False Claims Act Retaliation Decision Underscores Broad Scope of Protected Conduct

False Claims Act Whistleblower Protection

Today the Fourth Circuit issued a decision in a False Claims Act retaliation case underscoring the broad scope of FCA protected whistleblowing. The court reversed an order granting a motion to dismiss in Young v. CHS Middle East, holding that the FCA’s protection can extend to disclosures about false, implied certifications regarding staffing in the performance of a medical services contract.

The whistleblowers worked as Medical Surgery Registered Nurses under a $61.5 million services agreement with the State Department to provide medical services to non-military personnel in Iraq. They raised concerns to management about the lack of qualified staff, inadequate training, and the use of expired medicine. Though the whistleblowers expressly warned management of potential liability for reporting false employee staffing, the company failed to take corrective action. When the whistleblowers escalated their concerns to the State Department, the company terminated their employment two days later.

The Fourth Circuit noted that the False Claims Act’s whistleblower protection provision prohibits retaliation “because of lawful acts done . . . in furtherance of an action under this section or other efforts to stop 1 or more violations of this subchapter,” which encompasses collecting information about a possible fraud, even before the plaintiff puts together “all the pieces of the puzzle.” Mann v. Heckler & Koch Defense, Inc., 630 F.3d 338, 343-44 (4th Cir. 2010).

Young relies heavily on the Fourth Circuit’s recent decision in United States ex rel. Omar Badr v. Triple Canopy, Inc., 775 F.3d 628 (4th Cir. 2015) holding that a whistleblower successfully “pleads a false claim when it alleges that the contractor, with the requisite scienter, made a request for payment under a contract and withheld information about its noncompliance with material contractual requirements.” Id. at 636. In Triple Canopy, the government alleged that a security contractor at an airbase in a combat zone knowingly employed guards who were unable to use their weapons properly.

Broad Scope of False Claims Act Protected Whistleblowing

The Fourth Circuit’s broad construction of FCA protected conduct in Young is consistent with other recent FCA retaliation decisions applying the 2009 amendments to the FCA that broadened the scope of protected whistleblowing. Under those amendments, the FCA’s whistleblower protection provision protects not only steps taken in furtherance of a potential or actual qui tam action, but also steps taken to remedy fraudulent activity or to stop an FCA violation. For example internal reporting of fraudulent activity to a supervisor can be a step in furtherance of uncovering fraud, and is therefore protected under the False Claims Act.