Labor & Employment Law Daily Wrap Up, RETALIATION—E.D. Mich.: False Claims Act retaliation lawsuit to proceed against pediatric practice in Michigan, (Aug 27, 2026)

By Leah S. Poniatowski, J.D.

Specialty pediatrician’s complaints were sufficiently specific to survive motion to dismiss.

An orthopedic pediatrician who made repeated and specific complaints about billing practices she encountered during a short tenure under a larger practice before being terminated, satisfied the pleading requirements of a retaliation-based False Claim Act claim, a federal district court in Michigan ruled. The court also denied the practice’s motion to dismiss the pediatrician’s state law and breach of contract claims, permitting only the breach of contract claim against the practice owner to be dismissed (Frye v. Pediatric & Adolescent Advance Care, PLLC, No. 26-10555 (E.D. Mich. Aug 19, 2026)).

Background. In January 2025, the pediatric orthopedic and sports medicine doctor (the pediatrician) joined a larger provider, commemorated by a for-cause employment contract. Her practice would be under the umbrella of the larger organization, and she held the title “Physician of Non-Operative Pediatric Orthopedics & Sports Medicine.” The owner of the clinic practiced general pediatrics and would make referrals, along with other colleagues, to the pediatrician, even though they were under the same PLLC.

Shortly after the pediatrician began working under the PLLC, she encountered an increasing number of billing issues and irregularities. She first experienced issues becoming approved by major insurance providers, leaving many patients out-of-network. The practice itself was slow to establish a fee schedule for her services, leaving the out-of-network patients without “good faith estimates” of the cost of care.

Additionally, the pediatrician noticed that the practice billed most of its services to CMS instead of to private insurers, and that the referral patients were billed as “new patients” instead of established patients. By April, the pediatrician was notified by the practice to code some of her services as “post-operative’ despite the fact that as a non-surgical physician, none of her services were “post-operative.” The owner began referring patients despite there being no medical indication her services were needed, and the pediatrician later learned that patients were complaining that they were having appointments scheduled for “unexplained reasons” and billing CMS for those appointments. The practice then changed the pediatrician’s tax identification code from “pediatrics” to “sports medicine” to enable higher reimbursement rates.

The pediatrician was not idle and raised her concerns with every new irregularity that emerged, notifying the CEO of the practice after her concerns to the owner were not remedied. By September she sought guidance from the CEO as she believed the billing practices were not legal and that she was not comfortable using the up-codes, nor was she comfortable resubmitting denied claims under a new tax ID.

In accordance with the terms of her employment contract, she tendered her resignation and 90-days notice to the owner and the CEO based on her concerns about their business practices. She continued to work but only a few days later, all of her appointments had been cancelled. She then received a letter from the practice’s attorney notifying her that the employment was terminated immediately for failing to appear at work and her “discontent” with the billing practices.

The pediatrician filed a lawsuit against the owner and the practice, asserting violations of the federal False Claims Act and Michigan public policy. The practice and the owner filed the present motion to dismiss.

Retaliation. Under the federal False Claims Act, 31 U.S.C. § 3729–3733, employees have a basis to file a lawsuit against an employer suspected of fraud against the government. The statute provides a broad scope of protection for those pursuing claims, including for efforts made to stop fraud on the government, including internal reports to supervisors. The statute’s amendments protect against retaliation upon showing that a party had engaged in protected activity, the employer knew that the party had engaged in protected activity, and the party had been discharged or discriminated against because of that activity.

First, the court agreed that the pediatrician had engaged in protected activity. Under legal precedent, the pediatrician must allege that she was retaliated against for attempting to stop or expose fraud on the government, but this must rise above the level of being fraud on patients or general regulatory noncompliance. Although the email to the CEO and owner did not specify the pediatrician’s concerns about CMS billing, she had made several other reports verbally and in person that the billing practices were fraudulent vis-a-vis CMS. Her message to the owner about using a different tax ID specified her concern that the practice may violate federal false claims laws and threatens to expose the practice and its providers to civil penalties was specific enough to meet the pleading requirement. The court noted that she also made other complaints about the billing practices that most of the claims had been submitted to CMS instead of private insurers.

Second, with respect to the notice element, the court determined that despite the amendments made to the statute in 2009, the pediatrician had met the more narrow standard for notice. Her statement that the billing practices Amy be in violation of the False Claims Act and exposed them to penalties was sufficient to put her employer on notice that she was considering a qui tam claim.

Finally, on the issue of causation, the court agreed that, at this stage of the litigation, the pediatrician met her pleading requirements. Although the parties disagreed on what legal standard applied, the court found that the plain language in the termination letter that one cause of her termination was her conduct vis-a-vis billing irregularities. Construed in her favor, the letter supported the position that her termination was in retaliation. Consequently, the motion to dismiss the False Claims Act claim was denied.

Wrongful discharge. According to Michigan law, a common law claim of wrongful discharge in violation of public policy may exist if there is no other “applicable statutory prohibition against discharge in retaliation for the conduct at issue.” The practice contended that this claim was duplicative of the False Claims Act-based claim. The pediatrician countered that many of her complaints were based on Michigan’s “No Surprises” and similar federal medical billing statutes, distinct from the False Claims Act. The court agreed, observing that her repeated verbal and written concerns about violating the state law culminated in her termination, which the practice did little to defend. Therefore, the dismissal on this issue was denied.

Breach of contract. The contract dispute centered on whether the terms of agreement obligated the practice to provide notice and payment during the notice period when an employee is terminated for cause. Construing the facts in the pediatrician’s favor, the court found that she adequately pleaded that the terms were violated by the practice’s actions. She contended that she did not walk off the job or otherwise violate the terms of the agreement and was still terminated “for cause” and lost earnings as a result. The court agreed with the practice that the owner should not be a party to the breach of contract claim because Michigan law precludes actions against non-parties as the practice was the party. Accordingly, the matter was dismissed against the owner but not the practice.

The case is No. 26-10555.

Judge: Michelson, L.

Attorneys: Sarah Gordon Thomas (Deborah Gordon Law) for Stacy Frye. Allan S. Rubin (Jackson Lewis P.C.) for Pediatric & Adolescent Advance Care, PLLC.

Companies: Pediatric & Adolescent Advance Care, PLLC

Cases: Retaliation ContractClaims Discharge Procedure MichiganNews