The False Claims Act not only protects the federal treasury, it also protects from retaliation whistleblowers who try to stop violations of the False Claims Act, or who take action in furtherance of a False Claims Act case. 31 U.S.C. § 3730(h).
Recognizing that whistleblowers who sincerely do their best to stop False Claims Act violations and wrongdoing may be entitled to protection, the Sixth Circuit recently issued a pair of decisions explaining these whistleblower protections. Together, these new opinions find that: (1) a whistleblower need not necessarily expressly state that their employer’s scheme drained the federal treasury to be protected by the Act, and (2) that an employee who quits rather than engage in the False Claims Act scheme is protected when their resignation was a reasonably foreseeable consequence of their employer’s actions.
A. United States ex rel. Crockett v. Complete Fitness Rehabilitation, Inc., 2018 WL 327453 (6th Cir. Jan. 9, 2018).
The Crockett whistleblower was fired after “repeatedly objecting to her supervisor’s directives that she provide her patients with more extensive (and profitable) treatments.” Crockett, 2018 WL 327453 at *1. She brought a sealed False Claims Act case, which included a whistleblower retaliation action under 31 U.S.C. § 3730(h) against her employer. The District Court dismissed both actions, holding that the whistleblower failed to meet the False Claims Act’s technical pleading requirements as well as the pleading standards for retaliation protection claims. Id.
Though it upheld dismissal of Ms. Crockett’s qui tam False Claims Act claim, on appeal the Sixth Circuit determined that the District Court improperly dismissed her retaliation claim because the whistleblower alleged “sufficient facts suggest[ing] that she reasonably believed her objections would stop an FCA violation.” Id.
The Sixth Circuit credited Ms. Crockett’s allegations that her supervisor “would have understood [her] complaints to implicate fraud on the government, given [her] previous objection about [the defendant’s] drive for revenues, and the knowledge of everyone involved that ‘Med A’s’ and ‘Med B’s’ are patients whose rehabilitation costs are charged to the Government,” and her use of Medicare billing jargon. Id. at 8.
Thus, the Sixth Circuit reasoned that the motion to dismiss should not have been granted because the “tight link” between her complaints of improper coding and treating Medicare patients and the assumption that Medicare paid based on that improper coding and treatment presented a “more concrete basis for her FCA retaliation claim.” Id.
While the Sixth Circuit noted that its decision would be easier if the whistleblower had told her supervisor that “her objections were founded in concerns about improper government disbursements,” (id.) the Sixth Circuit’s decision not to require use of specific magic words to allege a retaliation claim is correct. The False Claims Act’s retaliation provision contains no requirement that a whistleblower know the law or say expressly state standard words to be protected for stopping False Claims Act violations.
B. Smith v. LHC Group, Inc., 2018 WL 1136072 (6th Cir. Mar. 2, 2018).
Rather than participate in perpetuating health care fraud on the federal government by seeking and receiving fraudulent reimbursements, plaintiff Sue Smith left her position and then brought a retaliation claims alleging she was constructively discharged by her employer due to her efforts to stop False Claims Act violations. Smith, 2018 WL 1136072 at 1. The District Court had granted a motion to dismiss her case.
On appeal, the Sixth Circuit reversed, holding that the jury could find that the defendant created intolerable conditions from the perspective of a reasonable person in the whistleblower’s position, concluding that “it is damaging to a professional to require her to engage in activity she considers illegal and immoral with the threat of prosecution and loss of her nursing license looming in the background.” Id. at 4.
Furthermore, the Sixth Circuit rejected the District Court’s conclusion that to prove a whistleblower retaliation claim under a theory of constructive discharge, the whistleblower must prove that their employer had a “conscious ‘specific intention,’ i.e., a subjective intent, for the employee to resign.” Id. This type of subjective requirement is “inconsistent with … the realities of modern employment.” Rather, the intent requirement to demonstrate constructive discharge “can be satisfied so long as the employee’s resignation was a reasonably foreseeable consequence of the employer’s actions.”
While we did not represent any of the parties in these cases, Helmer Martins routinely represents whistleblowers in complex healthcare False Claims Act actions. If you are aware of fraud involving healthcare or government contracts, please contact us.