Michelle Maddon v. Los Gatos Orthopedic Sports Therapy, Inc

Case Name: Maddon v. Los Gatos Orthopedic Sports Therapy, Inc., et al.
Case No.: 1-14-CV-273385

Defendants Los Gatos Orthopedic Sports Therapy, Inc. (“LGOST”) and Nancie Edwards (“Edwards”) (collectively, “Defendants”) demur to the complaint (“Complaint”) filed by plaintiff Michelle Maddon (“Plaintiff”).

Plaintiff was formerly employed by LGOST as a scheduling coordinator, primarily in a part-time capacity, but would work full time or overtime on occasion when LGOST required it. (Complaint, ¶¶ 9, 11.) Plaintiff could generally accommodate short term increases in her work hours but required additional notice for long term changes in order to arrange for child care, including care for her disabled son, of whom LGOST was aware. (Id., ¶ 13.)

On November 15, 2013, LGOST hired Edwards as the new Administrative Director. (Complaint, ¶ 14.) Upon her hiring, Edwards took issue with Plaintiff’s part-time schedule, which incorporated the child care needs of her disabled son. Despite her knowledge of Plaintiff’s need for flexibility and the fact that accommodations had previously been provided, Edwards was unwilling to accommodate Plaintiff and was hostile towards her. (Id., ¶¶ 17-19.) Edwards also began harassing Plaintiff about her alleged “inability” to work the hours required and told her that she would have to find a solution to the scheduling problem one way or another. (Id., ¶ 20.)

On November 24, 2013, Plaintiff received a letter regarding her yearly review, signed by a number of her superiors, which complimented her work over the preceding year and stated that LGOST was happy to have her as an employee. (Complaint, ¶ 21.) Shortly thereafter, Plaintiff discovered that Edwards, who had not signed the letter, had posted her position on Craigslist and that LGOST has begun collecting resumes for her replacement. (Id., ¶ 22.) When Plaintiff confronted her, Edwards did not deny her intention to find a replacement for her position. (Id., ¶ 23.) Plaintiff reiterated that she could always work full time, provided that she had one week’s notice to arrange care for her son. (Id., ¶ 24.)

Plaintiff subsequently complained about the issue to LGOST’s owner and manager and was reassured that they would look into the matter further and she should not worry because it would be worked out. (Complaint, ¶ 25.)

In December of 2013, Plaintiff developed health issues that required surgical treatment, which she communicated to LGOST. (Complaint, ¶¶ 26, 27, 30.) During that same time period, Plaintiff refused Edwards’ instruction to violate the process associated with Advanced Beneficiary Notice of Non-Coverage (“ABN”) forms, which are used to inform a Medicare patient that the provider anticipates Medicare will not pay for the service rendered, thus allowing them to legally collect directly from the patient. (Id., ¶ 28.) If the ABN is not issued when notice is required, the beneficiary cannot be held financially liable if Medicare denies payment. (Id., ¶ 28.) Plaintiff refused to retroactively date and obtain a signature from a particular patient on an ABN to allow LGOST to collect for services provided, which visibly upset Edwards. (Complaint, ¶¶ 28, 29.)

Shortly after informing LGOST of her upcoming surgery, Plaintiff’s employment was terminated by Edwards. (Complaint, ¶ 31.) Plaintiff refused to sign a letter presented to her which outlined the reasons she was purportedly being terminated, believing that her termination was discriminatory and retaliatory and that the stated reasons for her firing were false and pretextual. (Id., ¶¶ 31, 32.)

On November 18, 2014, after obtaining a Right to Sue letter from the state Department of Fair Employment and Housing, Plaintiff filed the Complaint asserting the following causes of action: (1) disability discrimination (against LGOST); (2) associational disability discrimination (against LGOST); (3) failure to engage in interactive process (against LGOST); (4) failure to accommodate (against LGOST); (5) failure to investigate complaints of/failure to prevent discrimination, harassment, retaliation (against LGOST); (6) retaliation (against LGOST); (7) harassment (against Defendants); (8) wrongful termination in violation of public policy (against LGOST); and (9) violation of Labor Code § 1102.5 (against LGOST).

On January 9, 2015, Defendants filed the instant demurrer to each of the nine causes of action asserted in the Complaint on the ground of failure to state facts sufficient to constitute a cause of action. (Code Civ. Proc., 430.10, subd. (e).)

Defendants’ demurrer to the first cause of action (disability discrimination) on the ground of failure to state facts sufficient to constitute a cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND. The Fair Employment and Housing Act (“FEHA”) makes it an unlawful employment practice to discriminate against any person because of a physical or mental disability. (Gov. Code, § 12940, subd. (a).) In order to state a cause of action for violation of the FEHA, a plaintiff must allege facts establishing the prima facie elements of his or her claim. (See Dudley v. Dept. of Transportation (2001) 90 Cal.App.4th 255, 261.) The elements of a prima facie case of disability discrimination are that the plaintiff: (1) suffered from a disability or was regarded as suffering from a disability; (2) could perform the essential duties of the job with or without reasonable accommodation; and (3) was subjected to an adverse employment action because of the disability or perceived disability. (Sandell v. Taylor-Listug, Inc. (2010) 188 Cal.App.4th 297, 310.) A “physical disability” includes any physiological disease, disorder, condition, cosmetic disfigurement, or anatomical loss that both: (1) affects one or more of the following body systems: neurologic, immunological, musculoskeletal, special sense organs, respiratory (including speech organs), cardiovascular, reproductive, digestive, genitourinary, hemic and lymphatic, skin and endocrine; and (2) limits an individual’s ability to participate in major life activities. (Gov. Code, § 12926, subd. (m)(1); Cal. Code Regs., § 11065, subd. (d)(2)(B).

Here, Plaintiff’s allegation that she had a suspicious lump in her upper chest/arm (which is not alleged to be cancerous) that was discovered by her doctor on December 6, 2013 and removed by a specialist on January 9, 2014 does not establish that she suffered from a “physical disability” within the meaning of the FEHA. There are no allegations that the discovery and removal of the lump limited Plaintiff’s ability to participate in major life activities, nor are there any factual allegations, rather than mere conclusory statements, that suggest that LGOST perceived Plaintiff to be disabled because of this discovery and procedure.

Defendants’ demurrer to the second cause of action (associational disability discrimination) on the ground of failure to state facts sufficient to constitute a cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND. The FEHA not only makes it unlawful for an employer to discriminate against an employee because of an actual or perceived physical or mental disability, but also prohibits discrimination based on the employee’s association with a person who has, or is perceived to have, such a disability. (Gov. Code, § 12926, subd. (n).) Given the dearth of California case law which discusses association disability discrimination in the context of the FEHA, and “because of the similarity between state and federal discrimination laws,” California courts look to pertinent federal authority to guide the construction and application of the FEHA for this type of claim. (Rope v. Auto-Chlor System of Washington, Inc. (2013) 220 Cal.App.4th 635, 656.) Because the FEHA and the Americans with Disabilities Act (“ADA”) “share the goal of eliminating discrimination,” federal cases which discuss disability-based associational discrimination under the ADA are particularly relevant.

Larimer v. International Business Machines Corp. (7th Cir. 2004) 370 F.3d 698 recognized as actionable under the ADA the following three types of associational disability discrimination: the employee suffers an adversarial personnel action because (1) his family member has a disability that is costly to the employer; (2) the employee’s family member or companion has a communicable disease or ailment which has a genetic component that the employer fears the employee is likely to acquire or develop; and (3) the employee is “somewhat inattentive at work because his family member has a disability that requires his attention, yet not so inattentive that to perform to his employer’s satisfaction he would need an accommodation, perhaps by being allowed to work shorter hours.” (Larimer, supra, 370 F.3d at 700.) Here, Plaintiff fails to plead facts which establish that her termination was the result of any of the foregoing circumstances. There are, for example, no allegations that Plaintiff was, or Defendants’ considered her to be, “inattentive at work.” Instead, Plaintiff alleges that Defendants’ discriminated against her by not granting her sufficient time to arrange for child care. However, an employer is not required to accommodate an employee’s need to care for a disabled family member through scheduling modifications. (See, e.g., Tyndall v. National Education Centers, Inc. of Cal. (4th Cir. 1994) 31 F.3d 209, 213-214, citing 29 C.F.R. § 1630, App. [“An employee would not be entitled to a modified work schedule as an accommodation to enable the employee to care for [a family member] with a disability”].)

Defendants’ demurrer to the third cause of action (failure to engage in interactive process) on the ground of failure to state facts sufficient to constitute a cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND. The FEHA regulations provide that the employer must initiate the interactive process in any of the following situations: (1) an employee or applicant with a known physical or mental disability or medical condition requests a reasonable accommodation; (2) the employer becomes aware of the need for accommodation through a third party or by observation; or (3) the employer becomes aware of the possible need for accommodation because the disabled employee has exhausted leave under applicable federal and state statutes and the employer’s leave policy, and the employee or employee’s health care provider indicates that further accommodation is necessary for recuperative leave or to allow the employee to perform essential job functions. (2 Cal. Code Regs., § 11069, subd. (b); see also Prilliman v. United Air Lines, Inc. (1997) 53 Cal.App.4th 935, 950.)

As articulated above, Plaintiff fails to plead facts which establish that she suffered from or was perceived to be suffering from a “physical disability” within the meaning of the FEHA. Thus, she has not pleaded an entitlement to a reasonable accommodation in the first place and thus an obligation on Defendants’ part to engage in the interactive process. In her opposition, Plaintiff insists that she should have been granted additional time off to care for her children and required the reasonable accommodation of time off to meet with doctors and specialists. But as previously stated, an employer is not obligated to modify an employee’s schedule to accommodate his or her need to care for a disabled family member, Plaintiff has not pleaded a recognized type of associational disability discrimination, and there are no allegations that Plaintiff’s need for time off to meet with doctors and specialists was refused or discouraged by Defendants.

Defendants’ demurrer to the fourth cause of action (failure to accommodate) on the ground of failure to state facts sufficient to constitute a cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND. In order to establish a claim for “failure to accommodate,” a plaintiff must demonstrate that: (1) he or she suffers from a disability covered by the FEHA; and (2) the defendant has failed to reasonably accommodate the plaintiff’s disability. (See Jensen v. Wells Fargo Bank (2000) 85 Cal.App.4th 245, 256; see also Avila v. Continental Airlines, Inc. (2008) 165 Cal.App.4th 1237, 1246-1247.) Because Plaintiff has not pleaded facts demonstrating that she suffered from a disability covered by the FEHA and she is not entitled to a modified schedule to care for her disabled son, she has not pleaded a valid claim for failure to accommodate.

Defendants’ demurrer to the fifth cause of action (failure to investigate complaints of/failure to prevent discrimination, harassment, retaliation) on the ground of failure to state facts sufficient to constitute a cause of action is SUSTAINED WITH 10 DAYS; LEAVE TO AMEND. A claim for failure to prevent discrimination is dependent on a viable claim for actual discrimination. (Scotch v. Art Institute of California (2009) 173 Cal.App.4th 986, 1021, citing Trujillo v. North County Transit Dist. (1998) 63 Cal.App.4th 280, 289 [“Employers should not be held liable to employees for failure to take necessary steps to prevent such conduct, except where the actions took place and were not prevented”].) Having failed to sufficiently plead claims for disability discrimination, associational disability discrimination and harassment, it follows that Plaintiff’s claim for failure to investigate fails.
Defendants’ demurrer to the sixth cause of action (retaliation) on the ground of failure to state facts sufficient to constitute a cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND. The FEHA prohibits retaliation against any person who has opposed any practices forbidden under the Act or has “filed a complaint, testified, or assisted” in any of the proceedings under the Act. (Gov. Code, § 12940, subd. (h).) In order to establish a prima facie case of retaliation, a plaintiff must demonstrate that the employee “engaged in a protected activity, his employer subjected him to adverse employment action, and there is causal link between the protected activity and employer’s action.” (Flait v. North America Watch Corp. (1992) 3 Cal.App.4th 467, 476; Yanowitz v. L’Oreal USA, Inc. (2005) 36 Cal.4th 1028, 1042.)

Here, Plaintiff fails to plead facts establishing that she engaged in a protected activity under the FEHA. There are no facts pleaded which demonstrate that Plaintiff complained about discrimination or harassment (within the meaning of the Act) and a mere request for accommodation, without more, does not constitute a protected activity sufficient to support a claim for retaliation. (See Rope, supra, 220 Cal.App.4th at 652-653 [“we find no support in the regulations or case law for the proposition that a mere request- or even repeated requests- for an accommodation, without more, constitutes a protected activity sufficient to support a claim for retaliation in violation of FEHA. On the contrary, case law and FEHA’s implementing regulations are uniformly premised on the principle that the nature of activities protected by [Government Code] section 12940, subdivision (h) demonstrate some degree of opposition to or protest of the employer’s conduct or practices based on the employee’s reasonable belief that the employer’s action or practice is unlawful”].)

Defendants’ demurrer to the seventh cause of action (harassment) on the ground of failure to state facts sufficient to constitute a cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND. In order to state a claim for harassment under the FEHA, a plaintiff must allege that: (1) he or she is a member of a protected group; (2) he or she was subjected to harassment because they belonged to the group; and (3) the alleged harassment was so severe that it created a hostile work environment. (See Aguilar v. Avis Rent A Car System, Inc. (1999) 21 Cal.4th 121, 130.) Moreover, in order to have an actionable claim, there must be a “concerted pattern of harassment of a repeated, routine or a generalized nature.” (Id.) Harassment is distinguishable from discrimination in that it “consists of a type of conduct not necessary for performance of a supervisory job.” (Reno v. Baird (1998) 18 Cal.4th 640, 645-646.) Instead, it is “outside the scope of necessary job performance, conduct presumably engaged in for personal gratification… or for other personal motives.” (Id.) Accordingly, “commonly necessary personnel management actions such as hiring and firing, job or project assignments, … promotion or demotion, [and] performance evaluations, … do not come within the meaning of harassment.” (Id. at 646-647.)

Plaintiff’s allegations that Edwards was acted towards her in a hostile manner by “cutting her off, belittling her work, and snapping at [her]” and “harass[ed] [her] about her alleged inability to work the hours required” are insufficient to establish a claim for harassment under FEHA. Critically, criticism of an employee’s work performance is not actionable as harassment. (See, e.g., Lawler v. Montblanc North America, LLC (9th Cir. 2013) 704 F.3d 1235, 1244-1245.) Further, Plaintiff’s allegation that Edwards “harass[ed]” her is conclusory and devoid of factual support.

Defendants’ demurrer to the eighth cause of action [wrongful termination in violation of public policy] on the ground of failure to state facts sufficient to constitute a cause of action is OVERRULED. In order to sustain a claim for wrongful termination in violation of public policy, a plaintiff must establish that: (1) he or she was employed by the defendant; (2) the defendant discharged the plaintiff, (3) a violation of public policy was a motivating reason for the discharge, and (4) the discharge harmed the plaintiff. (See Haney v. Aramack Uniform Services, Inc. (2004) 121 Cal.App.4th 623, 641.) Plaintiff has pleaded that she was terminated, at least in part, for her refusal to taken part in fraudulent Medicare billing practices, resulting in violation of Labor Code section 1102.5. Courts have recognized a substantial and “broad” public policy interest in this code section (see, e.g., Green v. Ralee Engineering Co. (1998) 19 Cal.4th 66, 77); thus, its alleged violation provides a sufficient foundation for Plaintiff’s wrongful termination claim. Moreover, contrary to Defendants’ argument, Plaintiff has sufficiently pleaded a nexus between her refusal to engage in certain fraudulent behavior and her termination. (See Complaint, ¶ 33.)

Defendants’ demurrer to the ninth cause of action [violation of Labor Code § 1102.5) on the ground of failure to state facts sufficient to constitute a cause of action is OVERRULED. “Labor Code section 1102.5 is a whistleblower statute, the purpose of which is to encourage workplace whistle-blowers to report unlawful acts without fearing retaliation. To establish a prima facie case of retaliation, a plaintiff must show that she engaged in protected activity, that she was thereafter subjected to adverse employment action by her employer, and there was a causal link between the two.” (Soukop v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 287-288 [internal citations and quotations omitted].) Within the meaning of the statute, “protected activity” is the “disclosure of or opposition to a violation of state or federal statute, or a violation or noncompliance with a state or federal rule or regulation.” (Edgerly v. City of Oakland (2012) 211 Cal.App.4th 1191, 1199 [superseded by statute on other grounds].) Stated alternatively, Labor Code section 1102.5 “requires that to come within its provisions, the activity disclosed by an employee must violate a federal or state law, rule or regulation.” (Id.)

Here, Plaintiff has sufficiently pleaded a claim for violation of Labor Code section 1102.5, specifically subdivision (c), which provides that “an employer, or any person acting on behalf of the employer, shall not retaliate against an employee for refusing to participate in an activity that would result in a violation of a state or federal statute, or a violation of or noncompliance with a local, state, or federal rule or regulation.” Plaintiff alleges that she refused to obtain a backdated, i.e., fraudulent, ABN form so as to enable LGOST to collect for services provided to a patient that were not covered by Medicare and was fired as a result. This is sufficient to state a claim for violation of the so-called “whistleblower statute.”

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