November 29, 2023

One of the primary concerns that employees have when considering whether or not to pursue a False Claims Act (FCA) lawsuit against their employer – or even to bring internal attention to the fact that an employer is engaging in actions that violate the FCA – is that the employee might face some sort of retaliation from the employer for coming forward with the FCA violations. 

One the one hand, presenting evidence of FCA violations – which might include Medicare or Medicaid fraud, customs duties fraud, military procurement fraud, or other fraud by which the federal government pays a company or individual for goods and services that were unnecessary, subpar, or not provided – can result in a plaintiff obtaining a financial reward that might be reach into the millions of dollars, while recovering funds for American taxpayers. On the other hand, coming forward with information that presents an employer in a negative light might lead to employer retaliation that causes a serious impact on the individual’s livelihood and career. 

There are solid anti-retaliation provisions in the FCA itself that protects employees from such retaliation by their employers. But where the employee no longer works for the employer and as such is a former employee, that employee might still face the risk of retaliation, for example through the former employer impugning the credibility or skills of that employee. Whether or not the FCA protects such retaliation against a former employee is the subject of debate currently, and provides additional reason for working with an experienced FCA whistleblower attorney in pursuing any such whistleblower claim. 

Retaliation Provisions in the False Claims Act

The US Department of Labor generally defines retaliation to occur when an employer (through a manager, supervisor, administrator or directly) fires an employee or takes any other type of adverse action against an employee for engaging in protected activity. An adverse action is an action which would dissuade a reasonable employee from raising a concern about a possible violation or engaging in other related protected activity. 

The FCA includes anti-retaliation provisions to protect workers who pursue a whistleblower lawsuit. Such provisions protect workers not just from being fired for coming forward with a whistleblower claim, but also protect workers from being demoted, harassed, threatened, suspended or otherwise discriminated against in the workplace.

Pursuant to the FCA, if an employee is subjected to such retaliatory behavior as a result of pursuing a whistleblower claim, then the employee can pursue legal action against the employer for reinstatement in the same position, twice the amount of back pay they were denied plus interest, compensation for any special damages they suffered as a result of the discrimination, and attorney’s fees. 

Does the False Claims Act Protect Former Employees?

The question of whether the FCA protects former employees came up in a Sixth Circuit Court of Appeals case in 2021 dealing with a matter in which an employee of a Michigan hospital had filed an FCA qui tam lawsuit against the hospital, alleging that the hospital had violated both the FCA and Michigan Medicaid False Claims Act (note: many states have state-level versions of the FCA to recover funds inappropriately received from state governments). In the lawsuit, the individual alleged that the hospital was paying kickbacks to various physicians and physicians’ groups in exchange for referrals of Medicare, Medicaid, and TRICARE patients. 

The individual, David Felton, also alleged that the hospital had retaliated against him after he filed his initial FCA complaint. He specifically alleged that he was terminated after the hospital falsely represented to him that an internal report suggested that he be replaced and that his position was subject to mandatory retirement. He further alleged that he had been unable to obtain a comparable position in academic medicine after applying to almost 40 institutions because the hospital “intentionally maligned [him]…in retaliation for his reports of its unlawful conduct.” 

The Sixth Circuit conceded that the “FCA does not explicitly say whether it pertains only to current employment” but also said that “the statutory text [of the FCA] is in fact ambiguous.” The court considered reasons for and against including former employees in those protected by the FCA, and ultimately determined that former employees were in fact protected based on an analogous decision by the Supreme Court extending anti-retaliatory relief to former employees pursuant to Title VII of the Civil Rights Act of 1964.

This decision, however, is in conflict with a 2018 decision by the Tenth Circuit which held that the FCA only protects against retaliation carried out by currently employed employees. As such, a “circuit split” has developed, meaning different circuit courts have reached contradictory conclusions which can only be resolved by the Supreme Court. However, here, the Supreme Court declined to intervene on the legal question in 2022. 

In 2023, Sen. Charles Grassley – one of the key architects of critical amendments to the FCA in 1986, introduced legislation which, if signed into law, would make clear that the FCA does in fact protect former employees from retaliation. 

Key Legal Considerations for Former Employees

Because the law is currently less than clear on the full range of anti-retaliation provisions provided to former employees pursuant to the FCA, it is especially important for potential FCA whistleblower plaintiffs who are either current or former employees of the organization who has potentially violated the FCA to work with experienced FCA counsel in pursuing their claim. An experienced FCA attorney can not only help the employee collect evidence and develop their claim, but also assist in taking steps to maintain their confidentiality to the fullest extent of the law and to aggressively respond to all retaliatory actions, which could potentially include pursuing legal relief under the FCA or via a separate federal or state anti-retaliation law. 

Work with Experienced California FCA Counsel

Potential FCA whistleblowers are strongly encouraged to work with experienced legal counsel in pursuing their FCA claim in order to maximize their opportunity to obtain a significant financial reward and to properly protect themselves against retaliation. 

If you have information that you believe may form the basis of an FCA action, contact our office today to schedule a confidential consultation with one of our experienced Whistleblower attorneys. 

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