Whistleblower, David Felten, M.D., Ph.D. (“Felten”), initially filed his qui tam complaint on August 30, 2010, alleging his then-employer, William Beaumont Hospital (the “Hospital”) was violating the False Claims Act (FCA) and the Michigan Medicaid False Claims Act. Felton alleged that the Hospital was paying kickbacks to physicians and physicians’ groups in exchange for referrals of Medicare, Medicaid, and TRICARE patients. Felten also alleged that the Hospital retaliated against him in violation of the FCA’s anti-retaliation provision and Michigan Law, by threatening and marginalizing him for insisting on compliance with the law. The United States and Michigan intervened and settled the case against the Hospital for $84.5 million. The district court dismissed the remaining claims, except those for retaliation, attorneys’ fees and costs.
Felten subsequently amended his complaint to add allegations of retaliation that took place after he filed his initial complaint. See Felten’s First Amended Complaint below:
Felten alleged he was terminated after the Hospital falsely represented to him that an internal report suggested he be replaced, and his position was subject to a mandatory retirement. Felten further alleged he had been unable to obtain a comparable position in academic medicine because the Hospital intentionally maligned him in retaliation for his reports of its unlawful conduct, undermining his employment application to almost forty institutions.
The district court granted the Hospital’s motion to partially dismiss Felten’s first amended complaint. In relevant part, the district court dismissed the allegations of retaliatory conduct occurring after Felten’s termination, holding that the FCA’s anti-retaliation provision does not extend to retaliation against former employees.
Upon Felton’s request to amend the dismissal order, the district court certified for interlocutory appeal the question of whether the FCA’s anti-retaliation provision applies to allegations of post-employment retaliatory conduct. The Sixth Circuit granted Felton’s petition for permission to appeal.
On appeal, the Sixth Circuit addressed this issue in a case of first impression, ruling that the FCA’s anti-retaliation provision protects former employees alleging post-termination retaliation. The Sixth Circuit’s published opinion can be found HERE.
At issue was the temporal meaning of the word “employee” and the prohibited employer conduct in the FCA’s anti-retaliation provision, 31 U.S.C. § 3730(h)(1). The question presented was when that provision refers to an “employee” and proscribes certain employer conduct, does it refer only to a current employment relationship, or does it also encompass one that has ended?
The FCA does not explicitly say whether it pertains only to current employment. The Sixth Circuit followed the guidelines/factors laid out in Robinson v. Shell Oil Co., 519 U.S. 337, 340-41 (1997) for determining when a statute’s meaning is not plain in the context of protections for employees and what to do in the face of ambiguity. Using the Supreme Court’s guidance in Robinson, the Sixth Circuit found the term “employee,” as used in the FCA’s anti-retaliation provision, was ambiguous. An in-depth analysis of the Robinson guidelines/factors is contained in the linked opinion above.
The Sixth Circuit noted that when confronted with similar ambiguity, the Supreme Court in Robinson looked to the broader context of Title VII and the primary purpose of the statute to hold that former employees were covered by Title VII’s anti-retaliation protections. The Sixth Circuit took an analogous approach. The FCA is designed to “discourage fraud against the government.” And the purpose of the Act’s anti-retaliation provision is to encourage the reporting of fraud and facilitate the federal government’s ability to stymie crime by protecting persons who assist in its discovery and prosecution. The Sixth Circuit proclaimed that if employers could simply threaten, harass, and discriminate against employees without repercussion as long as they fire them first, potential whistleblowers could be dissuaded from reporting fraud against the government. It therefore held that the anti-retaliation provision of the FCA may be invoked by a former employee for post-termination retaliation by a former employer.
The Sixth Circuit acknowledged that its decision creates a circuit split. It’s analysis differs from that of the Tenth Circuit primarily with regard to Robinson‘s first and third factors: whether the statute includes a temporal qualifier and whether other provisions envision both current and former employees. The Sixth Circuit deemed it a better fit with all of Robinson‘s considerations to construe § 3730(h)(1) to effectuate the statute’s broader context and purpose.
As a result of the foregoing, the Sixth Circuit vacated the district court’s order granting the Hospital’s motion to partially dismiss Felten’s First Amended Complaint and remanded for further proceedings consistent with this opinion.
Finally, Felten argued for the first time on appeal that the “terms and conditions of employment” provision of § 3730(h) includes blacklisting. Although the district court invoked the “terms and conditions of employment” qualifier as a reason why post-employment retaliatory action did not fall within the FCA’s ambit, it did not address whether blacklisting is included as a form of prohibited retaliatory action. Thus, the Sixth Circuit did not address the issue; instead, remanded to the district court to consider the issue in the first instance.
There was a lengthy dissent essentially arguing that none of the Robinson considerations were present in this case.