding: Adelstein ultimately saw all of his assigned patients, there was no evidence his temporary refusal affected patient care, and he continued working all of his scheduled shifts through July and August even after Axelrod declined to restore the disputed shifts.
The court also vacated summary judgment on the WLAD retaliation claim for the same reasons, noting that both statutes involve the same burden-shifting analysis. The court declined to address the defendants' argument — raised for the first time on appeal — that reporting billing issues is not protected conduct under the WLAD, holding that the defendants had forfeited the issue by conceding below that disputed facts existed on that question.
The opinion also noted that because the court held Adelstein raised a genuine dispute about the contract nonrenewal, it was unnecessary to decide whether Defendants separately retaliated by preventing PeaceHealth's other locations from hiring him; the court therefore did not address whether the district court erred in excluding evidence about an open position at PeaceHealth Southwest.
The memorandum disposition is not designated for publication and is not precedent except as provided by Ninth Circuit Rule 36-3.