The False Claims Act’s anti-retaliation provision, 31 U.S.C. § 3730(h), provides relief to an “employee, contractor, or agent,” who 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 . . . in furtherance of an action” under the FCA. Recently, in Smith v. LHC Group, Inc. et al., __ F. App’x __, 2018 WL 1136072 (6th Cir. Mar. 2, 2018) (unpublished), the Sixth Circuit clarified that the test for an employer’s intent in a “constructive discharge” retaliation case is an objective one — joining the majority of circuits that have rejected a subjective employer intent requirement in constructive discharge cases in different contexts. (more…)
While there generally has been no question that the False Claims Act protects employees who suffer retaliation because of reporting suspected fraud by their employer, the Fourth Circuit recently made clear that the FCA whistleblower provisions protect disclosures that could lead to any viable FCA action regardless of whether the target is the employer of the whistleblower. O’Hara v. NIKA Technologies, Inc., No. 16-1805, _ F.3d. _, 2017 WL 6542675 (4th Cir. Dec. 22, 2017). This decision raises the bar for employers who learn of employees’ concerns about third-parties allegedly committing fraud on the government in the event the company takes subsequent adverse employment action against the so-called whistleblower. (more…)
In a March 8, 2017 ruling, the Ninth Circuit deepened a circuit split, holding that Dodd-Frank’s whistleblower protections extend to employees who raise concerns internally, and not merely to those who raise concerns to the U.S. Securities and Exchange Commission.
In United States ex rel. Uhlig v. Fluor Corp., et al., No. 14-2815 (7th Cir. Oct. 11, 2016), the Seventh Circuit affirmed the grant of summary judgment in favor of Fluor Corporation (“Fluor”) in an FCA action premised on alleged contract violations and whistleblower retaliation. The decision sets a relatively high bar for proving the existence of “protected” whistleblower activity and is particularly helpful for defendants seeking to defeat retaliation claims under the FCA.
On December 1, the New York Times reported on the confidential settlement of unfair labor practices and retaliation claims lodged with the NLRB by two former attorneys with the National Whistleblowers Center in Washington, D.C. According to the article, the whistleblowers were fired shortly after the Center had helped secure a $104 million whistle-blower award against a Swiss bank, a portion of which some thought might have gone to the Center. Additionally, the NYT reports, the firings coincided with the fired attorneys’ efforts to unionize the Center’s workforce. The details of the settled case were themselves sealed, until someone blew the whistle.
A recent opinion examines the interplay between the Health Insurance Portability and Accountability Act (“HIPAA”) and the False Claims Act (“FCA”). Relators Pam Howard and Eben Howard filed a wrongful termination action against Arkansas Children’s Hospital – a covered entity under HIPAA – alleging that they were terminated after expressing concern about the hospital’s billing practices in violation of the FCA and several other statutes. The relators allege that they were terminated from their positions after raising concerns regarding the manner in which the hospital billed the federal government. The Howards shared with an attorney protected health information (“PHI”) that they had retained in anticipation of their lawsuit.
Posted by Scott Stein, Max Fischer and Joe Cooper
In a case raising an issue of first impression, a court recently held that an employer can be held liable under the FCA’s retaliation provisions for adverse action taken against an employee based on that employee’s protected activity against a prior employer. Cestra v. Mylan Inc., et al., No. 14-825, 2015 U.S. Dist. LEXIS 67069 (W.D. Penn. May 22, 2015). Acknowledging that its decision was an unprecedented expansion of existing law, the district court also certified its decision for interlocutory review by the Third Circuit.
Posted by Scott Stein and Brenna Jenny
On March 27, 2015, a federal court in the Southern District of Ohio granted in part and denied in part a motion to dismiss a qui tam suit alleging that Bristol-Myers Squibb Co. (“BMS”) and Otsuka America Pharmaceutical (“Otsuka”) had promoted Abilify for off-label uses and violated the AKS through grants, speaker, and similar programs offered to physicians. See United States ex rel. Ibanez v. Bristol-Myers Squibb Co., No. 11-cv-00029 (S.D. Ohio Mar. 27, 2015). The court’s ruling reiterates that regardless of the particularly with which a scheme is pled, complaints will be dismissed if they fail to, at a minimum, include particular allegations that support a strong inference that a false claim was submitted. However, the court’s partial denial of the motion to dismiss also demonstrates the weight of the expanded protections relators now enjoy when bringing retaliation claims under the FERA-amended definition of protected conduct.
Both BMS and Otsuka previously executed Corporate Integrity Agreements (“CIAs”) relating to alleged off-label promotion of an anti-depressant, Abilify. Relators asserted that both companies violated their CIAs by subsequently promoting Abilify for off-label uses, including for pediatric and geriatric patients, and for offering physicians kickbacks to write off-label prescriptions for Abilify. Relators asserted they could rely on a “relaxed” pleading standard referenced but never applied by the Sixth Circuit Court of Appeals, under which they need not present any samples of false claims actually submitted, so long as they pled a strong inference of such submissions.
The defendants contested that such a standard was appropriate, yet the court ruled that the dispute was moot, because relators failed even to meet the lower pleading standard. In particular, while relators alleged that defendants’ off-label promotion and kickbacks caused physicians to write prescriptions for off-label uses of Abilify, the complaint failed to support a strong-inference that the patients who received those prescriptions participated in federal health care programs, that the patients actually filled the off-label prescriptions, and that an entity submitted claims for reimbursement to the government for those prescriptions.
Relators had argued that they further fell within the ambit of dicta in United States ex rel. Bledsoe v. Community Health Systems, Inc., 501 F.3d 493 (6th Cir. 2007), where the Sixth Circuit left open the possibility that a relaxed pleading standard would be appropriate “where a relator demonstrates that he cannot allege the specifics of actual false claims that in all likelihood exist, and the reason that the relator cannot produce such allegations is not attributable to the conduct of the relator.” According to the relators, they were precluded from identifying specific false claims because such information regarding claims for payment caused to be submitted by BMS and Otsuka lay in the exclusive possession and control of the defendants, pharmacies, and federal and state payors. The court characterized the Sixth Circuit’s dicta as “so broadly worded that [it] could undermine the purpose of the particularity rule,” and refused to allow it to “swallow the existing and well-settled rules for FCA pleading.”
Nonetheless, the court denied defendants’ motion to dismiss the relators’ retaliation claims. The FERA amendments to the FCA expanded protection over lawful acts “in furtherance of an action under [the FCA]” to also protect “other efforts to stop [one] or more violations of [the FCA].” Thus, whereas protected conduct prior to the FERA amendments was generally limited to actions that could lead to a FCA suit, the court noted that post-FERA, employees need only “report alleged misconduct up the chain of command in order to engage in FCA-protected activity.” Because relators had pled that they reported compliance concerns to their management, the court found this standard to be met.
A copy of the court’s opinion can be found here.
Posted by Jaime L.M. Jones and Emily Van Wyck
Earlier this week, Senators Chuck Grassley (Iowa) and Ron Wyden (Oregon) hosted a press conference to announce the launch of the Whistleblower Protection Caucus—a bipartisan group of Senators focused on raising awareness of the need for adequate protection from retaliation for whistleblowers.
In his remarks, Grassley stated that “Americans deserve a federal government that is free from fraud, waste, and abuse and whistleblowers play a very important role in keeping government accountable.” He expressed concern that “these patriots” often face retaliation and declared that “[m]uch can be done to improve the environment for whistleblowers and actually encourage more people to step forward when they encounter wrongdoing.” The Caucus will foster bipartisan discussion on the treatment of whistleblowers and will serve as a clearinghouse for the Senate for current information on whistleblower developments.
Other founding members of the Caucus include Senators Ron Johnson (Wisconsin), Mark Kirk (Illinois), Deb Fischer (Nebraska), Thom Tillis (North Carolina), Barbara Boxer (California), Claire McCaskill (Missouri), Tammy Baldwin (Wisconsin), and Ed Markey (Massachusetts).
A copy of Senator Grassley’s related press release can be found here.
Earlier this month, a federal district court in California dismissed relators’ retaliation claims because they rested on an unduly expansive interpretation of 31 U.S.C. § 3730(h). Both the plaintiff bringing the claim (a company) and defendants against whom it was asserted (several individuals) did not fall within the statute’s scope, the court held. United States v. Kiewit Pac. Co., No. 12-CV-02698-JST, 2014 WL 1997151, — F. Supp. 2d — (N.D. Cal. May 14, 2014).
The case arose out of a highway expansion project in Los Angeles jointly funded by the United States and the state of California. Kiewit was the primary contractor on the project. Relators were subcontractors—individuals and their respective companies who supplied materials for mechanically stabilized earth (“MSE”) wall panels. After several wall panels failed, investigations ensued and this case followed. Relators alleged that, among other things, Kiewit falsely certified compliance with MSE project specifications in exchange for government funds, and Kiewit and individual Kiewit employees retaliated against relator SSL, LLC (one of the subcontractors).
The court dismissed the retaliation claims with prejudice. First, the court held that relator SSL, LLC, could not bring a retaliation claim because the statute does not extend protection to non-individuals, or “entity plaintiffs.” 2014 WL 1997151, at *10-11. Relator’s argument was a simple textual one: section 3730(h) allows any “employee, contractor, or agent” to sue, and the ordinary meaning of “contractor” covers SSL. But the court held that the entirety of 3730(h) and its legislative history foreclosed SSL’s broad reading. To begin with, the types of relief available to successful plaintiffs under section 3730(h)(2), like back pay and reinstatement, were all “directed to individual plaintiffs, not entities.” Id. And the legislative history confirmed the point: in adding “contractors” and “agents” to the list of potential plaintiffs, Congress made clear that it merely intended to sweep in persons or individuals who were not technically “employees” but who had a contractual or agent relationship with an employer. Id. “Nothing suggest[ed] it was Congress’ intent also to broaden the retaliation entitlement to entity plaintiffs.” Id.
The court took a comparably narrow view of who may be sued under the statute. Prior to 2009, section 3730(h) allowed any employee subject to retaliatory conduct “by his or her employer” to sue. Id. at *11. When Congress amended the provision to include “contractor[s]” and “agent[s]” alongside “employee[s],” it simultaneously did away with the reference to conduct “by his or her employer.” Id. Relator argued that this change—and the plain meaning of the current provision—expanded the class of potential defendants to anyone engaging in retaliatory conduct and therefore authorized claims against individual Kiewit employees. Id. Again, the court disagreed. Because the predominant view before 2009 limited liability to the whistleblower’s employer, the court held that Congress would not have overruled that long line of cases and expanded the scope of False Claims Act liability without saying so. Instead, the reason for the deletion was most likely that the provision could no longer refer only to the whistleblower’s “employer” because it now applied to entities with a contractual or agency relationship with the whistleblower. Id. at *12. The court thus concluded that “the 2009 amendment did not expand liability to individuals such as the individual Defendants named here, e.g., coworkers, supervisors, or corporate officers who are not employers, or who lack a contractor or agency relationship with the plaintiff.” Id.
This decision imposes important limits on retaliation claims and may be looked to in future cases, particularly since the court found no case law addressing whether non-individuals can sue for retaliation, 2014 WL 1997151, at *10, and recognized express disagreement with its interpretation regarding putative defendants, id. at *12 n.5.