The case, Adelstein v. Peacehealth, Inc., docket 25-605, stems from Adelstein's claim that PeaceHealth and supervisor Robert Axelrod retaliated against him after he reported suspected fraudulent billing at Saint John's Medical Center.
Adelstein alleged that a colleague, Dr. Shoemaker, billed for patients he had not seen. He pointed to perfunctory patient notes and the volume of involuntarily committed Medicaid patients at the facility as evidence.
The panel held that Adelstein's internal complaints and his comments to Axelrod about "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.
Email records and testimony showed Axelrod refused to retain Adelstein to fill staffing shortages after learning of the protected activity, the court said. Nonrenewal of an employment contract can constitute retaliation even if renewal was discretionary, the panel noted.
The court also found a genuine dispute over pretext. Defendants argued Adelstein created a "patient care crisis" by temporarily refusing to see seven patients, but Adelstein ultimately saw all assigned patients with no evidence of impact on care.
A reasonable jury could also conclude that Axelrod no longer believed Adelstein was "blackmailing" him by the time the contract decision was made, given that Adelstein worked his remaining shifts in July and August, the panel said.
The Ninth Circuit applied the same burden-shifting analysis to vacate summary judgment on Adelstein's claim under the Washington Law Against Discrimination. The court declined to address the defendants' argument that reporting billing issues is not protected conduct under WLAD, finding the issue forfeited by concession at the district court.