Wednesday, April 7, 2021

6th Circuit applies False Claim Act’s anti-retaliation protections to ex-employees

In the history of this blog's 3,603 posts, I've never written about the False Claim Act. If you've been waiting with bated breath for me to fix this omission, today's your lucky day, thanks to United States ex rel. David Felten, M.D., Ph.D. v. William Beaumont Hosp. (6th Cir. 3/31/21). Before diving into the Felten case, let's first take a 61-word peek at the False Claims Act and to what it applies.

The False Claims Act is a federal statute that imposes liability on people and companies that defraud the federal government, and further, relevant to Felten, permits private citizens (which the law calls "relators") to file lawsuits (known as qui tam claims) on behalf of the government and protects relators from retaliation when the lawsuit they are filing is against their employer.

At issue in Felten is whether the FCA's anti-retaliation protections only cover current employees, or whether they also extend to an employer's former employee who blows the whistle by filing a qui tam suit.

Dr. Felten was employed by Beaumont at the time he filed his qui tam complaint alleging that it had violated the FCA by paying kickbacks in exchange for referrals of Medicare and Medicaid. After Felten left Beaumont he amended his complaint to add allegations that his former employer had blackballed him by undermining his efforts to find new employment.

The FCA's anti-retaliation section says:

Any employee, contractor, or agent shall be entitled to all relief necessary to make that employee, contractor, or agent whole, if that employee, contractor, or agent is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done by the employee, contractor, agent or associated others in furtherance of an action under this section or other efforts to stop one or more violations of this subchapter.
Does "employee" only apply to a current employment relationship, or does it also extend to one that has ended? The 6th Circuit nevertheless concluded that Dr. Felten was protected from retaliation even though he'd alleged post-employment retaliation.
The FCA is designed to "discourage fraud against the government," and the purpose of the Act's anti-retaliation provision is to encourage the reporting of fraud and facilitate the federal government's ability to stymie crime by "protect[ing] persons who assist [in its] discovery and prosecution." If employers can simply threaten, harass, and discriminate against employees without repercussion as long as they fire them first, potential whistleblowers could be dissuaded from reporting fraud against the government. We therefore hold that the anti-retaliation provision of the FCA may be invoked by a former employee for post-termination retaliation by a former employer. (Internal citation omitted.)

Even though Felten has limited applicability to a narrow range of cases, employers should still take its universal lesson seriously. Retaliation is a surefire way to put your business in legal jeopardy. Judges and juries punish companies that try to exact revenge on employees, past or current, who exercise their legal right to blow the whistle or otherwise engaged in protected conduct. Your organization needs to have a zero-tolerance policy for retaliation. Otherwise, you're asking for expensive and time-consuming problems.

* Image by Alison Courtney on Unsplash