Employee Claims Wrongful Termination After Blowing the Whistle on New York Health Care Center

Thursday, December 24, 2015
By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

On Monday, December 21, 2015, Debra Martin filed suit against former employer, Middletown Community Health Center Inc. (MCHC), in the U.S. District Court for the Southern District of New York, claiming she was wrongfully terminated after exposing alleged illegal activities of the health center to her superiors.  Martin claims she discovered MCHC's alleged misuse of federal funds and overbilling of government federal health care programs while assisting in the review of the company's finances.  Upon discovery, Martin states she reported the alleged fraudulent activity to the president of the board of directors, Joe Palughi, who in turn confronted MCHC's director, Theresa Butler.  Butler subsequently fired Martin for a breach of confidentiality thereby initiating this case.

What Martin Alleges She Found.

Between November 2014 and July 2015, Martin allegedly discovered several discrepancies regarding MCHC's finances.  Martin allegedly found that MCHC was engaging in fraudulent activity by spending down funds received from the Health Resources and Services Administration (HRSA), spending such funds on disapproved activities, and billing Medicare and Medicaid for medical services that were never rendered.  Martin reported her concerns to Palughi and noted that the alleged illegal activities were also known to and taking place under the sanctioning of Butler.  Martin also expressed her reservations about being fired should Butler be made aware of such disclosures to Palughi.

Martin continued to relay her findings to Palughi throughout the entirety of the approximate eight-month time period.  Among her claims communicated to Palughi and in her complaint, Martin allegedly found that MCHC had also failed to pay bills required to maintain necessary medical supplies for patient care.  Furthermore, the health center was not paying health insurance premiums for employees despite the fact deductions were still being subtracted from employees' paychecks.  

For a full listing of claims and to read Martin's complaint as filed with the U.S. District Court for the Southern District of New York in its entirety, click here

Leading Up to Martin's Termination.

Martin continued to advise Palughi of MCHC's alleged violations of federal law up until August 6, 2015.  At that point, Palughi was well aware that Martin was investigating the company for illegal financial practices.  Palughi was also aware that Martin was utilizing her employment status to access MCHC's financial records in an effort to discover further misuse of federal funds with an intent to file a qui tam case against her employer.  Palughi informed Butler of Martin's investigations and accusations despite his reported assurance that he would not do so.  Martin was subsequently fired (just weeks later) for an alleged breach of confidentiality. 

Martin's Protected Activity Under Federal Law.

Martin's complaint states, "disclosure to Palughi of this information, which plaintiff [Martin] reasonably believed evidenced gross mismanagement of a federal contract or grant and violations of the rules governing such grants, was protected under federal law."  The complaint further asserts that Palughi (as an officer of the board) had a duty under federal law to insure that MCHC was not operating in an illegal manner or in a manner inconsistent with regulatory guidelines, by monitoring its activities and addressing any misconduct that may have occurred.

In failing to address Martin's concerns and allegedly turning a "blind eye" to her resulting termination, Palughi was purportedly apathetic and dismissive as to Martin's protected activity under federal law.  Section 3730(h), 31 United States Code, lays the framework for relief from retaliatory actions in False Claims Act (FCA) qui tam cases.  In summary, the law provides relief for employees wrongfully terminated due to their efforts to stop violations of the FCA or their engagement in lawful acts in furtherance of an FCA action including reinstatement, back pay with interest and any other necessary compensation for damages incurred.


Are you fearful of retaliation by your employer for reporting suspected False Claims Act violations?

Contact Health Law Attorneys Experienced with Qui Tam or Whistleblower Cases.

Attorneys with The Health Law Firm also represent health care professionals and health facilities in qui tam or whistleblower cases both in defending such claims and in bringing such claims.  We have developed relationships with recognized experts in health care accounting, health care financing, utilization review, medical review, filling, coding, and other services that assist us in such matters.  We have represented doctors, nurses and others as relators in bringing qui tam or whistleblower cases, as well.

To contact The Health Law Firm, please call (407) 331-6620 and visit our website at www.TheHealthLawFirm.com.


Complaint 2-5:4,6-10, 12-13, 15-22, Dec. 21, 2015

Kass, Dani.  "Whistleblower Sues NY Health Care Center After Firing."  Law360.  Portfolio Media Inc.: 21 Dec. 2015.  Web.  22 Dec. 2015.

About the Author:
George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law.  He is the President and Managing Partner of The Health Law Firm, which has a national practice.  Its main office is in the Orlando, Florida area.  www.TheHealthLawFirm.com The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.

Florida health attorney, qui tam lawyer, health law attorney, Florida health lawyer, The Health Law Firm, health law defense lawyer, health care fraud attorney, whistleblower attorney, False Claims Act (FCA) defense lawyer, FCA attorney, DOJ settlement attorney, government health care fraud, health fraud and abuse allegations, health fraud attorney, FCA legal representation, relator attorney, qui tam attorney, relief from retaliation by employer, legal representation for retaliatory claims, FCA retaliation, wrongful termination attorney, FCA employee investigation, overbilling Medicare and Medicaid

“The Health Law Firm” is a registered fictitious business name of George F. Indest III, P.A. – The Health Law Firm, a Florida professional service corporation, since 1999.

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