Ignjatovic v. Caregivers America LLC

UNITED STATES DISTRICT COURT □

MIDDLE DISTRICT OF PENNSYLVANIA

DOLHIA IGNJATOVIC,

Plaintiff "CIVIL ACTION NO. 3:24-cv-75

v. (JUDGE MANNION)

CAREGIVERS AMERICA, LLC SCRANTON |

Defendant AUG 09 2924

PER $/

DEPUTY CLERK

MEMORANDUM

Plaintiff Dolhia Ignjatovic claims that her former employer, Defendant

Caregivers American LLC, discriminated against her on the basis of her

gender and retaliated against her for making . complaints about

discrimination. (Doc. 10). Plaintiff also claims that Defendant violated the

Pennsylvania Whistleblower Law (the “PWL”) and discharged her in violation

of Pennsylvania public policy. (Ild.). Defendant moves for partial dismissal of

Plaintiffs Amended Complaint (the “Complaint”). (Doc. 12).

l. BACKGROUND

A. Factual Background

Because this is a motion to dismiss, the court must “accept all factual

allegations as true.” Bruni v. City of Pittsburgh, 824 F.3d 353, 360 (3d Cir.

2016).

Plaintiff began working for Defendant, a Pennsylvania company

providing health and home care services, in June 2019. (Doc. 10 99/3, 17,

23). She was promoted to Care Coordinator and began working in

Defendant’s Pottsville office in April 2023. (Id. J]24-27). A transgender

woman, Plaintiff faced “severe and pervasive discrimination because of her

sex” upon starting in Pottsville. (Id. ]]J27-28).

Plaintiffs Pottsville coworkers made frequent “harassing comments

about [her] transgender status.” (Id. J29). Another Care Coordinator, Darlene

Smith (“Smith”) repeatedly referred to her using either male pronouns or as

a “thing” and an “it.” (Id. 730). Smith also misgendered her in conversation

with an interviewee and called her a “freak,” and subsequently hired the

interviewee despite Plaintiffs objections. (Id. 431). Finally, Plaintiff

encountered “inappropriate, uncomfortable, and probing questions about her |.

genitalia” from other coworkers. (Id. 32). Such questions included: “how do

you pee?,” “how does it feel during sex?,” and similar inquiries. (Id.) Plaintiff

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made complaints to management, but they took no action, and one manager

told her to “get over it.” (Id. 935).

In July 2023, Plaintiff reported to different management personnel that

Defendant was failing to perform background checks and tuberculosis

screenings on new hires before allowing them to work and was failing to

maintain employee files and charts properly, in violation of state regulations.

(Id. 9J37—39). At about the same time, Plaintiff also reported to the same

management personnel that certain employees were working too many

consecutive hours, which she believed violated labor laws, posed safety

risks to clients, and amounted to misuse of funds by payment of unnecessary

overtime. (Id. 740).

Overtime payment came in part from funding Defendant received from

the state through Medicaid. (Id. 9/41). Medicaid is “funded and managed by

and through the Commonwealth of Pennsylvania.” (Id. 918). Indeed,

Defendant is “funded largely by” Medicaid reimbursements it receives from

the Commonwealth for the services it provides to clients on Medicaid. (Id.

120).

In response to Plaintiff's reports, the Branch Manager instructed

Plaintiffs coworkers to bring the office into compliance with regulations. (Id.

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42). Her coworkers then ostracized and berated her for making the reports.

(Id. 9143-44).

On July 13, 2023, Plaintiff told a human resources (“HR’)

representative about her regulatory compliance concerns, as well as “the

workplace discrimination and harassment she was enduring because of her

transgender status.” (Id. 47). Four days later, that HR representative visited

Plaintiff's worksite “ostensibly to investigate Plaintiff's concerns,” but

informed her that Defendant was suspending her without pay. (Id. ]49). At

around the same time, Plaintiff contacted the Pennsylvania Department of

Health (the “Department”) about the office’s regulatory non-compliance. (Id.

150). The Department investigated the office on July 21, 2023 and confirmed

Plaintiff's reports. (Id. 951). On the same day, Defendant terminated Plaintiff

because of an event that occurred months prior and resulted in no discipline

at the time. (Id. 1152-53). Plaintiff's role was then transferred to a non-

transgender employee. (Id. 56).

B. Procedural History

Plaintiff filed a Charge of Discrimination with the United States Equal

Employment Opportunity Commission (“EEOC”) and the Pennsylvania

Human Relations Commission on January 10, 2024. (Id. 17). She received

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a Notice of Rights to Sue from the EEOC on January 16, 2024, (id. J9), and

filed this action the same day. (Doc. 1).

Plaintiff filed an Amended Complaint on April 1, 2024. (Doc. 10). The

Complaint brings the following claims against Defendant: (I) Title VII —

Discrimination, Retaliation, Hostile Work Environment, and Wrongful

Termination; (Il) Pennsylvania Whistleblower Law (“PWL”) — Discrimination,

Retaliation, and Wrongful Termination; and (III) Pennsylvania Common Law

— Wrongful Discharge in Violation of Public Policy. (Id.). Plaintiff seeks

compensatory and punitive damages.

Defendant filed a partial motion to dismiss the Complaint on April 15,

2024. (Doc. 12). Specifically, Defendant moves to dismiss all of Counts II

and Ill, as well as the sex discrimination and retaliation portions of Count I.

(Id.)

ll. LEGAL STANDARD

In response to a complaint, a party may move for dismissal for “failure

to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6).

To survive dismissal, a complaint must make more than “conclusory or ‘bare-

bones’ allegations,” and “‘threadbare recitals of the elements of the cause of

action, supported by mere conclusory statements, do not suffice.” Fowler v.

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UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (quoting Ashcroft v.

Iqbal, 556 U.S. 662, 678 (2009)). Instead, the complaint must “set out

‘sufficient factual matter’ to show that the claim is facially plausible.” /d.

(quoting /qbal, 556 U:S. at 678). .

When considering the complaint, the court must apply a “two-part

analysis.” /d. “First,” the court “must accept all of the complaint’s well-pleaded

facts as true, but may disregard any legal conclusions.” /d. at 210-11.

“Second,” the court “must then determine whether the facts alleged in the

complaint are sufficient to show that the plaintiff has a plausible claim to

relief.” /d. at 211. When determining the sufficiency of the facts alleged, the

court must “construe the complaint in the light most favorable to the plaintiff,

and determine whether, under any reasonable reading of the complaint, the

plaintiff may be entitled to relief.” Phillips v. Cnty. of Allegheny, 515 F.3d 224,

233 (3d Cir. 2008).

Ill. DISCUSSION

A. Title VII

Title VII of the Civil Rights Act of 1964 makes it unlawful for employers

“to fail or refuse to hire or to discharge any individual, or otherwise to

discriminate against any individual with respect to his compensation, terms,

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conditions, or privileges of employment, because of such individual’s race,

color, religion, sex, or national origin.” 42 U.S.C. §2000e-2(a)(1). It also

prohibits discriminating against employees for engaging in certain protected

activities. /d. §2000e-3(a).

i. Sex Discrimination

Plaintiff claims that Defendant fired her for being transgender and that

she was thus discriminated against because of her sex. Plaintiff's gender

identity is protected by Title VII. See Bostock v. Clayton Cnty., 590 U.S. 644

(2020). That is because, although the statute does not refer to “gender

identity,” discrimination because of one’s transgender status is discrimination

because of one’s sex. /d. at 660-62.

Absent direct evidence of discrimination, a successful Title VII claim

requires a plaintiff to establish a prima facie case of discrimination under the

McDonnell-Douglass framework.’ See Burton v. Teleflex Inc., 707 F.3d 417,

426 (3d Cir. 2013). To do so, the plaintiff must plead that: (1) she “is a

member of a protected class”; (2) she “was qualified for the position s[]he

sought to ... retain”; (3) she “suffered an adverse employment action’; and

(4) “the action occurred under circumstances that could give rise to an

' McDonnel Douglas Corp. v. Green, 411 U.S. 792, 802—03 (1973).

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inference of intentional discrimination.” Makky v. Chertoff, 541 F.3d 205, 214

(3d Cir. 2008).

Defendant argues that Plaintiff has failed to satisfy the fourth element.

(Doc. 12 at 10-11). An inference of intentional discrimination may arise when

a similarly situated employer outside of the plaintiff's protected class is

treated more favorably by the defendant despite engaging in the same

conduct as the plaintiff. See Mandel v. M & Q Packaging Corp., 706 F.3d

157, 170 (3d Cir. 2013). This element can also be satisfied by “circumstantial

evidence that otherwise shows a causal nexus between ... membership in a

protected class and adverse employment action.” Greene v. Virgin Islands

Water & Power Auth., 557 Fed. App’x 189, 195 (non-precedential) (citing

Sarullo v. U.S. Postal Serv., 352 F.3d 789, 797 n.7 (3d Cir. 2003)).

Plaintiff has failed to satisfy the fourth element because she has not

alleged that she was treated less favorably than similarly situated employees

or that her gender identity shared a causal relationship with her suspension

and termination. .

As Defendant points out, Plaintiffs allegation “that cisgender

coworkers were not subject to workplace harassment or discriminatory |

comments because of their sex,” (Doc. 10 J 33), is insufficient, for she “fails

to assert that they engaged in the same conduct she did.” (Doc. 13 at 10—

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11). Nor does she allege that these coworkers were similarly situated. See

Wilcher v. Postmaster Gen., 441 Fed. App’x 879, 882 (3d Cir. 2011) (non-

precedential) (“[T]o be considered similarly situated, comparator employees

must be similarly situated in all relevant respects.”). Plaintiff has thus failed

to satisfy the fourth element through comparison to similarly situated

employees.

Plaintiff has also failed to allege a “causal nexus” between her gender

identity and her suspension and termination. Greene, 557 Fed. App’x at 195.

While Defendant’s Branch Manager's (the “Manager”) alleged response to

Plaintiff's complaints of harassment—‘you just need to learn to work together

and get over it’—raises eyebrows, (Doc. 1 935), mere inaction on the

Manager's part does not suggest that Defendant intentionally discriminated

against Plaintiff because of her gender identity. Plus, the Complaint does not

indicate that the Manager took part in Plaintiff's suspension and termination.

(Id. 935).

Plaintiff also contends that the temporal proximity between the HR

representative learning of her transgender status and her suspension and

termination creates an inference of intentional discrimination. (Doc. 14 at 10—

11). But the court cannot infer that the representative discriminated against

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Plaintiff because of her transgender status simply because she knew of that

status, even if that knowledge was recently acquired.”

Nor do the various comments made by Plaintiff's coworkers suffice, for

“stray remarks” by non-decisionmakers, “standing alone, are inadequate to

support an inference of discrimination.” Walden v. Georgia-Pacific Corp., 126

F.3d 506, 521 (3d Cir. 1997). Finally, the Complaint’s allegation that

Plaintiffs termination was based on “clearly pretextual” reasons, (Doc. 10

752), is a conclusory statement that does not give rise to an inference of

discriminatory intent. See /gbal, 556 U.S. at 678.

Ultimately, the facts pled do not show a causal relationship between

Plaintiffs gender identity and her suspension and termination. So Plaintiff

has not pled that these actions occurred under circumstances that could give

rise to an inference of intentional discrimination. Accordingly, Plaintiff has

failed to state a claim for Title VII discrimination.

? Plaintiff relies here on precedent considering temporal proximity

between Title VII protected activities and adverse employment actions as

suggestive of a causal link in retaliation claims. (Doc. 14 at 11 (first citing

LeBoon v. Lancaster Jewish Cmty. Ctr. Ass’n, 503 F.3d 217, 232 (3d Cir.

2007); then citing Lichtenstein v. Univ. of Pittsburgh Med. Cr., 691 F.3d 294,

307 (3d Cir. 2012); and then citing Blakney, 559 Fed. App’x at 186)). But

those cases do not support a similar analysis based on mere awareness of

a plaintiff's status.

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li. Retaliation

A prima facie case of retaliation under Title Vil requires a plaintiff to

allege that: “(1) [s]he was engaged in protected activity; (2) [s]he was

discharged subsequent to or contemporaneously with such activity; and (3)

there is a causal link between the protected activity and the discharge.”

Woodson v. Scott Paper Co., 109 F.3d 913, 920 (3d Cir. 1997).

A causal connection can be established in two ways: “(1) an unusually

suggestive temporal proximity between the protected activity and the alleged

retaliatory action, or (2) a pattern of antagonism coupled with timing to

establish a causal link.” Summy-Long v. Pennsylvania State Univ., 226 F.

Supp. 3d 371, 417 (M.D. Pa. 2016) (quoting Lauren W. ex rel. Jean W. v.

DeFlaminis, 480 F.3d 259, 269 (3d Cir. 2007)). As to temporal proximity, “the

timing of the alleged retaliatory action must be ‘unusually suggestive’ of

retaliatory motive” by the employer. Krouse v. Am. Sterilizer Co., 126 F.3d

494, 503 (3d Cir. 1997) (quoting Robinson v. City of Pittsburgh, 120 F.3d

1286, 1302 (3d Cir. 1997)). Regarding a “pattern of antagonism,” a “stray

remark made by a non-decisionmaker” could be relevant to the question of

retaliation “as evidence of the atmosphere in which” the adverse employment

action “was carried out.” Woodson, 109 F.3d at 922. This is because

“evidence of condoned harassment can support an inference ... that the

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employer, having failed to respond to the harassment, also engaged in

retaliatory conduct against the plaintiff.” Id. .

Plaintiff has pled the necessary causal connection between her initial

complaint to management about “severe and pervasive discrimination

because of her sex” and her eventual suspension and termination. (Doc. 1

927). A reasonable, favorable reading of Plaintiffs factual allegations

suggests that the length of time between Plaintiff's initial complaint and

Defendant’s adverse employment action could have been “unusually

suggestive.” Lauren, 480 F.3d at 269. Further, the Complaint’s allegations

suggest that Plaintiff inhabited a hostile working atmosphere that, coupled

with the Manager’s inaction, could have contributed to a “pattern of

antagonism” by Defendant. /d.

Plaintiff has alleged that she was suspended without pay two business

days after reporting “workplace discrimination” to Defendant’s HR

Representative. (Id. ]47-48). A period of this length has been found to be

unusually suggestive. See Blakney v. City of Philadelphia, 559 Fed. App’x

183, 186 (8d Cir. 2014) (non-precedential) (collecting cases) (“We -have

found that a temporal proximity of two days is unusually suggestive of

causation ... but have found that a temporal proximity greater than ten days

requires supplementary evidence of retaliatory motive”). In the Third Circuit,

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courts “measure temporal proximity from the date on which the litigant first

files a complaint.” /d. (citing Jalil v. Avdel Corp., 873 F.2d 701, 708 (3d Cir.

1989)). Here, Plaintiff does not specify when she first complained of sex

discrimination. Plaintiff only states that she made “multiple complaints”

between her appointment as Care Coordinator in April 2023 and her

suspension on July 17. (Doc. 1. 926, 49). Although Plaintiffs pleading is

unclear about when her first complaint occurred, construing the facts alleged

“in the light most favorable to the plaintiff,” a “reasonable reading” suggests

Plaintiff's first complaint could have been made within ten days of July 17.

Phillips, 515 F.3d at 233; Krouse, 126 F.3d at 503.

Even if it was not, Plaintiff has alleged a pattern of antagonism that,

combined with this temporal proximity, warrants an inference of retaliatory

motive. The comments by Plaintiff's coworkers, together with the Branch

Manager’s inaction, evince an “atmosphere of condoned ... harassment”

supporting an inference of retaliatory conduct. Woodson, 109 F.3d at 922.

The court concludes that these circumstances are sufficient to plausibly |

suggest a causal link between her complaints and her suspension and

termination. Accordingly, Plaintiff has pled a claim for Title VII retaliation.

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B. Pennsylvania Whistleblower Law

The PWL provides that “[n]o employer may discharge, ... discriminate

or retaliate against an employee ... because the employee ... makes a good

faith report ... to the employer or appropriate authority an instance of

wrongdoing or waste by a public body or an instance of waste by any other

employer.” 43 Pa. Stat. §1423(a). The PWL defines an “employer” as either

a “public body” or an entity “that receives money from a public body to

perform work or provide services relative to the performance of work for or

the provision of services to a public body.” /d. §1422. A “public body,” in turn,

includes “the General Assembly and its agencies,” municipal bodies, and

“[a]ny other body ... which is funded in any amount by or through the

Commonwealth or political subdivision authority or a member or employee

of that body.” /d.

Plaintiff has not stated a PWL claim because she has not alleged that

she reported “wrongdoing ... by a public body” or “an instance of waste.” /d.

She has not alleged wrongdoing by a public body because Defendant is not

a “public body” under the statute. And her allegation of waste rests on a

conclusory statement that Defendant misused state funds.

A report of “wrongdoing” is not protected under the PWL unless the

defendant is a “public body.” /d.; see Eaves-Voyle v. Almost Family, Inc.,

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F.Supp.3d 403, 407 (M.D. Pa. 2016) (“Because Plaintiff's amended

complaint alleges that Defendant committed an instance of ‘wrongdoing’

rather than an instance of waste, Defendant must qualify as a ‘public body.’”).

Plaintiff asserts that Defendant is a public body because it received

Commonwealth funding through Medicaid reimbursements. (Doc. 10 771;

Doc. 14 at 17).

Whether a recipient of Medicaid funds is a “public body” has given rise

to split decisions. Several courts, including the Pennsylvania Superior Court,

have ruled in the affirmative. See, €.9., Denton v. Silver Stream Nursing &

Rehabilitation Center, 739 A.2d 571, 576 (Pa. Super. Ct. 1999); Romer v.

MHM Health Pros., Civ. No. 1:20-cv-1275, 2020 WL 6747418, at *3 (M.D.

Pa. Nov. 17, 2020); Heckman v. UPMC Wellsboro, No. 20-cv-1680, 2021

WL 2826716, at*19 (M.D. Pa. July 7, 2021); Gloukhova v. CSL Behring LLC,

Civ. No. 22-2223, 2022 WL 16722314 (E.D. Pa. Nov. 4; 2022); Tucci v.

Gilead Sciences, Inc., No, 21-cv-1859, 2023 WL 2139931, at *2 (W.D. Pa.

2023). Others have ruled in the negative. See, e.g., Cohen v. Salick Health

: Care, Inc., 772 F.Supp. 1521 (E.D. Pa. 1991); Eaves-Voyle, 198 F.Supp.3d

at 403; Grim v. May Associates Civ. No. 18-2231, 2019 WL 358520, at *4

(E.D. Pa. Jan. 29, 2019); Tanay v. Encore Health Care, LLC, 810 F. Supp.

2d 734, 743-44 (E.D. Pa. 2011).

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Since the Supreme Court of Pennsylvania has not ruled on this issue,

see Tucci, 2023 WL 2139931, at *2, this court must predict how that court

would decide. See City of Philadelphia v. Lead Industries Ass'n, Inc., 994

F.2d 112, 123 (3d Cir. 1993). Decisions made by intermediate state courts

are accorded significant, but not dispositive, weight in making that prediction.

See Sheridan v. NGK Metals Corp., 609 F.3d 239, 254 (3d Cir. 2010)

(“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.”). Here, Denton is the only such decision that renders a specific

decision on the issue.* District courts, on the other hand, have made

divergent conclusions even in the wake of Denton. Discussion of several of

these decisions illustrates the primary divide in reasoning.

The Pennsylvania Superior Court has reasoned that the PWL’s plain

meaning indicates that a private entity receiving Medicaid reimbursements

qualifies as a “public body” because the “public body” definition applies to

entities that receive money that is either appropriated by the Commonwealth

3 The Superior Court has continued to cite Denton favorably. See

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

Super. Ct. 2017).

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simply passed through the Commonwealth. See Denton, 739 A.2d at 576.

In Denton, the plaintiff reported wrongdoing by her employer, a nursing

facility that received Medicaid reimbursements for its services to patients on

Medicaid. /d. at 573. After her subsequent termination, she brought a PWL

claim against the facility, alleging that it was a “public body” because it

received Medicaid funds through the Commonwealth. /d. at 573, 576.

The Superior Court in Denton declined to examine legislative history,

instead finding that the statute’s “plain meaning” was “clear”: “it was intended

to apply” not only to those receiving “legislatively appropriated funds,” but “to

all agencies that receive public monies under the administration of the

Commonwealth.” /d. at 576. The court reasoned that the “statutory language

differentiates between appropriated and ‘pass-through’ funds,” by including

the language “by or through,” and thus “extends the law to cover both types,”

allowing private companies receiving Medicaid reimbursements to qualify as

public bodies even if they do not receive specifically appropriated state

funds. /d. at 576. In reaching this conclusion, Denton relied on Riggio v.

Burns, 711 A.2d 497, 500 (Pa. Super. Ct. 1998), which had opined that 43

Pa. Stat. §1422’s “funded ... by or through” language was unambiguous.

Denton, 739 A.2d at 576 (citing Riggio, 711 A.2d at 500 (“Where the

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language of a statute is unambiguous on its face, we are bound to give effect

to that language.”)).

In Grim, the court came to a different conclusion. The court examined

the distinction between an “employer,” which “receives money’ from the

Commonwealth, and a “public body,” which “is funded” by or through the

Commonwealth. 2019 WL 358520, at *4. The court reasoned that this

distinction between “receiv[ing]” money from the Commonwealth and being

“funded” “by or through” the Commonwealth suggests that the definition of

“public body” should be read more narrowly as excluding private entities that

merely receive Medicaid reimbursements. /d. According to Grim: “The words

‘funded in any amount by or through’ are naturally read to denote money that

is specifically appropriated by a governmental unit” and which is “not

controlled by the whims of patients eligible for Medicaid.” 2019 WL 358520,

at *4.

The court further opined that reading “public body” as including private

entities that merely receive Medicaid funding “would unreasonably expand

the scope of the PWL to include any private business that accepts payment

from a recipient of government assistance.” /d. at *4. “In limiting the

retaliation provision to the report of wrongdoing by a ‘public body,” Grim

reasoned, “the legislature could not have intended such a large scope.” /d.

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Thus, the court held that a private entity that receives Medicaid

reimbursements, but does not otherwise receive Commonwealth funding or

grants, is not a public body. Id: see also Tanay, 810 F. Supp. 2d at 743-44

(E.D. Pa. 2011).

Romer read “is funded” differently, citing the Cambridge Dictionary

definition of “fund”: “to provide the money to pay for an event, activity, or

organization.” 2020 WL 6747418, at *3. The court there reasoned, based on

this definition (which it considered “the most basic definition of ‘fund’”), that

“the plain language of the statute renders any entity a public body if it is paid

either directly by the Commonwealth or indirectly by a public entity with

money that has passed ‘through’ the Commonwealth.” /d.

In short, some district courts have reasoned that both the statute’s

plain meaning and legislative intent indicate that entities receiving Medicaid

reimbursements are not “public bodies,” while other district courts and the

Superior Court have concluded that, according to the statute’s plain

meaning, they are.

Consideration of legislative intent is appropriate only if a Statute’s text

is ambiguous. Harmon v. Unemployment Compensation Bd. of Rev., 207

A.3d 292, 304 (Pa. 2019); 1 Pa. Cons. Stat. §1921(c)(7). “A statute is

ambiguous or unclear if its language is subject to two or more reasonable

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interpretations.” Bethenergy Mines Inc. v. Com., Dept. of Environmental

Protection, 676 A.2d 711, 715 (Pa. 1996). The court finds that, with respect

to entities that receive Medicaid reimbursements, §1422’s definition of

“oublic body” is ambiguous. That is because “funded ... by or through [a]

Commonwealth ... authority” can “naturally be read to denote money that is

specifically appropriated by a governmental unit,” Grim, 2019 WL 358520, at

*4: Lomaskin v. Siemens Medical Sols. USA, Inc., 820 Fed. App’x 138, 141

(3d Cir. 2020) (non-precedential), and can also reasonably be read as

referring to payment that passes indirectly through the Commonwealth,

Romer, 2020 WL 6747418, at *3. So consideration of legislative intent is

appropriate here.

In ascertaining legislative intent, the court must “assume ... that the

General Assembly intended the entire statute to be effective,” so that no

provision is surplusage. Harmon, 207 A.3d at 304 (citing 1 Pa. Cons. Stat.

§1922). Failing to distinguish between an employer, which “receives money”

from the Commonwealth, and a public body, which “is funded” by the

Commonwealth, would render the second part of the statutory definition of

“employer” (“or any of the following which receives money from a public body

wae) surplusage. 43 Pa. Stat. §1422.

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~~ If receiving money is interchangeable with being funded, then being

“funded in any amount by or through Commonwealth ... authority” would

mean functionally the same thing as receiving money from a public body.

Id. Thus, the definition of “public body” would fully encompass the definition

of “employer.” And because any “public body” is by definition an “employer,”

the second part of the “employer” definition would add nothing. The court in

Pugh v. Valmont Industries, Inc. observed this issue. No. 2:23-cv-1520, 2023

WL 7634758, at *4 (2023). It reasoned that the plaintiff's position that a

private entity would be a public body “solely because it receives state funds

through contracts with public programs or government agencies’—like

considering a private entity a public body solely because it receives Medicaid

reimbursements from the Commonwealth—would “render every employer ...

a public body” and consequently “run afoul of the cannons of statutory

interpretation that Pennsylvania has put in place by creating surplusage.” /d.

Section 1423 of the PWL also demonstrates an intent that “public body”

and “employer” not be coterminous. 43 Pa. Stat. §1423(a). It prohibits

retaliation against an employee who “makes a good faith report ... to the

employer or appropriate authority [of] an instance of wrongdoing or waste by

a public body or an instance of waste by any other employer as defined in

this act.” 43 Pa. Stat. §1423(a) (emphasis added). If “public body” fully

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encompassed “employer,” then the phrase “or an instance of waste by any

other employer as defined in this act” would be redundant. /d. So construing

“is funded” more narrowly than “receiviing] money,” to exclude private

companies that merely receive Medicaid reimbursements, avoids reading

the PWL as containing surplusage and thus more likely reflects legislative

intent.

Acknowledging the Superior Court’s decision in Denton, the court finds

the above-discussed reasoning, which has been employed by another

district court following Denton, persuasive data that the Pennsylvania

Supreme Court would decide otherwise. Accordingly, this court predicts that

the Pennsylvania Supreme Court would conclude that private entities

receiving Medicaid payments are not thereby “public bodies” under the PWL.

Id. Therefore, to succeed on Count II, Plaintiff must have sufficiently pled that

she reported “waste,” an action protected by the PWL. /d.

The PWL defines “waste” as “[a]Jn employer's conduct or omissions

which result in substantial abuse, misuse, destruction or loss of funds or

resources belonging to or derived from Commonwealth or political

subdivision sources.” /d. In Grim, the court concluded that the plaintiff did not

plead that her termination was in retaliation for a good faith report of waste

because she had not adequately alleged waste. 2019 WL 358520, at *4. It

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reasoned that although the plaintiff had allegedly “reported that her

supervisor was altering patient charts and that the lab testing equipment was

improperly maintained and malfunctioning” she had “not actually pled how

either resulted in a substantial abuse or misuse of Medicare and/or Medicaid

funds.” /d.

The court agrees with Grim that, in order to state a PWL retaliation

claim for her report of waste, Plaintiff must adequately allege waste as

defined by the PWL.

Plaintiff alleges that she “reported ... that certain employees were

working too many consecutive hours, resulting in the payment of

unnecessary overtime and therefore amounting to a misuse of funds” and

that she “reasonably believed employees working too many consecutive

hours violated the law, posed safety risks to Defendant’s consumers and

violated labor laws.” (Doc. 1 40-41, 73). Plaintiff also alleges that these

funds come from the Commonwealth: “[T]he wages Defendant paid its

employees derived in part from funding Defendant received from. the

Commonwealth of Pennsylvania via Medicaid.” (Id. ]41).

Plaintiff's assertion that the employers were working “too many hours”

and that the numbers of hours worked “violated labor laws,” (id. [{J40—41),

amounts to a “mere conclusory statement” of misuse of funds. Fowler, 578

53.

F.3d at 210 (quoting Ashcroft, 556 U.S. at 678). It does not present sufficient

factual matter for the court to conclude that a substantial misuse of

Commonwealth funds is plausible. See Grim, 2019 WL 358520, at *4. So

these allegations are not sufficient to survive dismissal under Rule 12(b)(6).

Thus, as Plaintiff has not adequately pled that she reported

wrongdoing by a public body or waste by an employer, Count II will be

dismissed.

C. Pennsylvania Public Policy

In Pennsylvania, there is a “strong presumption” that “all non-

contractual employment relations” are “at-will.” McLaughlin v.

Gastrointestinal Specialists, Inc., 750 A.2d 283, 290 (Pa. 2000). And under

Pennsylvania law, an at-will “employee may bring a cause of action for a

termination of [his employment] only in the most limited circumstances,

where the termination implicates a clear mandate of public policy.” Weaver

v. Harpster, 975 A.2d 555, 563 (Pa. 2009).

“[T]he Supreme Court of Pennsylvania has instructed courts to

ascertain whether an employer's conduct implicates public policy by

reference to the state constitution, Pennsylvania judicial precedent, and

statutes promulgated by the Pennsylvania legislature.” Warner v. United Nat.

Foods, Inc., 513 F.Supp. 3d 477, 481 (M.D. Pa. 2021) (first citing McLaughlin

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-- .|| Vv. Gastrointestinal Specialists, Inc., 750 A.2d 283, 288 (Pa. 2000), and then

citing Weaver, 975 A.2d at 563). Thus, allegations of public policy violations

must be grounded in “reference to the laws and legal precedents’ of the state

rather than “general considerations of supposed public interest.” Shick v.

Shirey, 716 A.2d 1231, 1237 (Pa. 1998).

“Pennsylvania courts have recognized the public policy exception

where the employer: (1) compels the employee to engage in criminal activity;

(2) prevents the employee from complying with a duty imposed by statute;

[and] (3) discharges the employee when a statute expressly prohibits such

termination.” Fraser v. Nationwide Mut. Ins. Co., 352 F.3d 107, 111-12 (3d

Cir. 2003) (citing Hennessy v. Santiago, 708 A.2d 1269, 1273 (Pa. Super.

Ct. 1998)). Outside of the Fraser scenarios, “[c]ourts will determine whether

an employee's discharge violates a clearly mandated public policy on a case-

by-case basis.” See Herskowitz v. County of Leb., Civ. No. 1:13-cv-00431,

2013 WL 5719250 (M.D. Pa. Oct. 1, 2013), at *22. The public policy must

“strike[ ] at the heart of a citizen’s social right, duties and responsibilities.”

Burkholder v. Hutchison, 589 A.2d 721, 723-24 (1991).

Plaintiff has not alleged that Defendant wrongfully terminated her in

violation of public policy. Although Plaintiff makes specific reference to state

law, she does not allege any of the three Fraser scenarios. And Fraser

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notwithstanding, she has not alleged a discharge violating clearly mandated

public policy.

The Complaint cites Pennsylvania regulations governing the

administration of home healthcare organizations, (Doc. 1 38-39, 70), and

submits that these laws have clear policy interests. (Id. [{[77—79). Although

Plaintiff has not alleged a violation of the PWL, that the PWL’s existence

evinces Pennsylvania’s “clear and important interest in policy in encouraging

the reporting of and preventing wrongdoing/waste within a publicly-funded

entity” is inarguable. (Id. {[79). Similarly, the existence of the cited state

regulations governing employee file maintenance and background checks

evinces Pennsylvania’s “clear and important interest and policy in ensuring |.

that persons working for home care and home health care agencies provide

safe, healthy, and quality care to their consumers as well as in ensuring

employee charts and files are maintained appropriately” and “in encouraging

the reporting of unsafe and improper practices of home and health care

agencies.” (Id. ¥{[77-78). Thus, Plaintiff has pointed to “a common law,

legisiative, or constitutional principle from which a clear public policy

[mandate] can be inferred.” Warner, 513 F.Supp. 3d at 482-83.

Plaintiff has not succeeded, however, in alleging any of the Fraser

scenarios. With regard to (1), Plaintiff argues that what Caregivers did was

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‘tantamount’ to compelling her to engage in criminal activity. (Doc. 14 at 18).

An employee’s discharge violates public policy “if the discharge result[ed]

from the employee’s refusal to engage in conduct prohibited by law.” Clark

v. Modern Group Ltd., 9 F.3d 321, 331 (3d Cir. 1993). Here, Plaintiff pleads

that her termination resulted from the reports that she made to Defendant.

(Doc. 1 781). She thus reasons that “to avoid Defendant's retaliation, [she]

would have had to lie to state authorities or otherwise make no reports{[,] thus

abetting Defendant’s regulatory violations.” (Doc. 14 at 23) The court is not

convinced by this argument. Plaintiff identifies neither a statutory duty for her

to report noncompliance (and thus does not allege Fraser scenario (2)) nor

affirmative conduct by Defendant compelling her to lie to state authorities

(such that she had to refuse to do so).

With regard to (3), Plaintiff does not allege that a statute prohibited her

termination. She pleads that her termination violated the PWL’s protection of

reports of wrongdoing and waste, (Doc. 1 981), but as discussed with respect

to Count II, the court concludes that she has not alleged a PWL violation.

Outside of the PWL, Plaintiff also cites various state regulations concerning

the safety and quality of care given to consumers. (Id. J]38—-39). These

regulations do not govern employee protections from termination. Thus,

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Plaintiff has not alleged that her termination implicated any of the three

Fraser scenarios.

Plaintiff argues that the Fraser scenarios need not be present, as

“Pennsylvania courts have also allowed wrongful discharge claims where

employees were fired for seeking workers’ compensation benefits, ... for

filling unemployment claims, for refusing to take a polygraph test, for refusing

to participate in a lobbying effort, and after being pardoned for a crime.” (Doc.

14 at 21). See Weaver, 975 A.2d at 563-64 (colleting cases). These types

of “public policy exceptions to at-will employment” involve “infringements on

statutory and constitutional rights.” /d. at 563. But a firing in retaliation for an

employee’s report of regulatory non-compliance involves such

infringement. See Warner, 513 F. Supp. at 487.

Rather, “Pennsylvania state and federal courts have consistently

dismissed [public policy] wrongful termination claims premised on retaliation

theories where the plaintiff had no duty to make the report he or she was

allegedly fired for submitting.” /d. at 485-86 (collecting cases). Thus, where

a “[p]laintiff [is] under no statutory duty to report [a] [djefendant’s conduct,” a

theory of retaliatory termination “cannot sustain [a] wrongful termination

claim” and “the narrow public policy exception to Pennsylvania's at-will

employment doctrine cannot apply. /d. at 487. (citing Hunger v. Grand Cent.

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.{| Sanitation, 670 A.2d 173, 176 (Pa. Super. Ct. 1996) (“If an employee is fired

for performing a function that he is required to perform by law, an action for

wrongful discharge on public policy grounds will be allowed.”)).

Again, Plaintiff identifies no statutory duty to make the reports that

allegedly resulted in her termination, so that termination cannot form the

basis for a wrongful termination in violation of public policy claim. Count Ill

will therefore be dismissed.

IV. CONCLUSION

For the foregoing reasons, Defendant’s motion to dismiss will be

denied as to Count | with respect to retaliation. As to Count | with respect to

discrimination, Count II, and Count Ill, the motion will be granted. An

appropriate order will follow.

6/ Matachy E. Mannion

MALACHY E. MANNION

United States District Judge

DATE: August 9, 2024

24-75-01 □

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