Heckman v. North Penn Comprehensive Health Services

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

MATTHEW HECKMAN, No. 4:20-CV-01680

Plaintiff, (Judge Brann)

v.

UPMC WELLSBORO, NORTH

PENN COMPREHENSIVE HEALTH

SERVICES, and THE GREEN HOME,

Defendants.

MEMORANDUM OPINION

JULY 7, 2021

On September 15, 2020, Dr. Matthew Heckman commenced this lawsuit

against UPMC Wellsboro, North Penn Comprehensive Health Services, and the

Green Home.1 On November 23, 2020, Heckman filed a five-count amended

complaint seeking a declaratory judgment regarding Heckman’s employment

agreement and relief for alleged violations of the False Claims Act (“FCA”), the

Pennsylvania Whistleblower Law, the Fair Labor Standards Act (“FLSA”), and the

Pennsylvania Wage Payment and Collection Law (“WPCL”).2 The Defendants

subsequently filed three motions to dismiss.3

1 Doc. 1.

2 Doc. 26.

The Defendants’ motions are now ripe for disposition; for the following

reasons, the motions are denied.

I. STANDARD OF REVIEW

Under Federal Rule of Civil Procedure 12(b)(6), a complaint may be

dismissed, in whole or in part, if the plaintiff has failed to “state a claim upon

which relief can be granted.” A motion to dismiss “tests the legal sufficiency of a

pleading”4 and “streamlines litigation by dispensing with needless discovery and

factfinding.”5 Where applicable, “Rule 12(b)(6) authorizes a court to dismiss a

claim on the basis of a dispositive issue of law.”6 This is true of any claim,

“without regard to whether it is based on an outlandish legal theory or on a close

but ultimately unavailing one.”7

Following the Roberts Court’s “civil procedure revival,”8 the landmark

decisions of Bell Atlantic Corporation v. Twombly9 and Ashcroft v. Iqbal10

tightened the standard that district courts must apply to 12(b)(6) motions.11 These

cases “retired” the lenient “no-set-of-facts test” set forth in Conley v. Gibson and

4 Richardson v. Bledsoe, 829 F.3d 273, 289 n.13 (3d Cir. 2016) (Smith, C.J.) (citing Szabo v.

Bridgeport Mach., Inc., 249 F.3d 672, 675 (7th Cir. 2001) (Easterbrook, J.)).

5 Neitzke v. Williams, 490 U.S. 319, 326-27 (1989).

6 Id. at 326 (citing Hishon v. King & Spalding, 467 U.S. 69, 73 (1984)).

7 Id. at 327.

8 Howard M. Wasserman, The Roberts Court and the Civil Procedure Revival, 31 Rev. Litig.

313, 316, 319-20 (2012).

9 550 U.S. 544 (2007).

10 556 U.S. 662 (2009).

replaced it with a more exacting “plausibility” standard.12 Accordingly, after

Twombly and Iqbal, “[t]o survive a motion to dismiss, a complaint must contain

sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible

on its face.’”13

“A claim has facial plausibility when the plaintiff pleads factual content that

allows the court to draw the reasonable inference that the defendant is liable for the

misconduct alleged.”14 “Although the plausibility standard does not impose a

probability requirement, it does require a pleading to show more than a sheer

possibility that a defendant has acted unlawfully.”15 Moreover, “[a]sking for

plausible grounds . . . calls for enough facts to raise a reasonable expectation that

discovery will reveal evidence of [wrongdoing].”16

The plausibility determination is “a context-specific task that requires the

reviewing court to draw on its judicial experience and common sense.”17 No

matter the context, however, “[w]here a complaint pleads facts that are ‘merely

consistent with’ a defendant’s liability, it ‘stops short of the line between

possibility and plausibility of entitlement to relief.’”18 Likewise, “[t]hreadbare

12 Id.

13 Id. at 678 (quoting Twombly, 550 U.S. at 570).

14 Id.

15 Connelly v. Lane Constr. Corp., 809 F.3d 780, 786 (3d Cir. 2016) (Jordan, J.) (internal

quotation marks and citations omitted).

16 Twombly, 550 U.S. at 556.

17 Iqbal, 556 U.S. at 679.

recitals of the elements of a cause of action, supported by mere conclusory

statements, do not suffice.”19

Nevertheless, when disposing of a motion to dismiss, the Court “accept[s] as

true all factual allegations in the complaint and draw[s] all inferences from the

facts alleged in the light most favorable to [the plaintiff].”20 The Court is not,

however, required to apply this tenet to legal conclusions.21 As a matter of

procedure, the United States Court of Appeals for the Third Circuit has directed

district courts evaluating motions under Rule 12(b)(6) to proceed in three steps:

(1) The court must “tak[e] note of the elements [the] plaintiff must plead

to state a claim”;

(2) The court “should identify allegations that, because they are no more

than conclusions, are not entitled to the assumption of truth”; and

(3) “When there are well-pleaded factual allegations, [the] court should

assume their veracity and then determine whether they plausibly give

rise to an entitlement of relief.”22

II. FACTS ALLEGED IN THE AMENDED COMPLAINT

A. Heckman’s Employment at UPMC Wellsboro, North Penn, and the

Green Home

North Penn is a Federally Qualified Health Center (“FQHC”) that provides

medical services in Tioga County, Pennsylvania.23 North Penn operates health

19 Id.

20 Phillips v. Cnty. of Allegheny, 515 F.3d 224, 228 (3d Cir. 2008) (Nygaard, J.).

21 Iqbal, 556 U.S. at 678; see also Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.

2009) (Nygaard, J.) (“After Iqbal, it is clear that conclusory or ‘bare-bones’ allegations will

no longer survive a motion to dismiss.”).

22 Connelly, 809 F.3d at 787 (alterations in original) (internal quotation marks and citations

omitted).

clinics in six municipalities within Tioga County, including Blossburg,

Lawrenceville, Wellsboro, Elkland, Mansfield, and Westfield.24 In 1988, North

Penn entered into a partnership with Soldiers & Sailors Memorial Hospital in

Wellsboro to form Laurel Health System.25 In 2012, Laurel Health System was

acquired by Williamsport-based UPMC Susquehanna, which then renamed the

hospital to UPMC Wellsboro.26

After completing a fellowship in obstetrics, Dr. Heckman began

employment at North Penn in 2016 as a primary-care and obstetrical-care

physician.27 Heckman and North Penn executed a five-year employment contract

on April 22, 2016 (the “North Penn Employment Agreement”).28 The agreement

set Heckman’s base salary as a North Penn physician, although it allowed North

Penn to adjust Heckman’s base salary beginning in the second year of Heckman’s

employment.29 Adjustments (either upward or downward) could be made based on

the “financial performance” of Heckman’s practice in the prior contract year.30

24 Id. at ¶ 9.

25 Id. at ¶ 18.

26 Id. at ¶ 19.

27 Id. at ¶ 16.

28 Doc. 42-1. UPMC Wellsboro attached the North Penn Employment Agreement to its brief in

support of its motion to dismiss. Because the agreement is integral to the amended complaint,

and because there is no dispute as to its authenticity, the Court will consider it for purposes of

resolving Defendants’ motions. In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426

(3d Cir. 1997).

29 Doc. 42-1 at § 4.

The North Penn Employment Agreement also contained a restrictive

covenant prohibiting Heckman from practicing medicine within a twenty-five mile

radius for one year following the contract’s termination.31 Heckman could nullify

the covenant by forfeiting a year’s salary.32 If Heckman opted not to do so,

however, and instead breached the covenant, North Penn reserved the right to seek

injunctive relief against him and to extend application of the covenant by a variable

period of time.33 Additionally, the North Penn Employment Agreement stated that

North Penn would be responsible for maintaining any medical records prepared by

Heckman.34 Following termination of the agreement, Heckman would remain

entitled to access and make copies of these records.35

Heckman was promoted to North Penn’s Medical Director in late-2017, and

then to North Penn’s Chief Medical Officer in March 2018.36 As Chief Medical

Officer, Heckman supervised a staff of over thirty medical providers.37 He also

maintained his practice as a physician.38 Heckman does not allege that he entered

into a new contract with North Penn or that the North Penn Employment

31 Id. at § 8.B.

32 Id. at § 8.B.

33 Id. at § 8.C. If Heckman breached the agreement but North Penn did not seek an injunction,

the covenant would be extended “for a period of time equal to the period of time during which

any such breach should occur.” Id. If North Penn ultimately sought and received an injunction,

the covenant would extend for one year. Id.

34 Id. at § 15.

35 Id.

36 Doc. 26 at ¶ 16.

37 Id.

Agreement was modified as a result of his promotions. Accordingly, the Court

assumes that the North Penn Employment Agreement remained in effect

throughout the course of Heckman’s employment.

Then, on June 1, 2018, North Penn assigned its rights and obligations under

the North Penn Employment Agreement to UPMC Wellsboro.39 Heckman

consented to this assignment and affirmed that all terms and conditions of the

North Penn Employment Agreement would remain in effect.40 It appears at this

point that UPMC Wellsboro assumed responsibility for paying Heckman’s salary

and issuing his W-2.41 At the same time, Heckman maintained his employment

with North Penn as if nothing had changed; he continued practicing as a physician

and serving as North Penn’s Chief Medical Officer.42 North Penn still retained

control over Heckman’s compensation (it paid Heckman’s salary to UPMC

Wellsboro which then paid Heckman), and Heckman reported directly to North

Penn’s CEO, James Nobles.43

On August 1, 2019, UPMC Wellsboro, North Penn, and the Green Home (a

UPMC Wellsboro affiliate) executed a tri-party agreement leasing Heckman to the

39 Id. at ¶ 25; Doc. 42-1 at 13. The parties have not attached the assignment agreement between

UPMC Wellsboro and North Penn; rather, UPMC Wellsboro includes only a writing signed

by Heckman confirming his consent to the assignment. Additionally, though the writing refers

to the assignee as Soldiers & Sailors Memorial Hospital, the parties acknowledge that UPMC

Wellsboro is the assignee.

40 Doc. 42-1 at 13.

41 Doc. 26 at ¶ 27.

42 Id. at ¶ 26.

Green Home.44 Under this arrangement, Heckman was to serve as the Green

Home’s Medical Director.45 The Green Home would then remit payment for

Heckman’s services to UPMC Wellsboro.46 Heckman alleges that he had an

employment agreement with UPMC Wellsboro and the Green Home

memorializing this relationship.47 However, he also asserts that the parties

expected that Heckman would receive payment from the Green Home (via UPMC

Wellsboro) based on “custom and practice.”48

B. North Penn’s Receipt of Section 330 Grant Funds

As an FQHC, North Penn is eligible to receive federal grant funding from

the United States Department of Health and Human Services under Section 330 of

the Public Health Service Act (codified at 42 U.S.C. § 254b).49 To apply for a

Section 330 grant, an eligible health center must complete and submit a grant

application.50 The Health Resources and Services Administration sets forth

policies and conditions regarding Section 330 grant recipients.51 These policies are

44 Id. at ¶¶ 10, 31.

45 Id. at ¶ 31.

46 Id. at ¶ 32.

47 Id. at ¶¶ 33, 125. Heckman cites, for example, an automatic-termination provision requiring

the Green Home to terminate Heckman in the event that he was discharged by UPMC

Wellsboro. Id. at ¶ 33.

48 Id. at ¶ 32.

49 42 U.S.C. § 254b. Per the amended complaint, North Penn also receives Pennsylvania

Medicaid reimbursements under the federal Medicare, Medicaid, and SCHIP Benefits

Improvement and Protection Act. Doc. 26 at ¶ 114.

50 42 U.S.C. § 254b.

located in the Health Center Program Requirements, the Health Center Program

Terms and Definitions, and the Health Center Compliance Manual.52

On January 7, 2020, North Penn submitted a Section 330 grant application.53

In this application, North Penn certified that it was “not part of a parent, affiliate,

or subsidiary organization.”54 North Penn also stated that it required competitive

bids for any purchase costing more than $3,000.55 North Penn further

acknowledged that it:

 “Will establish safeguards to prohibit employees from using their

positions for a purpose that constitutes or presents the appearance of

personal or organizational conflict of interest, or personal gain”; and

 “Will comply with all applicable requirements of all other Federal Laws,

executive orders, regulations, and policies governing this program.”56

Heckman alleges that North Penn made these certifications “repeatedly and

falsely” in several of its Section 330 grant applications.57

C. UPMC Wellsboro’s and North Penn’s Relationship

At all relevant times, Janie Hilfiger was the President of UPMC Wellsboro

and a “prominent” member of North Penn’s Board of Directors.58 Heckman

alleges that she used her position to “exercise control over all conditions” of

Heckman’s employment, and that this was connected to her effort to “dominate

52 Id.

53 Id. at ¶ 47; Doc. 26-1.

54 Doc. 26 at ¶ 47.

55 Id. at ¶ 54; Doc. 26-2 at 48.

56 Id.

57 Id. at ¶ 46.

and control North Penn.”59 All other members of North Penn’s Board were board

members of or employed by UPMC Wellsboro.60

Heckman alleges that when he became the Medical Director of North Penn

in 2017, UPMC Wellsboro had an ongoing practice of overcharging North Penn

for services such as information technology support, physician recruitment and

credentialing, and building leasing and maintenance.61 Despite representing to the

contrary on its Section 330 grant applications, North Penn did not require

competitive bids for these services.62 UPMC Wellsboro also apparently directed

physicians at North Penn to make referrals in violation of the Stark Law and Anti-

Kickback Statute.63 North Penn ceased enforcing this directive after Heckman

voiced concerns that it was illegal and unethical at a North Penn Executive

Leadership meeting.64

Prior to this, in 2016, and then later in December 2019, UPMC Wellsboro

attempted to “orchestrate a board vote” to remove North Penn’s FQHC

designation.65 Successfully terminating North Penn’s FQHC status would have

cost North Penn a significant amount in federal funding and would have allowed

UPMC Wellsboro to “exercise complete dominion and control over North Penn for

59 Id. at ¶ 29.

60 Id. at ¶ 48.

61 Id. at ¶ 53.

62 Id. at ¶ 54.

63 Id. at ¶ 56.

64 Id. at ¶ 57.

UPMC Wellsboro’s own financial benefit.”66 North Penn’s FQHC status was

ultimately not terminated.

In early-2019, Steven Johnson, the President of UPMC Susquehanna, asked

North Penn to hire an OB/GYN to practice primarily at UPMC Wellsboro.67

Johnson allegedly requested that this be done with Section 330 grant funds, even

though UPMC Wellsboro is not an FQHC and is therefore not authorized to

receive Section 330 funding.68 In meetings with Noble, Johnson stated that North

Penn was a subsidiary of UPMC Susquehanna.69 Johnson contended that UPMC

Susquehanna had “bought” North Penn when it acquired Soldiers & Sailors

Hospital.70

Later, in July 2019, UPMC Wellsboro abandoned this request and instead

directed North Penn to terminate its obstetric services.71 This was done to

eliminate UPMC Wellsboro’s competition and thereby increase its profitability.72

To this end, Hilfiger announced in August 2019 that all obstetric services at North

Penn would be discontinued by October 1, 2019, and that North Penn would

contract with a UPMC-controlled entity for obstetrics.73 Nobles informed

66 Id. at ¶ 63.

67 Id. at ¶ 51.

68 Id.

69 Id.at ¶ 52.

70 Id.

71 Id. at ¶ 58.

72 Id. at ¶ 58.

Heckman that the decision to terminate North Penn’s obstetrics practice was

“imposed by Hilfiger under the pressure of a threat.”74 Heckman lost his practice

at North Penn as a result.75

In March 2020, UPMC Wellsboro allegedly “plotted to force the closure of

North Penn’s Elkland and Westfield health centers.”76 As these centers were

highly productive, closing them ran counter to North Penn’s financial interests.77

The purpose of the closure was to “increase emergency room visits for UPMC

Wellsboro and UPMC Cole, shifting revenue to UPMC entities to offset losses

associated with the COVID-19 pandemic.”78 This contradicted the reason North

Penn offered for the closures in its 2020 Section 330 grant application, which was

to “reduce the non-urgent use of emergency room visits.”79

D. Heckman’s Complaints

Heckman has an extensive history of advocating for or against various

policies and practices at North Penn. For example, in 2016, Heckman opposed

UPMC Wellsboro’s efforts to drop North Penn’s FQHC designation.80 At a North

74 Id. at ¶ 59.

75 Id. at ¶ 82. The amended complaint implies that Heckman continued to see patients at North

Penn’s Elkland and Westfield centers. Id. at ¶ 75. Nevertheless, because Heckman alleges

that his practice at North Penn was terminated, the Court assumes that the medical care

provided at these centers (if any) was unrelated to his obstetrics practice at North Penn. Id. at

¶ 82.

76 Id. at ¶ 75.

77 Id. at ¶ 76.

78 Id.

79 Id. at ¶ 77.

Penn board meeting, Heckman (and other physicians) argued that the loss of North

Penn’s FQHC-status would negatively impact patient care and physician

recruitment.81 Heckman later challenged UPMC Wellsboro’s renewed attempt to

terminate North Penn’s FQHC designation in December 2019 on similar grounds

(that it would be detrimental to the community).82

Heckman also objected to the termination of North Penn’s obstetrics

practice. Heckman opposed the termination because it would be bad for patients

and for “North Penn’s finances.”83 He raised these concerns on numerous

occasions to both Nobles and Hilfiger in individual and executive leadership

meetings from August 2019 to January 2020.84 In one meeting in August 2019,

Heckman complained that the removal of North Penn’s obstetrics services was “an

additional manifestation of UPMC Wellsboro’s exertion of inappropriate control

over North Penn and placement of UPMC Wellsboro’s financial interests before

those of patients served by North Penn.”85

In mid-2019, Heckman challenged UPMC Wellsboro’s practice of

overcharging North Penn for services during an individual meeting with Nobles.86

The meeting was about an initiative to transition North Penn to UPMC’s electronic

81 Id.

82 Id. at ¶ 64.

83 Id. at ¶¶ 67-68.

84 Id. at ¶ 69.

85 Id. at ¶ 72.

medical records system (the “EPIC project”). Heckman asserted that UPMC

Wellsboro “was not providing adequate value for the funds it received from North

Penn” regarding the EPIC project and other IT-related services.87 He maintains

that he complained because the EPIC project was funded by a Section 330 grant

and North Penn had not required UPMC Wellsboro to bid for the contract.88

Nobles stated that he agreed with Heckman’s efforts to oppose UPMC Wellsboro’s

“domination and control” over North Penn but that “we’re hitting walls.”89

Sometime in March or April 2020, Heckman complained to Nobles

regarding UPMC Wellsboro’s plan to force the closure of the Elkland and

Westfield health centers.90 Heckman argued that the closure would harm patients

in the area and was “an attempt by UPMC Wellsboro to secure a major concession

from North Penn” while North Penn’s executives were focused on issues related to

COVID-19.91 Heckman apparently planned to raise these concerns at an upcoming

UPMC Wellsboro board meeting, although he was terminated before the board

meeting happened.92

Throughout this time period, Heckman alleges that, in his role as North

Penn’s Chief Medical Officer, he “objected to UPMC Wellsboro’s domination and

87 Id.

88 Id.

89 Id.

90 Id. at ¶ 78.

91 Id.

control of North Penn because” the entities’ relationship violated federal

regulations and requirements regarding FQHCs.93 He further asserts that he

“complained directly to Nobles and Hilfiger about UPMC Wellsboro’s ongoing

efforts to undermine North Penn’s independence and operations for the financial

benefit of Wellsboro, in violation of the FQHC Program Requirements.”94 While

Heckman does not explain on what dates he made these complaints, the Court

finds it reasonable to infer that these objections were made during at least one of

the meetings referenced above.

As an executive officer, Heckman claims that he was able to witness “the

progression of UPMC Wellsboro’s scheme to gain silent control of North Penn,

eliminate North Penn’s ability to compete with UPMC Wellsboro, and exploit

North Penn’s finances to effectively garner the federal and state subsidies flowing

from North Penn’s status as” an FQHC.95 Because Heckman “believed this was

greatly detrimental to both North Penn and its patient population,” he purposefully

“engaged in a pattern of advocacy to protect North Penn and its patients.”96

Finally, beginning in late-2019, Heckman started challenging two aspects of

his compensation.97 Heckman alleges first, that the Green Home never paid

UPMC Wellsboro for Heckman’s work there, and second, that UPMC Wellsboro

93 Id. at ¶ 62.

94 Id. at ¶ 63.

95 Id. at ¶ 3.

96 Id.

likewise did not pay Heckman.98 He claims that he was “adversely affected” by

the loss of his obstetrics practice.99 Heckman “repeatedly complained about

having his obstetrics practice reinstated” and being paid for his work at the Green

Home during “regular and frequent” meetings with Hilfiger and other UPMC

Wellsboro officials.100 At these meetings, Heckman “insisted that he needed to be

paid as contracted for his work at” the Green Home, and that “UPMC Wellsboro

needed to set a date for the reinstatement of his obstetrics practice.”101

E. Heckman’s Termination

In July 2019, Nobles informed Heckman that “the relationship between

North Penn and UPMC Wellsboro had deteriorated due to [Heckman’s] challenges

to” UPMC Wellsboro’s conduct.102 During this conversation, Nobles stated that

Heckman’s name “keeps coming up” in meetings with Hilfiger and that Hilfiger

accused Heckman of being “disruptive.103 Additionally, Nobles said “I need you to

stop talking about the problems we have to anyone that asks or is willing to listen”

because Heckman was a North Penn executive and his advocacy “has

consequences for North Penn.”104 Nobles then asked Heckman to cease his

98 Id.at ¶¶ 80-81.

99 Id. at ¶ 82.

100 Id.

101 Id. at ¶¶ 83-84.

102 Id. at ¶ 66.

103 Id.

complaints and “leave advocacy to him.”105 Heckman was subsequently demoted

from his position as Chief Medical Officer of North Penn in October 2019.106

Then, in March or early April 2020, Hilfiger told Nobles that Heckman was

a “liability” and directed him to fire Heckman.107 Heckman alleges that she did

this, at least in part, to prevent Heckman from raising objections at the upcoming

board meeting.108 On April 3, 2020, during a meeting with North Penn and UPMC

Wellsboro officials, Nobles “followed Hilfiger’s directive and fired Heckman.”109

At the meeting, Heckman received letters of termination from both Nobles (firing

him from North Penn) and UPMC Wellsboro officials (firing him from UPMC

Wellsboro).110 North Penn also “purported to terminate [Heckman’s] employment

with” the Green Home.111

Following Heckman’s termination, Heckman relaunched his obstetrics

practice at the All Natural Wellness Center in Elkland to provide prenatal care to

patients in the Elkland and Westland areas.112 Heckman opened this practice

because approximately twenty percent of prenatal patients in Elkland and fifty

percent in Westland lack reliable transportation to UPMC Wellsboro.113 These

105 Id.

106 Id. at ¶ 74.

107 Id. at ¶ 79.

108 Id.

109 Id.

110 Id. at ¶ 30.

111 Id. It is not clear precisely what this means, although the Court understands that Heckman’s

employment with the Green Home was effectively terminated.

112 Id. at ¶ 86.

areas are both considered medically underserved, and, at the time, had no local

obstetrics physicians before Heckman opened his practice.114

On July 8, 2020, UPMC Wellsboro sent Heckman a letter demanding that he

cease and desist from practicing medicine in Elkland because of the “covenants not

to compete contained within his employment agreement.”115 On August 14, 2020,

North Penn sent Heckman a letter demanding repayment of a $60,000 signing

bonus (plus interest) that would have been forgiven had Heckman remained

employed at North Penn through August 31, 2021.116 Heckman’s access to patient

records at UPMC Wellsboro was also revoked.117 Attempts to recover his

physician badge and have his access reinstated have been unsuccessful.118

III. DISCUSSION

Heckman asserts five claims against Defendants. The amended complaint

contends that:

 The North Penn Employment Agreement’s non-compete clause is

unenforceable, neither UPMC Wellsboro nor North Penn may recover

Heckman’s signing bonus, and UPMC Wellsboro and North Penn

have unlawfully prevented Heckman from utilizing his membership

on UPMC Wellsboro’s medical faculty and from accessing his

patients’ medical records (Count I);

 UPMC Wellsboro and North Penn unlawfully retaliated against

Heckman in violation of the False Claims Act (Count II);

114 Id. at ¶ 89.

115 Id. at ¶ 90.

116 Id. at ¶ 95.

117 Id. at ¶ 93.

 UPMC Wellsboro and North Penn unlawfully retaliated against

Heckman in violation of the Pennsylvania Whistleblower Law (Count

III);

 UPMC Wellsboro and North Penn unlawfully retaliated against

Heckman in violation of the Fair Labor Standards Act (Count IV); and

 UPMC Wellsboro and the Green Home failed to pay Heckman

contracted-for wages in violation of the Pennsylvania Wage Payment

and Collection Law (Count V).

Defendants now move to dismiss all counts under Rule 12(b)(6) for failure

to state a claim.

A. Count I: Declaratory Judgment

Count I requests declaratory and equitable relief regarding four aspects of

Heckman’s employment with UPMC Wellsboro and North Penn. Heckman seeks

declarations that (1) the North Penn Employment Agreement’s non-compete clause

is unenforceable as a matter of public policy; and (2) neither UPMC Wellsboro nor

North Penn may recover his signing bonus. He also asks for an injunction

enjoining UPMC Wellsboro and North Penn from preventing Heckman from (3)

utilizing his membership on the UPMC Wellsboro medical faculty; and (4)

accessing his patients’ medical records.

UPMC Wellsboro and North Penn argue that Count I should be dismissed

for being nonjusticiable, for failure to state a claim against North Penn, and for

failure to state a claim that the North Penn Employment Agreement’s non-compete

clause is unenforceable as a matter of public policy. The Court concludes that

injunctive relief. Accordingly, UPMC Wellsboro’s and North Penn’s motions to

dismiss Count I are denied.

1. Justiciability

The Declaratory Judgment Act authorizes federal courts to “declare the

rights and other legal relations of any interested party seeking such a

declaration.”119 But “[t]he Supreme Court, in upholding the constitutionality of the

Act, has interpreted the remedy as limited to cases and controversies in the

constitutional sense.”120 As a result, to survive a motion to dismiss, a plaintiff

seeking a declaratory judgment must show that he alleges a justiciable case or

controversy under Article III.121

In an action for a declaratory judgment, the case-or-controversy requirement

often implicates two questions of justiciability. The first is whether the plaintiff

has standing, and the second is whether the plaintiff’s claim is ripe. A plaintiff can

prove standing by showing the three elements of injury-in-fact, causation, and

redressability.122 By comparison, ripeness asks “whether a party has brought an

action prematurely,” and if so, “counsels abstention” until the claim satisfactorily

119 28 U.S.C. § 2201(a).

120 Wyatt, V.I., Inc., 385 F.3d 801, 805 (3d Cir. 2004) (citing Aetna Life Ins. Co. of Hartford v.

Haworth, 300 U.S. 227, 240 (1937)).

121 Id.

122 Wayne Land & Min. Grp. L.L.C. v. Del. River Basin Comm’n, 894 F.3d 509, 524-25 (3d Cir.

ripens into an actionable case or controversy.123 North Penn asserts both that

Heckman lacks standing and that his claims are unripe.

a. Standing

“To establish Article III standing, a plaintiff must allege ‘(1) an injury-in-

fact, (2) a sufficient causal connection between the injury and the conduct

complained of, and (3) a likelihood that the injury will be redressed by a favorable

decision.’”124 “Injury in fact requires ‘the invasion of a concrete and particularized

legally protected interest resulting in harm that is actual or imminent, not

conjectural or hypothetical.’”125 “The determination of what is imminent is

somewhat elastic, but it is fair to say that plaintiffs relying on claims of imminent

harm must demonstrate that they face a realistic danger of sustaining a direct injury

from the conduct of which they complaint.”126

In general, “[a]llegations of possible future injury do not satisfy the

requirements of Article III.”127 “And a party seeking equitable relief for a

prospective injury . . . must show a ‘likelihood of substantial and immediate

irreparable injury’ to establish standing.”128 “Allegations of possible injury” are

123 Plains All Am. Pipeline L.P. v. Cook, 866 F.3d 534, 539 (3d Cir. 2017) (internal quotation

marks omitted) (quoting Peachlum v. City of York, 333 F.3d 429, 433 (3d Cir. 2003)).

124 Finkelman v. Nat’l Football League, 877 F.3d 504, 510 (3d Cir. 2017) (quoting In re

Nickelodeon Consumer Priv. Litig., 827 F.3d 262, 272 (3d Cir. 2016)).

125 Sherwin-Williams Co. v. County of Delaware, 968 F.3d 264, 269 (3d Cir. 2020) (quoting

Finkelman v. Nat’l Football League, 810 F.3d 187, 193 (3d Cir. 2016)).

126 Blunt v. Lower Merion Sch. Dist., 767 F.3d 247, 278 (3d Cir. 2014) (citing N.J. Physicians,

Inc. v. President of the United States, 653 F.3d 234, 238 (3d Cir. 2011)).

127 Sherwin-Williams Co., 968 F.3d at 269.

insufficient; rather, “[a] threatened injury must be ‘certainly impending’ to

constitute injury in fact.”129 Further, the standing inquiry is remedy-specific, and

injury-in-fact must be demonstrated for each form of requested relief.130 As the

party invoking federal jurisdiction, Heckman bears the burden of establishing

standing.131

North Penn argues that Heckman lacks standing because he has not shown

injury-in-fact. North Penn first challenges Heckman’s claim regarding the non-

compete clause for failure to allege the invasion of a legally protected interest;

North Penn appears to base this conclusion on the assertion that reasonable non-

compete clauses are regularly enforced in Pennsylvania. North Penn next contends

that Heckman’s claims requests for injunctive relief must be dismissed as they are

not connected to the covenant not to compete contained within the North Penn

Employment Agreement.132

The Court is not persuaded. First, that non-compete clauses are regularly

enforced in Pennsylvania does not mean that questions regarding a specific

clause’s enforceability are necessarily outside the realm of Article III standing. If

North Penn were to attempt to enforce the North Penn Employment Agreement’s

non-compete clause against Heckman, Heckman would be able to proffer defenses

129 Whitmore v. Arkansas, 495 U.S. 149, 158 (1990) (internal quotation marks and citations

omitted).

130 See City of Los Angeles v. Lyons, 461 U.S. 95, 105 (1983).

131 Wayne Land, 894 F.3d 509 at 525 (citation omitted).

to evade enforcement just as he would regarding any other contract claim.

Because such a situation would certainly create a case or controversy within the

meaning of Article III, the Court cannot accept that the subject matter of

Heckman’s claim does not establish an injury-in-fact.133

Second, Heckman has standing to seek injunctive relief preventing North

Penn (and UPMC Wellsboro) from interfering with Heckman’s membership on

UPMC Wellsboro’s medical faculty and having his access to patient medical

records reinstated. To begin with, North Penn cites no law supporting the

proposition that Heckman’s claims for injunctive relief must be dismissed because

they are not directly related to his claim regarding the enforceability of the non-

compete clause. As far as the Court is concerned, claims brought under the

Declaratory Judgment Act may be asserted in one count. And doing so is not a

basis for dismissal under Rule 12(b)(6).

Moreover, the North Penn Employment Agreement confers upon Heckman a

contractual entitlement to review his patient records. Section 15 of the agreement

states that, while all patient records remain the property of North Penn, the records

“shall be available for review” by Heckman upon request.134 And Heckman’s

allegations that he has not been able to review these records plainly establishes the

133 Notably, North Penn does not contend that Heckman’s injury is not sufficiently imminent

under the rubric of injury-in-fact, instead reserving that argument under the doctrine of

ripeness.

invasion of a concrete legal interest.135 Further, because Heckman’s ability to

access patient records may be connected to his reinstatement onto UPMC

Wellsboro’s medical faculty, the Court finds that Heckman has standing to seek

this remedy as well.136

b. Ripeness

Just as plaintiffs must have standing to bring suit in federal court, claims

must ripen before they can constitute a justiciable case or controversy.137 The

doctrine of ripeness exists to prevent federal courts, by avoiding premature

adjudication, “from entangling themselves in abstract disagreements.”138 In

evaluating whether a dispute has properly ripened, “courts must consider ‘the

fitness of the issues for judicial decision and the hardship to the parties of

withholding court consideration.’”139 A claim is not ripe if it “rests upon

135 The Court notes that none of the parties attempt to clarify the distinction between the rights and

obligations under the North Penn Employment Agreement (i.e., the obligation to pay

Heckman), which were assigned to UPMC Wellsboro, and the agreement’s terms (i.e.,

Heckman continuing to work on North Penn’s behalf), which were not assigned. Because the

parties have not submitted the assignment agreement between UPMC Wellsboro and North

Penn, the Court declines to consider the implications of assignment at this point in the

litigation.

136 To the extent North Penn contends that equitable relief is unavailable under the Declaratory

Judgment Act, that argument is rejected. The Declaratory Judgment Act explicitly authorizes

any “further” relief where “necessary and proper.” 28 U.S.C. § 2202. This includes equitable

or injunctive relief. Powell v. McCormack, 395 U.S. 486, 499 (1969) (“A declaratory judgment

can . . . be used as a predicate to further relief, including an injunction.” (citations omitted)).

137 Wis. Right to Life State Pol. Action Comm. v. Barland, 664 F.3d 139, 148 (7th Cir. 2011).

138 Abbott Labs. v. Gardner, 387 U.S. 136, 148 (1967), overruled on other grounds, Califano v.

Sanders, 430 U.S. 99, 105 (1977).

‘contingent future events that may not occur as anticipated, or indeed may not

occur at all.’”140

“The parameters of ‘ripeness’ are especially difficult to define within the

context of declaratory judgment actions.”141 This is because “declaratory

judgments are, of necessity, rendered before an ‘accomplished’ injury has been

suffered.”142 Nevertheless, the Third Circuit has articulated a three-factor test for

courts to use when analyzing whether a claim is ripe. Under this test, courts look

to: “(1) the adversity of the parties’ interests, (2) the conclusiveness of the

judgment, and (3) the utility of the judgment.”143 North Penn contests only the

adversity of the parties’ interests.

The adversity factor is satisfied where “harm will result if the declaratory

judgment is not entered.”144 In general, adversity of the parties’ interests will only

exist in a case involving the threat of future harm if the plaintiff demonstrates “that

the probability of that future event occurring is real and substantial” and is “of

sufficient immediacy and reality to warrant the issuance of a declaratory

judgment.”145

140 Texas v. United States, 523 U.S. 296, 300 (1998) (internal quotation marks omitted) (quoting

Thomas v. Union Carbide Agric. Prods. Co., 473 U.S. 568, 580-81 (1985)).

141 Travelers Ins. Co. v. Obusek, 72 F.3d 1148, 1154 (3d Cir. 1995) (citing Step-Saver Data Sys.,

Inc. v. Wyse Tech., 912 F.2d 643, 646 (3d Cir. 1990)).

142 Id. (citation omitted).

143 Cook, 866 F.3d at 540 (internal quotation marks omitted) (quoting Khodara Env’t, Inc. v.

Blakey, 376 F.3d 187, 196 (3d Cir. 2004)).

144 Travelers, 72 F.3d at 1154 (citation omitted).

145 Id. (cleaned up) (quoting Salvation Army v. Dep’t of Cmty. Affs., 919 F.2d 183, 192 (3d Cir.

But a plaintiff may be able to show adversity when faced with the threat of

private, civil prosecution.146 This rule was aptly articulated in MedImmune, Inc. v.

Genentech, Inc.147 There, the defendant sent the plaintiff a letter informing the

plaintiff that it might be infringing upon one of the defendant’s patents and

demanding that the plaintiff pay royalties under a patent-licensing agreement.148

The plaintiff, believing that the patent was invalid, unenforceable, and not

infringed upon, filed a suit for a declaratory judgment to determine the validity of

the patent.149

MedImmune found that the plaintiff stated a case or controversy for purposes

of Article III even though the plaintiff had not yet infringed upon the patent and the

defendant had not taken any further steps to initiate a civil action.150 MedImmune

reasoned that, like the threat of criminal prosecution, the threat of private

enforcement of a contractual right constitutes coercion where it puts a plaintiff in

the dilemma between “abandoning his rights or risking prosecution.”151 Further,

MedImmune rejected the proposition that plaintiffs are required to “bet the farm”

or “risk treble damages” before seeking a declaratory judgment as unsupported by

Article III.152

146 MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 134 (2007).

147 Id.

148 Id. at 121-22.

149 Id. at 122.

150 Id. at 137.

151 Id. at 129.

While MedImmune was determined in the context of patent infringement, its

reasoning is equally applicable here. Heckman alleges that he received demand

letters from UPMC Wellsboro and North Penn informing him that he was in breach

of contract. The first, from UPMC Wellsboro, demanded that Heckman cease and

desist from practicing medicine at the All Natural Wellness Center in violation of

the North Penn Employment Agreement’s non-compete clause. The second, from

North Penn, demanded that Heckman immediately repay a $60,000 signing bonus

to which North Penn claims it was contractually entitled.

The Court is satisfied that the UPMC Wellsboro letter establishes adversity

of the parties’ interests because it puts Heckman into the same dilemma as that

faced by the plaintiff in MedImmune: he could either comply with the non-compete

clause, foregoing his right to challenge the clause’s enforceability, or risk the

extension of the clause’s effective date and an action for damages. Likewise,

North Penn’s letter requesting immediate payment is sufficient to show the risk of

immediate harm. While this dilemma is somewhat mitigated by the threat of an

injunction, the Court concludes it is of sufficient immediacy to render the claim

ripe.

2. Failure to State a Claim Against North Penn

North Penn next asserts that Count I fails because Heckman does not allege

that North Penn signed the agreement, and because Heckman’s requests for

injunctive relief are directed at UPMC Wellsboro, not North Penn. While it is true

that Heckman does not allege that North Penn signed the North Penn Employment

Agreement, North Penn’s contentions are contradicted by the contract itself; the

last page of the agreement, attached by UPMC Wellsboro, contains the President

of North Penn’s signature.153

Moreover, per the discussion above, the Court finds that Heckman

adequately establishes a claim for injunctive relief against North Penn. The North

Penn Employment Agreement states that North Penn owns the medical records to

which Heckman seeks access. And while it is not clear what control North Penn

has over UPMC Wellsboro’s medical faculty, it is at least plausible that Heckman

would be able to receive adequate relief from North Penn. This is especially true

given the complicated and interconnected nature of UPMC Wellsboro’s and North

Penn’s relationship (as alleged in the amended complaint). Accordingly, Heckman

adequately states a claim against North Penn under Count I.

3. Failure to State a Claim that the Non-Compete Clause Is

Unenforceable as a Matter of Public Policy

The Commonwealth of Pennsylvania has a “long history of disfavoring

restrictive covenants.”154 Nevertheless, public policy permits enforcement of

covenants not to compete in employment agreements where four criteria are

satisfied.155 Non-compete clauses are enforceable only if: (1) they are “ancillary to

153 Doc. 42-1 at 12.

154 Socko v. Mid-Atl. Sys. of C.P.A., Inc., 126 A.3d 1266, 1268 (Pa. 2015).

an employment relationship between an employee and employer”; (2) they are

“supported by adequate consideration”; (3) “the restrictions are reasonably limited

in duration and geographic extent”; and (4) “the restrictions are designed to protect

the legitimate interests of the employer.”156

Generally speaking, the “avoidance of contract terms on public policy

grounds requires a showing of overriding public policy from legal precedents,

governmental practice, or obvious ethical or moral standards.”157 Parties thus may

look to past caselaw in determining whether Pennsylvania’s public policy would

void a non-compete clause and render it unenforceable.158 Even so, the burden of

showing that such a clause is unreasonable and unenforceable as a matter of public

policy falls on the employee.159

In New Castle Orthopedic Associates v. Burns, the Supreme Court of

Pennsylvania discussed public interest factors relevant to evaluating whether to

issue an injunction enforcing a restrictive covenant against a physician.160 The

primary factors the court considered included the number of physicians already

practicing in a specific area, as well as the negative impact enforcement would

156 Pittsburgh Logistics Sys., Inc. v. Beemac Trucking, LLC, 249 A.3d 918, 932 (Pa. 2021)

(citation omitted).

157 Id. (quotation marks omitted) (quoting Camelback Ski Corp., 47 A.3d 1190, 1199 (Pa. 2012)).

158 See id.

159 John G. Bryant Co., Inc. v. Sling Testing & Repair, Inc., 369 A.2d 1164, 1169-70 (Pa. 1977)

(citations omitted).

have on patients.161 As the Court put it, “[i]n an area where the availability of and

the rising cost of medical services are matters of national concern, the law must

consider the impact of the enforcement of these non-competitive clauses upon the

problem.”162

UPMC Wellsboro argues that Heckman’s claim fails because Heckman does

not “plead the existence of a single public policy that would render the agreement

unenforceable.”163 Heckman responds that he alleges facts plausibly establishing

that enforcing the North Penn Employment Agreement’s non-compete clause

would run contrary to the factors set forth in Burns. Specifically, Heckman points

to the allegation that, when he began working at the All Natural Wellness Center,

he was the only practicing obstetrician in all of Elkland and Westfield. He also

cites averments that a significant number of prenatal patients in the area lack

reliable transportation to UPMC Wellsboro.

The Court concludes these factual allegations are sufficient to state a claim

that the non-compete clause is void as against public policy. The reasoning in

Burns is deeply rooted in considerations of public policy relating to the impact of

restrictive covenants in the medical context. And while the Pennsylvania Supreme

Court has not revisited this question since deciding Burns, the Court is convinced

that the Pennsylvania Supreme Court would consider Burns to have created a rule

161 Id. at 1388.

162 Id. at 1387.

of public policy.164 As Heckman pleads facts plausibly establishing the application

of this rule to the non-compete clause at issue here, the Court concludes that he

adequately states a claim.

B. Count II: Retaliation Under the False Claims Act

Enacted in 1863 “to combat fraud and price-gouging in war procurement

contracts,”165 the FCA makes liable any person who “knowingly presents, or

causes to be presented, a false or fraudulent claim for payment or approval” from

the government.166 The FCA is punitive in nature,167 and extends broadly any type

of fraud committed against the government. A claim under the FCA may be

brought by a private citizen in a qui tam suit, or by the government in a direct

action for damages.168

The FCA also protects employees who aid the government in investigating

or prosecuting FCA violations, or who attempt to stop FCA violations before they

happen or recur.169 The FCA’s “whistleblower” provision shields employees from

164 See also West Penn Specialty M.S.O., Inc. v. Nolan, 737 A.2d 295, 298 (Pa. Super. 1999)

(“[W]here the covenant in question seeks to limit the professional practice of a physician, the

court must scrutinize the effect of the resulting loss of medical services on the public interest.”

(citing Burns, 392 A.2d at 1385)). “In the absence of a controlling decision by the

Pennsylvania Supreme Court, [a federal court] must predict how it would rule if faced with the

issue.” Spence v. ESAB Group, Inc., 623 F.3d 212, 216 (3d Cir. 2010) (citation omitted). The

Court believes the Pennsylvania Supreme Court’s forceful articulation in Burns weighs heavily

in favor of finding that its ruling recognized a public policy under Pennsylvania law.

165 United States ex rel. Springfield Terminal Ry. Co. v. Quinn, 14 F.3d 645, 649 (D.C. Cir. 1994).

166 31 U.S.C. § 3729(a)(1).

167 See Vt. Agency of Nat’l Res. v. United States ex rel. Stevens, 529 U.S. 765, 784 (2000)

(describing the FCA’s fines as “essentially punitive in nature”).

168 United States ex rel. Stinson, Gerlin & Bustamante, P.A. v. Prudential Ins. Co., 944 F.2d 1149,

1154 (3d Cir. 1991).

retaliation in such circumstances because “[f]ew individuals will expose fraud if

they fear their disclosures will lead to harassment, demotion, loss of employment”

or any other adverse action.170 Consequently, where an employer retaliates against

its employee for engaging in protected activity under the FCA, the employee is

entitled to “all relief necessary to make that employee . . . whole.”

To state a claim for retaliation under the FCA, a plaintiff must establish that:

(1) he engaged in protected activity; (2) the employer knew he was engaged in

such activity; and (3) he was retaliated against because of the activity.171 Both

UPMC Wellsboro and North Penn challenge Count II for failure to plead the first

and second elements.172

1. Legal Standard

“In 1986, Congress added a retaliation provision [to the FCA], protecting

employees from being targeted for actions taken ‘in furtherance of an action [under

the FCA], including investigation for, initiation of, testimony for, or assistance in

170 Hutchins v. Wilentz, Goldman & Spitzer, 253 F.3d 176, 186 (3d Cir. 2001) (internal citations

omitted); see also 31 U.S.C. § 3730(h)(1).

171 Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008) (citations

omitted); see United States ex rel. Hefner v. Hackensack Univ. Med. Ctr., 495 F.3d 103, 110

(3d Cir. 2007) (“For a plaintiff to demonstrate that he was discriminated ‘against “because of”

conduct in furtherance of a False Claims Act suit, a plaintiff must show that (1) his employer

had knowledge he was engaged in “protected conduct”; and (2) that his employer’s retaliation

was motivated, at least in part, by the employee’s engaging in “protected conduct.”’” (quoting

Hutchins, 253 F.3d at 186).

172 While both parties frame their notice argument as one of causation, neither directly address the

issue. Cognizant of the overlap between the questions of notice and causation, the Court does

an action filed or to be filed under [the FCA].”173 Based on this language, a

number of Circuits (including this one) interpreted the provision as protecting

activity only where there was “a distinct possibility that a viable FCA action could

be filed.”174

To succeed under this standard, an employee must show that he was acting

in furtherance of a viable FCA action (requiring a demonstration of the employer’s

underlying liability),175 and that he put his employer “on notice of the ‘distinct

possibility’ of [FCA] litigation.”176 The Third Circuit imported the distinct

possibility standard into the notice analysis on the basis that the type of knowledge

necessary to predicate a finding of retaliatory intent must mirror the type of

protected activity in which the employee engaged.177

Congress then amended the FCA’s whistleblower provision in 2009 to

expand the scope of protected activity.178 Where the pre-2009 provision defined

protected activity as only that done in furtherance of an FCA action, the 2009

version stated that protected activity also encompasses conduct done in furtherance

of “other efforts to stop [one] or more violations” of the FCA.179 “In other words,

173 Hickman v. Spirit of Athens, Alabama, Inc., 985 F.3d 1284, 1288 (11th Cir. 2021) (quoting 31

U.S.C. § 3730(h)).

174 Dookeran v. Mercy Hosp. of Pittsburgh, 281 F.3d 105, 108 (3d Cir. 2002) (collecting cases).

175 Id.

176 Hutchins, 253 F.3d at 188.

177 Id. (citing United States ex rel. Yesudian v. Howard Univ., 153 F.3d 731, 742 (D.C. Cir. 1998)).

178 Hickman, 985 F.3d at 1288 (discussing the impact of the 2009 amendments); Halasa v. ITT

Educ. Servs., Inc., 690 F.3d 844, 847-48 (7th Cir. 2012).

the amendments expanded retaliation coverage to at least some set of people who

‘make efforts to stop’ [FCA] violations—even if those efforts do not lead to a

lawsuit or to the ‘distinct possibility’ of a lawsuit.”180

Since 2009, several Circuits have addressed the applicability of the “distinct

possibility” standard to the newly added “other efforts” prong of the whistleblower

provision. Virtually every court that has squarely taken up the issue has ruled that

the standard cannot apply to this latter category of protected activity.181 Courts

have done so on grounds that the added text decouples protected activity from the

requirement of future FCA litigation.182 Courts have also noted the inconsistency

of requiring a plaintiff to show the viability of future litigation when the statute

protects efforts to prevent FCA violations.183

180 Hickman, 985 F.3d at 1288 (citing United States ex rel. v. Chorches v. Am. Med. Response,

Inc., 865 F.3d 71, 95-98 (2d Cir. 2017)).

181 Singletary v. Howard Univ., 939 F.3d 287, 296-97 (D.C. Cir. 2019); United States ex rel. Grant

v. United Airlines Inc., 912 F.3d 190, 201-02 (4th Cir. 2018); see also Hickman, 985 F.3d at

1288-89; United States ex rel. Reed v. KeyPoint Gov’t Sols., 923 F.3d 729, 765 (10th Cir. 2019)

(questioning the viability of case law interpreting the scope of protected activity under the FCA

pre-amendments); Chorches, 865 F.3d at 95-96 (holding that a plaintiff adequately alleged

protected activity by pleading that he intentionally refused to engage in a fraudulent scheme in

a way that “reasonably could be expected to prevent the submission of a false claim to the

government”). But see United States ex rel. Booker v. Pfizer, Inc., 847 F.3d 52, 59 n.8 (1st

Cir. 2017) (holding that a plaintiff still needed to show that conduct “reasonably could lead to

an FCA action” to constitute protected activity because pre-2009 precedent had already

interpreted the 1986-version of the whistleblower provision as extending to conduct not

directly in furtherance of an FCA lawsuit).

182 Singletary, 939 F.3d at 295-96; Reed, 923 F.3d at 766 (“Congress added the ‘other efforts to

stop’ language for a reason—namely, to stretch the ‘protected activity’ umbrella to cover

additional conduct.”).

As a result, at least two Circuits have replaced the “distinct possibility”

standard with one asking whether the employee’s belief that an employer was

violating (or was about to violate) the FCA was “objectively reasonable,” at least

when considering activity under the “other efforts” prong.184 Courts which have

rejected application of the distinct possibility standard but not adopted the

objectively reasonable test generally ask whether an employee has shown that he

acted in furtherance of an effort to stop a future FCA violation.185 The new

standards also frame what notice a plaintiff must show to state a claim for

retaliation.186

As the Third Circuit has not directly interpreted the “other efforts” language

added to the whistleblower provision in 2009,187 the Court must now consider what

standard to apply in evaluating Heckman’s claim. After careful consideration, the

Court concludes that the “objectively reasonable” test is most appropriate. The

184 Singletary, 939 F.3d at 297; Grant, 912 F.3d at 201.

185 Reed, 923 F.3d at 765-66; Chorches, 865 F.3d at 96-97 (finding an employee’s refusal to

participate in making a false claim protected activity under the amended version of the FCA’s

whistleblower provision).

186 See Reed, 923 F.3d at 766 (“Once Congress expanded the scope of protected activity, the

universe of conduct that a plaintiff could allege to show notice also necessarily expanded.”

(citing United States ex rel. Smith v. Clark/Smoot/Russell, 796 F.3d 424, 434 & n.6 (4th Cir.

2015)).

187 In United States ex rel. Petras v. Simparel, Inc., the Third Circuit suggested that the “distinct

possibility” standard would continue to apply when it stated that the whistleblower provision

applies “only to actions taken in furtherance of a viable FCA case.” 857 F.3d 497, 507-08 (3d

Cir. 2017) (emphasis in original); accord. Ascolese v. Shoemaker Constr. Co., 2021 WL

1534505, at *12 (E.D. Pa. Apr. 19, 2021); United States ex rel. Perri v. Novartis Pharm. Corp.,

2019 WL 6880006, at *20 (D.N.J. Feb. 21, 2019). However, because the retaliation claims in

Petras were almost certainly asserted under the “FCA action” prong of § 3730 (as the plaintiff

had filed a qui tam action), the Court finds the Third Circuit’s reaffirmance of the “distinct

2009 version of the whistleblower provision lifted the requirement that protected

activity be connected to present or future FCA litigation.188 Accordingly, a

standard which premises success on a plaintiff’s ability to show the viability of

litigation is simply untenable under the statutory text.189

The Court’s analysis therefore proceeds as follows. First, the Court

determines whether Heckman adequately alleges that he engaged in protected

activity under the “other efforts” prong of the whistleblower provision. This

requires assessing whether Heckman sufficiently pleads that he had an objectively

reasonable belief that UPMC Wellsboro and North Penn were in violation of, or

were about to violate, the FCA. Second, the Court considers whether Heckman’s

alleged objections plausibly put UPMC Wellsboro and North Penn on notice that

Heckman was attempting to stop one or more violations of the FCA.

188 Singletary, 939 F.3d at 296 (“[T]he plain statutory text focuses on the whistleblower’s ‘efforts

to stop’ violations of the statute before they happen or recur . . . To put it simply, the focus of

the second prong is preventative—stopping ‘violations’—while the first prong is reactive to

an (alleged) actual violation of the statute.” (internal citations omitted)).

189 This is even more evident in the context of notice, as a plaintiff who successfully stops an FCA

violation from occurring would have no opportunity to show that his employer had notice of

future litigation. See also Grant, 912 F.3d at 201 (“A plain reading of this provision suggests

the incongruousness of attempting to subject it to the ‘distinct possibility’ standard. The

apparent purpose of the amendment is to untether these newly protected efforts from the need

to show that an FCA action is in the offing.”); Carlson, 657 Fed. Appx. at 171 (“It would be

nonsensical to say that [other] efforts only become protected activity if a lawsuit under the

FCA becomes a distinct possibility—the second prong is explicitly untethered from any such

2. Protected Activity

As discussed above, for a plaintiff to establish that he acted in furtherance of

“other efforts” to stop one or more violations of the FCA, he must allege that his

actions were “motivated by an objectively reasonable belief that the employer is

violating, or soon will violate, the FCA.”190 The objectively reasonable standard

requires a demonstration of four elements, that: (1) the employee believed that his

employer was violating the FCA; (2) this belief was reasonable; (3) the employee

took action based on that belief; and (4) his actions were “designed to stop one or

more violations of the FCA.”191

The Court is convinced that Heckman satisfies all four elements. The first

and third are met as Heckman alleges that he believed UPMC Wellsboro and North

Penn were about to violate the FCA, and that he objected to various practices on

this basis. The Court determines that the second and fourth elements, though

warranting an extended discussion, are also satisfied because Heckman alleges

conduct by UPMC Wellsboro and North Penn demonstrating a plausible violation

of the FCA and satisfactorily pleads that his objections were intended to stop the

FCA violation from occurring.

190 Grant, 912 F.3d at 201.

a. Reasonable Belief

Heckman establishes that he had an objectively reasonable belief that UPMC

Wellsboro and North Penn were about to violate the FCA because he pleads

conduct showing a plausible claim under the FCA.192 A claim under the FCA

includes four elements: falsity, knowledge, causation, and materiality.193 Falsity

may be premised on an express statement or an omission.194 The latter type of

falsity, also known as an implied false certification, occurs where a claimant

“submits a claim for payment that makes specific representations about the goods

or services provided, but knowingly fails to disclose the [claimant’s]

noncompliance with a statutory, regulatory, or contractual requirement.”195

A statement or misrepresentation is material “if: (1) a reasonable person

would attach importance to it in determining a choice of action in the transaction,

or (2) the defendant had reason to know that the recipient of the representation

attaches importance to the specific matter in determining his choice of action,

regardless whether a reasonable person would do so.”196 In general, that the

government requires compliance with a particular statutory, regulatory, or

192 The Court does not imply that pleading conduct establishing the existence of the elements of

an FCA claim is necessary to proving reasonableness, only that doing so satisfies the

requirement.

193 United States ex rel. Petratos v. Genentech Inc., 855 F.3d 481, 487 (3d Cir. 2017).

194 Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989, 1995 (2016);

United States ex rel. Kester v. Novartis Pharma. Corp., 23 F. Supp. 3d 242, 261 (S.D.N.Y.

2014) (citing Mikes v. Straus, 274 F.3d 687, 697 (2d Cir. 2001)).

195 Escobar, 136 S. Ct. at 1995.

196 United States ex rel. Freedom Unlimited, Inc. v. City of Pittsburgh, 728 Fed. Appx. 101, 106

contractual requirement as a condition on payment is not enough, on its own, to

establish materiality.197

Heckman offers at least two theories of liability premised on false

certifications made by North Penn in its 2020 Section 330 grant application. These

false certifications include North Penn’s statements that it would: (1) “establish

safeguards to prohibit employees from using their positions for a purpose” that

constitutes or creates the appearance of a conflict of interest; and (2) “comply with

all applicable requirements” of federal law.198 Heckman contends that UPMC

Wellsboro caused North Penn to make these statements and is therefore also liable

under the FCA.199

i. Heckman’s Knowledge of FQHC Program

Requirements

Before reaching the merits of Heckman’s proffered theories of liability, the

Court determines it appropriate to infer that Heckman had both general and

specific knowledge of North Penn’s obligations as an FQHC. Heckman was an

executive at North Penn and knew that North Penn was an FQHC and received

federal funding; he thus presumably was aware that North Penn, as an FQHC, had

197 Escobar, 136 S. Ct. at 2003.

198 Other allegedly false statements include that North Penn was “not part of a parent, affiliate or

subsidiary organization,” and that North Penn required at least three bids for purchases made

over $3,000. Because Heckman’s primary claims involve challenging the alleged conflict of

interest between UPMC Wellsboro and North Penn, as well as their violation of federal

program requirements, the Court considers only those.

199 Accepting as true that every member of North Penn’s board is employed by UPMC Wellsboro

and that UPMC Wellsboro’s president played a significant role in North Penn’s operations, the

special duties and obligations under federal law. Further, it is reasonable to infer

that Heckman was aware of specific conditions regarding North Penn’s conflict-of-

interest requirements and federal obligations because, as an employee, he would

have had to comply with them.200

ii. Promise to Create Safeguards Preventing

Actual and Apparent Conflicts of Interest

Heckman first claims that North Penn falsely certified in its 2020 Section

330 grant application that it would take steps to prevent employees from using

their positions for a purpose that constitutes or creates the appearance of a conflict

of interest. Heckman plausibly establishes the falsity and knowledge element of

this claim by alleging that he repeatedly complained to both UPMC Wellsboro and

North Penn that their relationship was improper, thus putting them on notice of at

least the appearance of a conflict of interest.201 Allegations that North Penn was

aware of these complaints and yet stated it would take steps to prevent such a result

was occurring plausibly demonstrates that North Penn knew its certification was

false.

200 The Court does not believe it necessary under these circumstances to require Heckman to

specifically plead knowledge of North Penn’s grant-application process.

201 Several allegations also demonstrate the existence of an actual conflict of interest. This

includes claims that North Penn’s board membership was entirely comprised of UPMC

Wellsboro employees, that UPMC Wellsboro directed North Penn to hire a physician using

federal funds to practice at UPMC Wellsboro, that the President of UPMC Susquehanna

referred to North Penn as a subsidiary, and that Hilfiger used her position on North Penn’s

Heckman also satisfies the materiality requirement, as he alleges that North

Penn’s application would have been rejected had North Penn included information

that its current relationship with UPMC Wellsboro had created, at the very least,

the appearance of a conflict of interest. It is entirely plausible that the government,

armed with this information, would have chosen to reject North Penn’s application.

As a result, because Heckman pleads that UPMC Wellsboro and North Penn may

have actually violated the FCA, the Court finds that Heckman sufficiently

establishes that his belief that UPMC Wellsboro and North Penn were about to

violate the FCA when he began raising his complaints was objectively reasonable.

iii. Promise to Comply with Federal Law

Heckman similarly challenges North Penn’s promise to comply with

applicable federal law. To receive a Section 330 grant, entities must satisfy a

number of requirements. For example, recipients must be “public or nonprofit

private entit[ies].”202 They also must meet specific board-composition

requirements; for example, a majority of board members must be “individuals who

are or will be served by the center and who, as a group, represent the individuals

served in terms of demographic factors, such as race, ethnicity, sex.”203 And “[n]o

more than one-half of the remaining board members of the board may be

202 42 C.F.R. § 51c.103. A nonprofit private entity is defined by federal regulation as an “entity

which may not lawfully hold or use any part of its net earnings to the benefit of any private

shareholder or individual.” 42 C.F.R. § 23.2.

individuals who derive more than 10 percent of their annual income from the

health care industry.”204

Regulations additionally mandate that Section 330 grant funds be expended

solely upon projects approved under section 330.205 Money must be spent in a

reasonable manner, with consideration being given to certain factors, including

whether a contractor or service provider engages in “arms-length bargaining,” and

what market prices for comparable goods or services for are in a given geographic

area 206 Heckman additionally claims that the Section 330 Terms and Definitions

specify that a Section 330 grant recipient “may not be owned, controlled, or

operated by another entity.”207

Heckman argues that North Penn was in violation of several of these

requirements prior to submitting its 2020 grant application, namely those regarding

North Penn’s non-profit status, board composition, payment practices, and

independence. In response, UPMC Wellsboro characterizes Heckman’s objections

as challenges to internal business decisions. Neither UPMC Wellsboro nor North

Penn squarely address whether Heckman’s allegations regarding their conduct

might plausibly violate federal law.

204 Id. at (b)(2).

205 42 C.F.R. § 51c.107.

206 45 C.F.R. § 75.404(b), (c).

The Court concludes that Heckman’s pleadings show a plausible violation of

the FCA. His allegations establish that these federal requirements were not met at

the time that North Penn submitted its 2020 grant application,208 and thus that

North Penn’s certification that it planned to comply with federal law was

misleading. Though somewhat vaguely, Heckman adequately pleads that he

informed both UPMC Wellsboro and North Penn that they were in violation of

federal law and federal program requirements prior to North Penn’s submission of

the grant application. Accordingly, the Court finds the elements of an FCA claim

satisfied, and Heckman’s belief regarding an impending FCA violation objectively

reasonable.

b. Designed to Stop One or More Violations of the FCA

Both UPMC Wellsboro and North Penn argue that Heckman insufficiently

pleads that he acted in furtherance of an effort to stop one or more violations of the

FCA. In support, they point to the absence of allegations establishing that

Heckman’s objections informed either party that their conduct would specifically

result in a fraud against the government or a violation of the FCA. Heckman

responds that he told both parties that they were violating federal law and federal

program requirements; he claims this is sufficient to constitute an “effort” to stop

the alleged FCA violation.

208 These allegations include that North Penn’s board was entirely populated by employees of

UPMC Wellsboro, that North Penn did not require bidding from UPMC Wellsboro, and that

The Court agrees with Heckman that informing UPMC Wellsboro and North

Penn that North Penn is in violation of FQHC program requirements constitutes an

effort to stop a violation of the FCA. Though the amended complaint lacks

specific allegations that Heckman referenced the FCA in his conversations with

UPMC Wellsboro and North Penn officials, the Court is satisfied that Count II

survives, at least under the rubric of a motion to dismiss. To be sure, Heckman’s

efforts are at least one step removed from the typical “efforts” involving

complaints of fraud. Nevertheless, the Court concludes they are sufficient to state

a claim.

3. Notice

UPMC Wellsboro and North Penn next contend that Heckman fails to plead

that either party had notice of Heckman’s protected activity. In doing so, they

essentially rehash their arguments that Heckman’s generalized complaints are not

sufficient to put either party on notice that Heckman was attempting to stop a

violation of the FCA. But just as the Court declined to adopt these arguments in

the context of establishing Heckman’s protected activity, it declines to do so now

in considering whether Heckman’s complaints put UPMC Wellsboro and North

Penn on notice of his protected activity.209 Consequently, the Court concludes that

Heckman states a claim for retaliation under the FCA.

209 The Court further notes that much of the Defendants’ arguments are premised on the distinct

C. Count III: Retaliation Under the Pennsylvania Whistleblower Law

“Generally speaking, the Whistleblower Law precludes a public body from

taking any adverse employment action against an employee in retaliation for the

employee’s good faith report of wrongdoing or waste.”210 “By its terms, the

Whistleblower Law applies only to public employees.”211 Accordingly, an

employee is only protected under the Whistleblower Law where he can

demonstrate that his employer was either “a public body” or an “employer” (an

entity “which receives money from a public body” to perform work or provide

services for the public body).212

UPMC Wellsboro and North Penn argue that: (1) they are neither public

bodies nor employers; (2) Heckman was not North Penn’s employee; and (3)

Heckman did not make a good faith report regarding an instance of waste or

wrongdoing. The Court respectfully disagrees, and finds that Heckman states a

claim for retaliation under the Whistleblower Law.

1. Public Body and Employer

The Pennsylvania Whistleblower Law defines a public body as any entity

“which is created by Commonwealth or political subdivision authority or which is

funded in any amount by or through Commonwealth or political subdivision

210 Scrip v. Seneca, 191 A.3d 917, 925 (Pa. Commw. 2018) (citing 43 P.S. § 1423).

211 Clark v. Modern Grp. Ltd., 9 F.3d 321, 332 (3d Cir. 1993).

authority or a member or employee of that body.”213 An employer is defined as a

public body or an entity “which receives money from a public body to perform

work or provide services” for the public body.214

District Courts in this Circuit have generally held that mere receipt of

Medicaid reimbursements from state funds is insufficient to turn an otherwise

private entity into a public body for purposes of Whistleblower Law liability.215

The main justifications for this rule are the statue’s text, which can be read as

requiring funding to come from a specific legislative appropriation (not an

automatic reimbursements system),216 and concerns that any other interpretation

would be too broad.217

By contrast, the Superior Court of Pennsylvania has consistently and

repeatedly ruled that the receipt of any Medicaid funding is sufficient to bring a

private entity into the reach of the Whistleblower Law.218 The Superior Court has

213 Id.

214 Id.

215 Eaves-Voyles v. Almost Family, Inc., 198 F. Supp. 3d 403, 409 (M.D. Pa. 2016); Tanay v.

Encore Healthcare, LLC, 810 F. Supp. 2d 734, 743-44 (E.D. Pa. 2011); Cohen v. Salick Health

Care, Inc., 772 F. Supp. 1521, 1527 (E.D. Pa. 1991); Ortiz v. Priority Healthcare Group LLC,

2019 WL 3240016, at *4 (M.D. Pa. July 18, 2019); Grim v. May Grant Assocs., 2019 WL

358520, at *4 (E.D. Pa. Jan. 29, 2019).

216 E.g., Eaves-Voyles, 198 F. Supp. 3d at 409; Tanay, 810 F. Supp. 2d at 743-44; Cohen, 772 F.

Supp. at 152.

217 E.g., Grim, 2019 WL 358520, at *4 (“A contrary result would unreasonably expand the scope

of the [Pennsylvania Whistleblower Law] to include any private business that accepts payment

from a recipient of government assistance, i.e. a grocery store that accepts food stamps. In

limiting the retaliation provision to the report of wrongdoing by a ‘public body,’ the legislature

could not have intended such a large scope.”).

218 Saltzman v. Thomas Jefferson Univ. Hosps., Inc., 166 A.3d 465, 475 n.8 (Pa. Super. 2017)

(“This Court has held that an entity that receives Medicaid funding is a ‘public body’ for

done so on grounds that the phrase “funded in any amount” necessarily extends to

all entities which “receive public monies under the administration of the

Commonwealth.”219 The Superior Court has also expressly rejected reasoning

offered by federal courts in this Circuit holding to the contrary.220

While the Pennsylvania Supreme Court has not yet addressed this issue

directly, it recently accepted without reservation the Superior Court’s interpretation

for purposes of resolving a question under the Whistleblower Law. In Harrison v.

Health Network Laboratories Limited Partnerships, the Pennsylvania Supreme

Court presumed as true the assertion that an entity, “as a recipient of Medicare and

other forms of public assistance payments,” is a “‘public body’ . . . as defined by

the Whistleblower Law.”221

Given the Superior Court’s consistent interpretation of the Whistleblower

Law as covering entities which receive Medicaid reimbursements, and the recent

decision in Harrison, the Court concludes it most appropriate to adopt the Superior

Court’s holding and reasoning.222 As a result, the Court finds that an entity which

Limited P’ships, 2018 WL 6520982, at *4 n.6 (Pa. Super. Dec. 12, 2018), aff’d, 232 A.3d 674,

677 (Pa. 2020); Denton v. Silver Stream Nursing & Rehab. Ctr., 739 A.2d 571, 576 (Pa. Super.

1999); see also Gratz v. Ruggiero, 2017 WL 2215267, at *7 (E.D. Pa. May 19, 2017) (citing

legislative history as supporting a broad interpretation of the term “public body”).

219 Denton, 739 A.2d at 576; accord. Saltzman, 166 A.3d at 475 n.8.

220 Denton, 739 A.2d at 576; Harrison, 2018 WL 6520982, at *4 n.6.

221 232 A.3d 674, 677 n.3 (Pa. 2020) (citations omitted).

222 “Where an intermediate appellate state court rests its considered judgment upon the rule of law

which it announces, that is a datum for ascertaining state law which is not to be disregarded by

a federal court unless it is convinced by other persuasive data that the highest court of the state

would decide otherwise.” Sheridan v. NGK Metals Corp., 609 F.3d 239, 254 (3d Cir. 2010)

receives Medicaid reimbursement is a “public body” under the Pennsylvania

Whistleblower Law. As North Penn is alleged to receive Medicaid

reimbursements from the Commonwealth, the Court determines that it is a public

body.

The Court also determines that UPMC Wellsboro, though not a public body,

is an “employer” as defined by the Whistleblower Law. Because North Penn is a

public body, UPMC Wellsboro constitutes an employer if it receives money from

North Penn in exchange for the provision of services.223 Since the amended

complaint alleges that UPMC Wellsboro provides services such as information and

technology support to North Penn in exchange for money, Heckman adequately

states that UPMC Wellsboro is an employer and thus subject to Whistleblower

Law liability.

2. Employee

Under the Whistleblower Law, an employee is a “person who performs a

service for wages or other renumeration under a contract of hire, written or oral,

express or implied,” for an employer or public body.224 North Penn argues that

Heckman fails to allege that he was an employee of North Penn, and that such an

assertion is contradicted by allegations that UPMC Wellsboro was Heckman’s

166, 174 (3d Cir. 2005)); see also Romer v. MHM Prof’ls, 2020 WL 6747418, at *3-6 (M.D.

Pa. Nov. 17, 2020).

223 43 P.S. § 1422.

formal employer. North Penn cites, for example, contentions that UPMC

Wellsboro issued Heckman’s W-2 forms and was responsible for issuing his

paychecks.

But North Penn’s assertions are untenable under the text of the

Whistleblower Law and in light of the existence of the North Penn Employment

Agreement. An employee is covered by the Whistleblower Law where he provides

services under a contract of hire for a public body; there is no requirement that an

employee be under contract with the public body. Thus, North Penn’s claim that

Heckman must allege more than that he worked as a physician for North Penn

under an employment contract is meritless.225 Consequently, the Court finds that

the amended complaint sufficiently establishes that Heckman is an employee under

the Whistleblower Law.

3. Waste or Wrongdoing

The Whistleblower Law protects employees who make a good-faith report

or attempt to make a good-faith report regarding “waste” or “an instance of

wrongdoing.”226 Waste is defined as “conduct or omissions which result in

substantial abuse, misuse, destruction or loss of funds or resources belonging to or

derived from the Commonwealth or political subdivision sources.”227 By contrast,

225 See also Rankin v. City of Philadelphia, 963 F. Supp. 463, 470 (E.D. Pa. 1997). The North

Penn Employment Agreement further forecloses North Penn’s arguments, as it establishes the

existence of an employment agreement between Heckman and North Penn.

226 43 P.S. § 1423(a).

the term “wrongdoing” encompasses an “actual ‘violation’ of the laws, regulations,

ordinance, or code of conduct or ethics ‘which is not of a merely technical or

minimal nature.’”228

UPMC Wellsboro curiously argues that Heckman’s claim must be dismissed

because he does not allege that UPMC Wellsboro’s conduct resulted in waste.

However, it neglects the fact that Heckman may show either waste or wrongdoing.

The Court concludes that Heckman’s allegations that UPMC Wellsboro violated

federal law is sufficient to establish a plausible instance of wrongdoing, and

therefore that Heckman has satisfied the good-faith reporting requirement of a

retaliation claim under the Whistleblower Law.229 Consequently, UPMC

Wellsboro’s and North Penn’s motions to dismiss Count III are denied.

D. Count IV: Retaliation Under the Fair Labor Standards Act

“[T]o establish a prima facie case of discriminatory retaliation [under the

FLSA], ‘a plaintiff must show that (1) the plaintiff engaged in protected activity,

(2) the employer took an adverse employment action against her, and (3) there was

a causal link between the plaintiff’s protected action and the employer’s adverse

action.’”230 North Penn asserts that Heckman has not adequately alleged that North

Penn was his employer. Additionally, both North Penn and UPMC Wellsboro

228 Kimes v. Univ. of Scranton, 126 F. Supp. 3d 477, 505 (M.D. Pa. 2015).

229 UPMC Wellsboro does not challenge whether Heckman’s reports were made in “good faith,”

so the Court does not address the issue.

230 Kovach v. Turner Dairy Farms, Inc., 929 F. Supp. 2d 477, 499 (W.D. Pa. 2013) (quoting

challenge the amended complaint under the protected activity and causation

prongs.

1. Employer

To be covered by the FLSA, a plaintiff must be an employee and not an

independent contractor.231 The question of whether a person is an employee or an

independent contractor “is not fixed by labels that parties may attach to their

relationship nor by common law categories nor by classifications under other

statutes.”232 It is instead dependent upon the “economic reality” of the parties’

relationship.233 Under the “economic reality” theory, “the FLSA defines employer

‘expansively’ . . . and with ‘striking breadth.’”234 “The Supreme Court has even

gone so far as to acknowledge that the FLSA’s definition of an employer is ‘the

broadest definition that has ever been included in any one act.’”235

“Under the FLSA, multiple persons or entities can be responsible for a single

employee’s wages as ‘joint employers’ in certain situations.”236 This can occur

where two employers “exert significant control” over an employee.237 The Third

231 29 U.S.C. § 203.

232 Powell v. U.S. Cartridge Co., 339 U.S. 497, 528 (1950) (Frankfurter, J., dissenting).

233 Goldberg v. Whitaker House Co-op., Inc., 366 U.S. 28, 33 (1961).

234 In re Enterp. Rent-A-Car Wage & Hour Emp. Prac. Litig., 683 F.3d 462, 467 (3d Cir. 2012)

(internal citations omitted) (quoting Rutherford Food Corp. v. McComb, 331 U.S. 722, 730

(1947)).

235 Id. at 467-68 (quoting United States v. Rosenwasser, 323 U.S. 360, 363 n.3 (1945)).

236 Thompson v. Real Estate Mortg. Network, 748 F.3d 142, 148 (3d Cir. 2014) (quoting 29 C.F.R.

§ 791.2).

237 Id. (quoting N.L.R.B. v. Browning-Ferris Indus. of Pa., Inc., 691 F.2d 1117, 1124 (3d Cir.

Circuit, in In re Enterprise Rent-A-Car Wage & Hour Employment Practices

Litigation, set forth a four-factor test evaluating whether a joint-employment

relationship exists under the FLSA.238 Pursuant to the Enterprise test, courts must

consider the following:

(1) The alleged employer’s authority to hire and fire relevant employees;

(2) The alleged employer’s authority to promulgate work rules and

assignments and to set the employees’ conditions of employment:

compensation, benefits, and work schedules, including the rate and

method of payment;

(3) The alleged employer’s involvement in day-to-day employee

supervision, including employee discipline; and

(4) The alleged employer’s actual control of employee records such as

payroll, insurance, or taxes.239

“[T]his list is not exclusive, and cannot be ‘blindly applied.’”240 Rather,

“[i]f a court concludes that other indicia of ‘significant control’ are present to

suggest that a given employer was a joint employer of an employee, that

determination may be persuasive, when incorporated with the individual factors”

specified by the Third Circuit.241

The amended complaint adequately pleads that North Penn was Heckman’s

joint employer. Heckman alleges that he served as the Chief Medical Officer of

North Penn, that North Penn directed and controlled his compensation, and that

238 683 F.3d at 469.

239 Id.; Thompson, 748 F.3d at 149.

240 Enterprise, 683 F.3d at 469-70 (citations omitted).

Heckman received a letter of termination from North Penn. These assertions alone

are sufficient to establish North Penn’s status as joint employer, although they are

further supported by the North Penn Employment Agreement, which lays out

Heckman’s duties to North Penn as an employee. Consequently, the Court finds

that Heckman satisfies the requirement of pleading that North Penn was his joint

employer under the FLSA.

2. Protected Activity

Unlike the FCA, the FLSA only protects employees who have “filed” a

“complaint” regarding an employer’s violation of the FLSA.242 A complaint may

be made orally or in writing243 to either the employer or the government.244

However, a complaint will only be considered filed when it is made in such a way

that “‘a reasonable, objective person would have understood the employee’ to have

‘put the employer on notice that [the] employee is asserting statutory rights under

the [FLSA].’”245

242 29 U.S.C. § 215(a)(3).

243 Kasten v. Saint-Gobain Performance Plastics Corp., 563 U.S. 1, 17 (2011).

244 While the United States Supreme Court left the question unresolved in Kasten v. Saint-Gobain

Performance Plastics Corp., the Court notes that the majority of courts interpret the FLSA’s

anti-retaliation provision as protecting intracompany complaints. E.g., Greathouse v. JHS Sec.

Inc., 784 F.3d 105, 115-16 (2d Cir. 2015); Minor v. Bostwick Labs., Inc., 669 F.3d 428, 439

(4th Cir. 2012); Hagan v. Echostar Satellite, LLC, 529 F.3d 617, 626 (5th Cir. 2008); Valerio

v. Putnam Assocs., Inc., 173 F.3d 35, 44-45 (1st Cir. 1999); EEOC v. Romeo Community

Schools, 976 F.2d 985, 989-90 (6th Cir. 1992); Brock v. Richardson, 812 F.2d 121, 124-25 (3d

Cir. 1987).

“Although no magic words are required, to qualify as protected [activity] the

employee must convey to the employer his or her concern that the employer has

engaged in a practice made unlawful” by the FLSA.246 Thus, “it must be possible

to discern from the context of the statement that the employee opposes an unlawful

employment practice.”247 “[C]omplaints that a reprimand was undeserved, or of

unfair treatment, or merely disagreeing with disciplinary practices, do not

constitute protected activity.”248 However, “the key to construing the anti-

retaliation provision is the need to prevent employees’ fear of economic retaliation

for voicing grievances about substandard conditions.”249

UPMC Wellsboro and North Penn challenge Count IV for failing to allege:

(1) conduct giving rise to an FLSA violation; and (2) that Heckman filed a

complaint within the meaning of the FLSA. North Penn additionally contends that

Heckman’s allegations do not establish that it received notice because he alleges

only that he complained to Hilfiger and members of UPMC Wellsboro’s board.

Heckman responds by citing his allegations that UPMC Wellsboro and North Penn

terminated him in response to requests that he be paid for work done at the Green

Home and that he have his obstetrics practice reinstated at North Penn.

246 Braden v. Cnty. of Wash., 749 F. Supp. 2d 299, 305 (W.D. Pa. 2010) (internal quotation marks

omitted) (quoting Hinds v. Sprint/United Mgmt. Co., 523 F.3d 1187, 1203 (10th Cir. 2008)).

247 Id. (internal quotation marks omitted) (quoting Curay-Cramer v. Ursuline Acad. Of

Wilmington, Del., Inc., 450 F.3d 130, 135 (3d Cir. 2006)).

248 Id. (citations omitted).

Substantively, “[t]he FLSA provides that employers may not require

employees to work more than forty hours per workweek unless those employees

receive overtime compensation at a rate of not less than one-and-a-half times their

regular pay.”250 But certain classes of employees are exempted from the overtime-

pay requirement, including employees who work in a “bona fide executive,

administrative, or professional capacity.”251 The parties appear to agree that

Heckman falls within such an exemption.

Nevertheless, “[a]n employer who makes improper deductions from [an

exempted employee’s] salary shall lose the exemption if the facts demonstrate that

the employer did not intend to pay employees on a salary basis.”252 An employee

is paid on a “salary basis” where the employee receives consistent compensation

“which amount is not subject to reduction because of variations in the quality or

quantity of the work performed.”253 Showing that the employer had an “actual

practice of making improper deductions” to the employee’s salary is sufficient.254

However, deductions are generally only improper where they impact the

employee’s salary, not fringe benefits or bonus compensation.255

250 Baden-Winterwood v. Life Time Fitness, Inc., 566 F.3d 618, 626 (6th Cir. 2009) (citing 29

U.S.C. § 207(a)(1)).

251 29 U.S.C. § 213(a)(1).

252 29 C.F.R. § 541.603(a).

253 29 C.F.R. § 541.602(a).

254 29 C.F.R. § 541.603(a).

255 See Coates v. Dassault Falcon Jet Corp., 961 F.3d 1039, 1043 (8th Cir. 2020) (citations

Heckman asserts that his salary was subject to improper deductions when he

was not paid for work he completed at the Green Home, and when North Penn

terminated his obstetrics practice. He maintains that he properly filed a complaint

by objecting to these deductions beginning in late 2019 during regular meetings

with Hilfiger and members of UPMC Wellsboro’s board. He further claims that he

repeatedly insisted at these meetings that he be “paid for his work” done for the

Green Home and “be allowed to earn his contracted wage” by resuming his

obstetrics practice at North Penn.

Though the case is close, the Court finds that Heckman adequately alleges

that he engaged in protected activity. First, UPMC Wellsboro’s and North Penn’s

alleged conduct could constitute a plausible violation of the FLSA. As discussed

above, receiving less money than the base-level salary provided for in a contract

may destroy an FLSA exemption where the employee shows that the employer had

an actual practice of making improper deductions. Refusing to pay Heckman for

work completed at the Green Home to which he was contractually or otherwise

entitled to may constitute such a practice. Additionally, terminating Heckman’s

obstetrics practice (a factor considered in adjusting Heckman’s yearly salary) may

also demonstrate an intent not to pay Heckman on a salary basis.

Second, Heckman’s complaints, while vague, are extremely broad. He

asserts that he repeatedly complained about the purported violations to Hilfiger and

UPMC Wellsboro board members. Although Heckman does not allege that he

objected to these alleged violations on the basis that they violated the FLSA, the

Court finds his pleadings sufficient to state a claim.256 The Court further agrees

with Heckman that complaining to a “prominent” member of North Penn’s board

satisfies the requirement that Heckman’s complaint give North Penn notice of

potential FLSA violations.

3. Causal Link

A plaintiff may establish a causal link between his protected activity and an

adverse employment action by two methods. First, he may point to “the temporal

proximity between the employee’s protected activity and the adverse employment

action.”257 “[T]his is an obvious method by which a plaintiff can proffer

circumstantial evidence ‘sufficient to raise the inference that her protected activity

was likely the reason for the adverse action.’”258 But “where there is a lack of

temporal proximity, circumstantial evidence of a ‘pattern of antagonism’ following

the protected conduct can also give rise to the inference.”259

The Court finds that the amended complaint adequately states a causal link.

Heckman pleads that Hilfiger referred to him as a “liability” immediately before

terminating him, and that Hilfiger fired him to prevent him from raising objections

256 See Hong Nguyen v. KARAG Ford of Pittsburgh, LLC, 2020 WL 6063490, at *4 (W.D. Pa.

Oct. 14, 2020) (denying a motion to dismiss an FLSA-retaliation claim where the plaintiff did

not explicitly reference the FLSA but complained only that his employer had not made

overtime payments).

257 Kachmar v. SunGard Data Sys., Inc., 109 F.3d 173, 177 (3d Cir. 1997).

258 Id. (quoting Zanders v. Nat’l R.R. Passenger Corp., 898 F.2d 1127, 1135 (6th Cir. 1990)).

at a UPMC Wellsboro board meeting. This, combined with other alleged instances

of antagonism preceding Heckman’s FLSA complaints260 and the temporal

proximity between Heckman’s complaints and his termination,261 is sufficient to

establish a plausible inference of discriminatory intent. Consequently, UPMC

Wellsboro’s and North Penn’s motions to dismiss Count IV are denied.

E. Count V: Pennsylvania Wage Payment and Collection Law

The WPCL “provides employees a statutory remedy to recover wages and

other benefits that are contractually due to them.”262 The WPCL defines “wages”

as “all earnings of an employe[e], regardless of whether determined on time, task,

piece, commission or other method of calculation.”263 “To present a wage-

payment claim,” a plaintiff must “aver that he was contractually entitled to

compensation from wages and that he was not paid.”264 UPMC Wellsboro and the

Green Home argue that Heckman fails to state a claim because he alleges that he

was “leased” to the Green Home pursuant to a tri-party agreement, thus precluding

260 Examples include Nobles’ statement in July 2019 that Heckman’s name “keeps coming up” in

conversation with Hilfiger, that Hilfiger accused Heckman of “causing problems” and being

“disruptive,” and that Hilfiger led the push (and directed) Heckman’s termination.

261 While the amended complaint does not offer specific dates upon which this Court might base

a temporal-proximity analysis, the Court does not believe this necessitates dismissal as

Heckman claims that he objected during “regular and frequent” meetings over a five-month

period.

262 Braun v. Wal-Mart Stores, Inc., 24 A.3d 875, 953 (Pa. Super. 2011) (internal quotation marks

omitted) (quoting Oberneder v. Link Comp. Corp., 696 A.2d 148, 150 (Pa. 1997)).

263 43 P.S. § 260.2a.

264 Sullivan v. Chartwell Inv. Partners, L.P., 873 A.2d 710, 716 (Pa. Super. 2005) (citing Hartman

a determination that he had a contractual entitlement to compensation for his work

at the Green Home.

UPMC Wellsboro and the Green Home ignore, however, that the amended

complaint also alleges that an agreement existed between him, UPMC Wellsboro,

and the Green Home which provided for the terms of Heckman’s compensation.

Heckman thus satisfies the requirement that he plead the existence of a contract.

Further, he adequately alleges that both UPMC Wellsboro and the Green Home

have breached that contract. Accordingly, UPMC Wellsboro’s and the Green

Home’s motions to dismiss Count V are denied.

IV. CONCLUSION

An appropriate Order follows.

BY THE COURT:

s/ Matthew W. Brann

Matthew W. Brann

United States District Judge