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Julie Mahony v. Universal Pediatric Services

July 11, 2011


Appeal from the United States District Court for the Southern District of Iowa.

The opinion of the court was delivered by: Loken, Circuit Judge.

Submitted: December 16, 2010

Before LOKEN and BYE, Circuit Judges, and MARSHALL,*fn1 District Judge.

Julie Mahony appeals the district court's*fn2 grant of summary judgment dismissing claims of wrongful termination against her former employer, Universal Pediatric Services, Inc. ("UPSI"); S. Tucker Anderson, its president and chief executive officer; and Connie Freeman, its principal owner. Mahony appeals only the dismissal of the claim that she was wrongfully terminated in violation of Iowa public policy. Reviewing the grant of summary judgment de novo, and viewing the facts in the light most favorable to Mahony, the nonmoving party, we affirm. Yon v. Principal Life Ins. Co., 605 F.3d 505, 509-10 (8th Cir. 2010) (standard of review).


UPSI and its affiliates operate multiple home health agency offices in Iowa and neighboring States that provide home nursing care, primarily to pediatric and young-adult patients. The offices have been certified as approved Medicare providers by the federal Centers for Medicare & Medicaid Services (CMS), making them eligible for reimbursement of qualifying expenses under federal Medicare and state Medicaid programs. See 42 C.F.R. §§ 424.505, 424.510; Iowa Admin. Code rule 441-77.9. Medicaid reimbursement accounts for some eighty percent of UPSI's income.

Mahony was hired as UPSI's Vice President of Nursing in 2006. One of her principal responsibilities was ensuring compliance with federal and state Medicare and Medicaid requirements. She conducted audits of the quality of services provided by UPSI, remedied deficiencies identified by regulatory agencies, and oversaw the completion and submission of documents required by those agencies.

In mid to late 2007, UPSI decided to divide its overburdened office in Carroll, Iowa, by opening an office in Sheldon, a town about one hundred miles northwest of Carroll that also would be a more convenient work location for employee Tracy Gorter. Because the Carroll office was already an approved provider, CMS rules provided alternative ways in which UPSI could qualify for Medicare and Medicaid reimbursement for services provided from a new location in Sheldon. It could apply to have Sheldon certified as a new, stand-alone office, which requires submission and approval of a detailed CMS-855A form that all new providers must submit, followed by an initial survey of the new office by an approved accreditation company.*fn3 Alternatively, UPSI could apply to open Sheldon as a branch of the Carroll office, which involves a much simpler approval process. See Form CMS-855A, at p.7, § 2. CEO Anderson decided to open Sheldon as a stand-alone office and instructed Mahony to proceed accordingly in late 2007 and early 2008.

In March 2008, UPSI's office in Newton, Iowa, received a notice of multiple compliance deficiencies from the Iowa Department of Inspection and Appeals. The Newton administrator was terminated, and Mahony's primary focus for the following two months was to deal with this compliance crisis and "maintain the functionality of the Newton office." By May 2008, Mahony had again turned her attention to the new Sheldon office project. Meanwhile, Gorter was anxious that an office be opened in Sheldon, closer to where she lived. In early May, Anderson told Gorter she could get the Sheldon office ready to open, but it could not yet open. Mahony admitted that a June 1 opening date was discussed in management meetings but testified that she warned Anderson that much needed to be done before the office would be approved for Medicaid reimbursement, including completion of the CMS-855A form, portions of which were the responsibility of billing manager Tammy Chapman.

Mahony testified that she first learned on June 3 or June 4 that phone, fax, and internet connection had been installed in the Sheldon office, and that Gorter had moved in and been told she could go to the office to fax and make phone calls and copies. Mahony immediately advised Gorter, "I do not feel comfortable with you working out of that office" because the CMS-855A form was not yet submitted and the CMS approval process would "take some time." At a management meeting on June 5, Mahony told Anderson, "we cannot open this office until we go through the [CMS approval] process." Anderson became angry and heatedly blamed Mahony for the process being so far behind. Offended, Mahony stormed out of the office and worked on other matters from home for the next few days. Following the meeting, Anderson instructed Gorter to move out of the Sheldon office and work from home.

Mahony returned to work the following Monday, June 9. She filed a grievance with UPSI's Human Resources Manager asserting that permitting Gorter to move into the Sheldon office "is a violation of the Conditions of Participation of the CMS program," and complaining about Anderson's "harassing conduct" on June 5. UPSI immediately investigated Mahony's grievance with the assistance of outside counsel. The next day, the Human Resources Manager responded with a letter to Mahony. Regarding opening the Sheldon office, she wrote:

Based on the interviews conducted, everyone agrees that the Sheldon office will not be opened and Tracy Gorter will not be moving into the Sheldon office until proper procedures have been followed and compliance standards are met. Everyone interviewed shared frustration with the process relating to the Sheldon office and with the timeline of receiving information regarding the requirements for the office.

Regarding Anderson's alleged harassment, the response stated, "based on the interviews, there was no discrimination or harassment," and added, "as part of company policy, retaliation will not be accepted." On June 13, UPSI terminated Mahony's employment. On June 26, UPSI applied to CMS for approval to add a branch of the Carroll office in Sheldon. Anderson testified that the application was approved and ...

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