False Claims Act Whistleblower Retaliation Law

Yes: the False Claims Act (“FCA”) protects employees, contractors, and agents who engage in protected activity from retaliation in the form of their being “discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment.” 31 U.S.C. § 3730(h)(1).

FCA retaliation extends not only to employees and contractors, but also to partners.  See U.S. ex rel. Kraemer v. United Dairies, L.L.P., 2019 WL 2233053 (D. Minn. May 23, 2019); Munson Hardisty, LLC v. Legacy Point Apartments, LLC, 359 F. Supp. 3d 546, 558 (E.D. Tenn. 2019) (LLC that was general contractor on defendant’s construction project was proper FCA plaintiff).  In addition, the False Claims Act whistleblower protection law extends to physicians with staff privileges at a hospital. Powers v. Peoples Cmty. Hosp. Auth., 455 N.W.2d 371, 374 (Mich. Ct. App. 1990); El-Khalil v. Oakwood Healthcare, Inc., No. 19-12822, E.D. Mich. April 20, 2020.

A whistleblower who prevails in an anti-retaliation action under the FCA may recover:

• reinstatement;
• double back pay, plus interest;
• special damages, which include litigation costs, reasonable attorney’s fees, emotional distress, and other noneconomic harm from the retaliation. 31 U.S.C. § 3730(h)(2).

Recently, a jury awarded more than $2.5 million to a whistleblower in an FCA retaliation case.  As there is no cap on compensatory damages, FCA retaliation plaintiffs can potentially recover substantial damages for the retaliation that they have suffered.

And in 2020, two cardiologists formerly employed by Tenet Healthcare Corporation recovered $11 million in compensatory damages in an arbitration of claims of FCA retaliation, tortious interference with business expectancies, false light, and breach of contract.

The FCA protects:

1. “lawful acts . . . in furtherance of an action under [the FCA]”; and
2. “other efforts to stop 1 or more [FCA] violations.” 31 U.S.C. § 3730(h)(1).

Recent cases have interpreted this protected activity to include:

• internal reporting of fraudulent activity to a supervisor;
• steps taken in furtherance of a potential or actual qui tam action; or
• efforts to remedy fraudulent activity or to stop an FCA violation.

Protection attaches regardless of whether the whistleblower mentions the words "fraud" or "illegal."  The employer need only be put on notice that litigation is a "reasonable possibility." A reasonableness standard is inherently flexible and dependent on the circumstances; thus, "no magic words—such as illegal or unlawful—are necessary to place the employer on notice of protected activity." Jamison v. Fluor Fed. Sols., LLC, 2017 WL 3215289, at *9 (N.D. Tex. July 28, 2017).

An FCA retaliation claim does not require proof of a viable underlying FCA claim.  The FCA retaliation provisions "do[] not require the plaintiff to have developed a winning qui tam action"; they "only require [] that the plaintiff engage in acts [made] in furtherance of an [FCA] action."  Hutchins v. Wilentz, Goldman & Spitzer, 253 F.3d 176, 187 (3d Cir. 2001).  And because the Supreme Court has held that the FCA “is intended to reach all types of fraud, without qualification, that might result in financial loss to the Government” and “reaches beyond ‘claims’ which might be legally enforced, to all fraudulent attempts to cause the Government to pay out sums of money,” the term “false or fraudulent claim” should be construed broadly. U.S. ex rel. Drescher v. Highmark, Inc., 305 F. Supp. 2d 451, 457 (E.D. Pa. 2004).

Yes: the FCA protects whistleblowers who try to prevent one or more violations of the FCA, as long as they have an objectively reasonable belief that their employer is violating, or will soon violate, the FCA. Case law has clarified that efforts to stop an FCA violation are protected even if they are not meant to further a qui tam claim.  For example, refusing to falsify documentation that will be submitted to Medicare is protected.

Similarly,a South Carolina district judge held that a relator engaged in protected conduct when she refused her employer's directive to obtain patient signatures and back-date the signatures, which relator perceived as an attempt to create fraudulent forms used to secure reimbursement from United States health insurance programs.

Yes, the act of internal reporting itself suffices as both the effort to stop the FCA violation and the notice to the employer that the employee is engaging in protected activity.

Yes. As the Second Circuit held in Fabula v. American Medical Response, Inc., an employee's refusal to sign fraudulent reimbursement documentation constitutes protected whistleblowing.  There the court notes that "[t]here is, at best, a hair's-breadth distinction between complaining internally that a practice is illegal under the FCA and advising a supervisor of one's refusal to engage in that illegal practice."

Examples of protected conduct under the False Claims Act include:

• Opposing double-billing of Medicare or Medicaid;
• Reporting the sale of defective products to the government;
• Filing or prosecuting a qui tam action;
• Refusing to follow an order to upcode;
• Assisting a qui tam relator, e.g., cooperating in an investigation;
• Reporting the payment of kickbacks to refer patients for services that will be reimbursed by Medicare;
• Oppose the fraudulent inducement of a contract;
• Disclosing bid-rigging;
• Reporting violations of good manufacturing practices; or
• Trying to stop a provider from billing Medicaid for unnecessary medical services.

The False Claims Act prohibits an employer from discharging, demoting, suspending, threatening, harassing, or in any other manner discriminating against a whistleblower.  Prohibited retaliation includes:

• oral or written reprimands;
• reassignment of duties;
• constructive discharge; and
• retaliatory lawsuits against whistleblowers.

A decision denying summary judgment in Baldwin v. Corecivic of Tennessee, LLC, No. 18-2390-JWB, 2020 WL 1952521 ( D. Kansas April 23, 2020) illustrates how harassment or a hostile work environment can be actionable retaliation under the FCA.  The link between the alleged harassment and whistleblower's complaint to a federal agency was made explicit in remarks addressed to the workforce by management that raise a reasonable inference of a retaliatory motive.

[S]oon after filing his DOL complaint, the Warden called him into his office, asked him what he thought he was doing, accused him of being like a litigious Walmart shopper, and told him he had “big balls” for making the complaint, and that nothing was going to change. The Warden then expressed his dissatisfaction with Plaintiff at a company-wide meeting, where he told Plaintiff’s coworkers that the prison might be shut down if Plaintiff kept up his complaining. His coworkers began to call him names after this public dressing-down. Plaintiff was assigned to the allegedly undesirable position of patrolling the prison’s exterior perimeter, with no breaks during his 12-hour shift and no relief. The prison’s training manager, Sandra Elliott, instructed new employees to avoid Plaintiff because he was a trouble-maker and incorporated his photo into her introductory PowerPoint presentation. Plaintiff finds further evidence of intentional retaliation because Defendant’s managers failed to refer his various grievances, most of which stated that the complained-of mistreatment was in retribution for his DOL complaint, up the management chain to the company’s investigative team. Later, according to Plaintiff, his identity was leaked in connection with his confidential report of employee theft, resulting in a campaign of harassment presumably from his coworkers, who, among other things, let the air out of his car tires repeatedly, made prank phone calls to his home, threatened him, told him to stay away from the company holiday party for his own safety, put a dead mouse on his car windshield, and possibly even talked to an inmate about “shanking” him.

Yes.  In Smith v. LHC Group, Inc., 2018 WL 1136072 (March 2, 2018), the Sixth Circuit held that where an employer ignores an employee's disclosures about fraud on the government and the employee is reasonably concerned that he may be charged with fraud by the government if he remains in the job, the employee's resignation is an actionable constructive discharge.  In other words, a jury could find that the employer’s alleged fraudulent behavior plus the employee’s moral conscience and reasonable fear of being accused of participating in the employer’s fraud is enough to justify quitting.   See also Byrd v. Nat'l Health Corp., No. 3:18-CV-00123, 2019 WL 403964 (E.D. Tenn. Jan. 31, 2019) and Bourne v. Provider Servs. Holdings, LLC, No. 1:12-CV-935, 2019 WL 2010596, at *6 (S.D. Ohio May 7, 2019).

A whistleblower must prove that:

1. the whistleblower engaged in protected activity;
2. the whistleblower’s employer took an adverse employment action against him or her; and
3. the adverse employment action was taken because of the whistleblower’s protected activity. 31 U.S.C. § 3730(h)(1).

"Notice may be provided in a number of ways: for example, by informing the employer of `illegal activities' that would constitute fraud on the United States, . . . by warning the employer of regulatory noncompliance and false reporting of information to a government agency, . . . or by explicitly informing the employer of an FCA violation."  McBride v. Peak Wellness Ctr., Inc., 688 F.3d 698, 704 (10th Cir. 2012).

Where an employee is hired to track compliance with regulatory requirements, some courts apply a presumption that he was merely acting in accordance with his employment obligations.  In other words, a compliance employee must plead that he was not just doing his job.  Some of the factors that courts consider in assessing notice include: whether the plaintiff’s complaints led to internal or external investigations; whether the plaintiff used the words, “illegal,” “unlawful,” “qui tam,” “fraud” or “fraudulent” in characterizing his concerns regarding the charges; whether the plaintiff’s “regular job duties” involved “investigating and reporting fraud” or, similarly, whether the plaintiff uncovered the alleged fraud through his performance of specifically “assigned task[s]”; and whether the plaintiff can rebut evidence that his supervisors had no knowledge of the protected activity.  Hutchins v. Wilentz, Goldman & Spitzer, 253 F.3d 176, 189-92 (3d Cir. 2001).

Most courts reject a heightened notice requirement.   "[T]he FCA no longer requires that conduct be in furtherance of an action under this section to be protected. Rather, the FCA protects any effort to stop 1 or more violations of this subsection. 31 U.S.C. 3730(h)(1). . . . If an employee does not need to take steps clearly in furtherance of a potential or actual qui tam action to engage in protected activity, the employee, even if charged with investigating potential fraud, also does not need to make clear their intentions of bringing or assisting in an FCA action, Yuhasz, 341 F.3d at 568, to satisfy the notice requirement. . . . By reporting [his/]her concerns directly to [his/her supervisor], [a] Plaintiff satisfie[s] the notice element of [his/]her . . . case."  Mikhaeil v. Walgreens Inc., No. 2:13-CV-14107, 2015 WL 778179, at *9 (E.D. Mich. Feb. 24, 2015) (italics and emphasis added).  See also Are "duty speech" disclosures protected under the False Claims Act?

The statute of limitations for FCA retaliation claims is three years from the date on which the retaliation occurred.  FCA retaliation claims can be brought directly in federal court; there is no administrative exhaustion requirement.

With some exceptions, e.g., Weihua Huang v. Rector and Visitors of University of Virginia, 896 F. Supp. 2d 524, 548 n.16 (W.D. Va. 2012), most courts addressing this issue have held that § 3730(h) does not create a cause of action against supervisors sued in their individual capacities."  Brach v. Conflict Kinetics Corp., 221 F. Supp. 3d 743, 748 (E.D. Va. 2016) (footnotes omitted) (citing Howell v. Town of Ball, 827 F.3d 515, 529-30 (5th Cir. 2016)).  But arguably a False Claims Act retaliation claim can be brought against an individual as an alter ego of an employer corporation.  United States ex rel. Brumfield v. Narco Freedom, Inc., No. 12 Civ. 3674 (JGK), 2018 WL 5817379, at *3 (S.D.N.Y. 2018) (citing cases).

Yes.  FCA protected conduct includes “efforts to stop 1 or more violations’ of the Act,” which goes beyond disclosures concerning an actual exchange of money or property.  See U.S. ex rel. Bahrani v. Conagra, 465 F.3d 1189, 1194 (10th Cir. 2006) (noting that the United States Supreme Court has given the FCA “an expansive reading, observing that it covers all fraudulent attempts to cause the government to pay out sums of money”) (internal citation omitted and quotation marks omitted).  A company that provides false information in the course of competing for or seeking a government contract or grant arguably violates the FCA where the false statement has “a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.”

The FCA does not preclude the waiver of a private retaliation claim. See Brown v. City of S. Burlington, 393 F.3d 337, 346 (2d Cir. 2004).  In contrast, a qui tam action cannot be dismissed without the written consent of the AG.  A written release of claims in a severance agreement can be enforced to bar a retaliation claim but the release might be unenforceable to dismiss a qui tam action.

Yes, the NDAA whistleblower protection provisions provide a private right of action to an employee who suffers retaliation for disclosing information that the employee reasonably believes is evidence of:

• gross mismanagement of a Federal contract or grant;
• a gross waste of Federal funds;
• an abuse of authority  relating to a Federal contract or grant; or
• a substantial and specific danger to public health or safety, or a violation of law, rule, or regulation related to a Federal contract.

To learn more about NDAA whistleblower protection, see our Practical Law Practice Note: Whistleblower Protections Under the National Defense Authorization Act.

Note that a recent district court ruling in Reed v. Keypoint Government Solutions, which might be erroneous, holds that an NDAA whistleblower retaliation claim must be brought in court within 2 years of the 210th day after the filing of the claim at the OIG.

The following table summarizes key distinctions between Section 3730(h) of the False Claims Act and Sections 827 and 828 of the NDAA:

Can a Government Contractor Bring a False Claims Act Whistleblower Retaliation Claim?

Yes, in certain circumstances.  Recently a Tennessee federal judge held in Munson Hardisty LLC v. Legacy Pointe Apartments that the False Claims Act’s anti-retaliation provision protects a general contractor on a construction project funded by the U.S. Department of Housing and Urban Development (HUD) from retaliation for opposing fraudulent misrepresentations to HUD.  Read more about the decision here.

A False Claims Act qui tam complaint should not include classified information and any relator in the possession of classified information should seek guidance to avoid disclosing such information.  But where a qui tam action might implicate sensitive information, the contractor is not entitled to step into the shoes of the Government to assert the Government’s interest in maintaining the confidential nature of the information.  Johnson et al v. Raytheon Company, No. 3:17-CV-1098-D, 2019 WL 6914967 N.D. Texas 12/19/2019.

A judge denied summary in an FCA retaliation case where the whistleblower was included in a layoff just one month after the FBI executed its search warrant with the whistleblower's assistance and the employer knew about the whistleblower's participation in the FBI's investigation.  UNITED STATES EX REL. BARRICK v. PARKER-MIGLIORINI INTERNATIONAL, LLC, Case No. 2:12-cv-381-DB (D. Utah 2020).  In particular, the employer knew that the whistleblower provided documents to the FBI and the whistleblower refused to participate in an interview with the company without his attorney present.

A number of courts have rejected the argument that state-wrongful-discharge claims are preempted by the False Claims Act. See, e.g., Brandon v. Anesthesia & Pain Mgmt. Assocs., Ltd., 277 F.3d 936, 945 (7th Cir. 2002) ("There is nothing in § 3730(h) to lead us to believe that Congress intended to preempt all state law retaliatory discharge claims based on allegations of fraud on the government."); Boone v. MountainMade Foundation, 857 F.Supp.2d 111, 113 n.2 (D.D.C. 2012); Glynn v. EDO Corp., 536 F.Supp.2d 595, 608-09 (D.Md. 2008); Hoefer v. Fluor Daniel, Inc., 92 F.Supp.2d 1055, 1059 (C.D.Cal. 2000); Palladino ex rel. United States v. VNA of S.N.J., Inc., 68 F.Supp.2d 455, 465-74 (D.N.J. 1999).

See also False Claims Act Retaliation Law Does Not Preempt State Wrongful Discharge Claims

False Claims Act Whistleblower Provision Protects Refusal to Violate False Claims Act

False Claims Act Retaliation Decision Underscores Broad Scope of FCA Whistleblower Protection

False Claims Act Whistleblower Obtains Favorable Rule on Double Back Pay

Does the False Claims Act protect whistleblowing in the course of the whistleblower’s job duties?

Third Circuit False Claims Act Retaliation Decision May Spur an Increase in NDAA Retaliation Claims

False Claims Act Retaliation Law Protects Efforts to Stop an FCA Violation

Decision in False Claims Act Whistleblower Retaliation Case Highlights Broad Scope of False Claims Act Protected Conduct

What whistleblowing is protected under the False Claims Act anti-retaliation provision?

The experienced whistleblower attorneys at leading whistleblower law firm Zuckerman Law have substantial experience representing whistleblowers disclosing fraud and other wrongdoing at government contractors and grantees.  In 2017, Washingtonian named two of our attorneys top whistleblower lawyers.  To schedule a free confidential consultation, click here or call us at 202-262-8959.

Our experience includes:

• Representing whistleblowers in NDAA retaliation claims before the Department of Defense, and Department of Homeland Security, Department of Justice Offices of Inspectors General.
• Litigating False Claims Act retaliation cases.
• Representing qui tam relators in False Claims Act cases.
• Representing whistleblowers disclosing fraud on the government in Congressional investigations.
• Training judges, senior Office of Inspector General officials, and federal law enforcement about whistleblower protections.

In addition, we have substantial experience representing whistleblowers under the Whistleblower Protection Act (WPA) and enforcing the WPA, the law that the NDAA whistleblower provisions are based upon.  Both Bachman and Zuckerman served in senior positions at the Office of Special Counsel, where they oversaw investigations of whistleblower retaliation claims and whistleblower disclosures, and enforced the Whistleblower Protection Act.

• Recently Washingtonian magazine named Jason Zuckerman and Eric Bachman top whistleblower lawyers.
• U.S. News and Best Lawyers® have named Zuckerman Law a Tier 1 firm in Litigation – Labor and Employment in the Washington DC metropolitan area
• Bachman and Zuckerman served on the Department of Labor’s Whistleblower Protection Advisory Committee, which makes recommendations to the Secretary of Labor to improve OSHA’s administration of federal whistleblower protections.
• Matt Stock is a Certified Public Accountant, Certified Fraud Examiner and former KPMG external auditor.  As an auditor, Mr. Stock developed an expertise in financial statement analysis, internal controls testing and fraud recognition, and he uses his auditing experience to help whistleblowers investigate and disclose complex financial frauds to the government and obtain damages for retaliation.  He is lead author of SEC Whistleblower Program: Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award.
• Eric Bachman has substantial experience litigating precedent-setting employment cases.  His wins include a $100 million settlement in a disparate impact Title VII class action and a $16 million class action settlement against a major grocery chain.  Having served as Special Litigation Counsel in the Civil Rights Division of the Department of Justice and as lead or co-counsel in numerous jury trials, Bachman is ready to go the distance to obtain the relief that you deserve.
• Jason Zuckerman was recognized by Washingtonian magazine as a “Top Whistleblower Lawyer” in 2017, 2015, 2009, and 2007 selected by his peers to be included in The Best Lawyers in America® in the category of employment law (2011-2017), and selected by his peers to be listed in SuperLawyers(2012 and 2015-2017) in the category of labor and employment law.  He is rated 10 out of 10 by Avvo, based largely on client reviews, and rated AV Preeminent® by Martindale-Hubbell based on peer reviews.

The following client reviews are from whistleblowers at government contractors:

"I hired Mr. Zuckerman to pursue an action against a former employer that was attempting to use deceit in its pursuit of federal contracts, and which fired me for not participating in its schemes. Jason was not just very responsive, he was also engaging, spending a good deal of time and effort with me on the phone and by email learning the ins and outs of the case, discussing strategy, laying out alternatives, anticipating counter-arguments, etc, all with the highest integrity. In the end, Jason was able to negotiate a substantial settlement for me, and I believe the company learned not to fire employees for failing to participate in lying to the government. All in all, a very good outcome.

I have had the opportunity in my career to interact with numerous attorneys. Jason truly stands out. I wholeheartedly recommend him to anyone seeking a lawyer for wrongful termination and related employment issues."

"I was in a very difficult work situation dealing with the National Defense Authorization Act (NDAA) and whistleblower claims, and I needed legal representation. I was referred to Mr. Zuckerman by an attorney for a major corporation, who indicated that if they were in a similar situation, they would want Mr. Zuckerman on their side. From the get-go, Mr. Zuckerman listened to the details of my situation and believed in the merits of my case. He quickly dug into the details of my case and asked me thought-provoking questions, providing his legal expertise to help to build and shape my case. In doing so, he led me to see clearly how the employer wronged me. With his probing questions and knowledge of the relevant and applicable laws/statues, we filed a very strong NDAA and whistleblower claim, and combined with his tenacity, I was eventually able to settle with my employer and avoid a lengthy lawsuit. Mr. Zuckerman was very knowledgeable, professional, and always in my corner. He was always accessible, and always very responsive to my questions and needs. He accompanied me and represented me in official meetings, and he was always available to provide guidance, even emailing and responding to me very late in the evening. Mr. Zuckerman is competent, fair, ethical, and honest, and it was a pleasure working with him. I would not hesitate in recommending him to anyone who has experienced whistleblower retaliation."

• How does the NDAA whistleblower retaliation law protect whistleblowers at federal contractors and grantees?
• Must a NDAA Whistleblower Retaliation Plaintiff Prove a Subjective Belief of a Violation?
• What whistleblowing is protected under the False Claims Act anti-retaliation provision?
• Does the False Claims Act protect whistleblowers against retaliation?
• Is whistleblowing in the course of performing job duties protected under the False Claims Act?
• Does the participation of a supervisor with knowledge of protected whistleblowing in the decision to take an adverse personnel action prove knowledge under the False Claims Act whistleblower protection provision?
• Can a False Claims Act whistleblower retaliation plaintiff obtain double back pay (two times lost wages and benefits)?
• Are employees whose jobs require investigating fraud against the government required to meet a higher pleading standard?
• Are "duty speech" disclosures protected under the False Claims Act?
• What protections are available to federal contractor whistleblowers under the NDAA whistleblower protection law?
• Can False Claims Act whistleblowers use confidential documents to report fraud to the government?
• What is the purpose of the False Claims Act whistleblower protection provision?
• Does the False Claims Act protect a whistleblower who refuses to violate the Act?

For a confidential consultation about a potential qui tam lawsuit, contact us at 202-262-8959.

We have also written extensively about whistleblower protections for employees of government contractors and grantees, including the following articles and blog posts:

• Boosting Contractor Employee Whistleblower Protections, Law 360 (December 2016)
• New Tools to Combat Whistleblower Retaliation, Taxpayers Against Fraud Education Fund Quarterly Review, Vol. 57 (October 2010)
• GAO Report Calls for Improvements in Government Contractor Whistleblower Protections
• False Claims Act Retaliation Decision Underscores Broad Scope of FCA Whistleblower Protection
• NDAA Provides Robust Whistleblower Protection
• FAR Amendment Bars Agencies from Subsidizing Whistleblower Retaliation
• NDAA Contractor Whistleblower Protection Law Highly Effective in Rooting Out Fraud
• Congress Enacts Anti-Gag Provision in Cromnibus Spending Bill
• Whistleblower Lawyer Jason Zuckerman Will Speak About False Claims Act Litigation at Taxpayers Against Fraud Conference
• Whistleblower Protections Under the Whistleblower Protection Act, Practical Law (October 2016)
• Whistleblower Lawyer Jason Zuckerman Quoted in National Law Journal
• Whistleblower Lawyer Jason Zuckerman Quoted About Federal Employee Whistleblower Rights
• Washington Post Quotes Whistleblower Attorney Jason Zuckerman About Chilling Effect of Insider Threat Program
• How to foster a more ethical culture
• Whistleblower Lawyer Jason Zuckerman Quoted About MacLean Whistleblower Protection Act Case
• Trump Questionnaire Raises Concerns About Retaliation Against Energy Department Staff
• CFPB official wants to silence a whistleblower before he can talk to Congress

Yes, the False Claims Act prevents reprisal against an employee who has engaged in either of two areas of protected activity. One, did the employee take acts in furtherance of a qui tam action? The employee need not bring a qui tam action in the False Claims Act, but did they make an effort to try to collect evidence, or to perform an investigation of a possible violation of false claims act?
The other area is did the employee try to stop a violation of False Claims Act? Did they try to halt some fraud against the US government. The key is, the employee need not bring an action under the qui tam provisions, but if the employee has a reasonable belief that there is fraud on the US government and expresses that concern, that is enough for a claim under the False Claims Act, anti-retaliation provision.