Whistleblower Retaliation

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In addition to bringing qui tam action against a company filing any fraudulent or false claim, a qui tam whistleblower may also have a claim for whistleblower retaliation.

The Whistleblower Protection Act was added to the False Claims Act as part of the 1986 United States amendments. Federal laws and state whistleblower retaliation laws prohibit a wide range of retaliatory adverse employment actions and offer robust remedies. Congress intended to use anti-retaliation laws to stop threats of demotion from employers who may attempt to keep whistleblowers quiet and also to assure those engaged in protected activity who may be considering exposing fraud are legally protected from retaliatory acts.

Many of these laws can mitigate the effects of retaliation through anti-retaliation provisions and financial recompense. Such laws include The Sarbanes-Oxley Act of 2002, which protects employees of publicly traded companies who report violations of Securities and Exchange Commission regulations or any provision of federal law relating to fraud against the shareholders, as well as a number of others protecting whistleblowers who report a violation of any law.

Many whistleblowers, with classified information on illegal activities, may have civil and potentially criminal exposure and decisions will need to be made about the risks of pursuing a qui tam lawsuit, weighted against whistleblower protection that is afforded through the Federal False Claims act amendments. The private citizen or relator may seek back pay and reinstatement if any egregious action is taken against them by the defendant for the FCA claim, through civil penalties.

Some common types of whistleblower cases and types of fraud are:

CAUSE OF ACTION FOR WHISTLEBLOWER RETALIATION

Congress specifically stated that whistleblower protection laws extend to the qui tam whistleblower, anyone assisting the qui tam whistleblower, and anyone working with the government “in furtherance of” an FCA action. The qui tam whistleblower must prove the cause of action by a preponderance of the evidence.

As codified in the False Claims Act, a cause of personnel action for retaliation requires the qui tam whistleblower to prove that he was:

(1) “an employee” who was

(2) “discriminated against”

(3) “by his or her employer”

(4) “because of lawful acts done by the employee,”

(5) “in furtherance of an [FCA claim].”

Nonetheless, a majority of gov courts have distilled this statutory list into two broad elements and require the qui tam whistleblower claims prove:

(1) that he engaged in protected activity, that is, “acts done . . . in furtherance of an action under this section”; and

(2) he was discriminated against “because of” that activity.

To prove the second element, the employee must make two further showings:

(1) “the employer had knowledge the employee was engaged in protected activity”; and

(2) “the retaliation was motivated, at least in part, by the employee’s engaging in [that] protected activity.”

A claim may be stated under the whistleblower protection section even when no FCA lawsuit has been filed. The qui tam whistleblower is not required to know that the investigation could lead to filing a claim under the False Claims Act. The policy reason behind this decision is that if the qui tam whistleblower were required to know this, it would result in decreased protected whistleblowing under the statute; the statute would only protect a person versed in the law.

Therefore, conducting an investigation without knowledge of the existence of the FCA is considered “in furtherance of” an action under the whistleblower section. A qui tam whistleblower will be protected regardless of whether he has filed a FCA qui tam lawsuit or whether the government has initiated an investigation.

Federal employees cannot sue for retaliatory action under the False Claims Act because the government must expressly waive its sovereign immunity. Congress created the Civil Service Reform Act of 1978 (“CSRA”) as a vehicle for employment claims brought by federal government employees. In 1989, United States Congress amended the CSRA to provide protection to whistleblowers employed by the government. This is the sole statutory remedy for federal employee whistleblowers seeking cases.

State employees cannot sue for retaliation under the FCA because the Eleventh Amendment grants sovereign immunity to the states. Congress can only abrogate that immunity if it uses unequivocal statutory language. Since the language of section 3730(h) is silent on the issue, the courts have barred retaliation suits based on the Eleventh Amendment. Furthermore, the Supreme Court has held that states are not “persons” subject to suit within the meaning of the False Claims Act.

Compliance officers and other employees who bear the responsibility for investigating fraud are not afforded the same protection from retaliation as other employees who discover fraudulent activity. Because a compliance officer’s obligation is to investigate and report a company’s improprieties, the officer is required to show more than mere employer knowledge. The officer must meet the higher burden of more explicit notice, including that he threatened the employer with an FCA action or government investigation.

POTENTIAL DAMAGES FOR RETALIATION

The False Claims Act provides that any employee “discriminated against . . . shall be entitled to all relief necessary to make the employee whole. Such relief shall include reinstatement with the same seniority status such employee would have had but for the discrimination, two times the amount of back pay, interest on the back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys’ fees.” Special damages therefore include damages for emotional distress.

The circumstances of the case, along with the qui tam whistleblower’s testimony, may be sufficient to show damages for emotional distress, provided the qui tam whistleblower shows, through specific facts, a connection between the retaliation and the emotional distress. Furthermore, litigation costs and reasonable attorneys’ fees are included as “special damages.” These damages do not include qui tam damages, even if an employee can show he was precluded from filing a meritorious FCA suit.

STATUTE OF LIMITATIONS FOR RETALIATION CASES

The False Claims Act includes a six-year statute of limitations for bringing civil claims of illegal activity. However, there was some disagreement among the circuits concerning the applicability of this period to retaliation actions brought pursuant to the whistleblower protection provision of the False Claims Act.

The Supreme Court recently held that courts must use the most analogous state law to find a limitations period for a retaliation action under the FCA. There is a large variance in the statute of limitations for wrongful or retaliatory discharge in the state statutes, ranging from thirty days to six years, although the most common state limitations period is two years. Therefore, it is imperative for a whistleblower to act quickly after retaliation has occurred.

For more information and case citations, please see “Federal False Claims Act and Qui Tam Litigation,” published by Law Journal Press (2010).

QUI TAM FAQS

Please explore our frequently asked questions often asked by whistleblowers about qui tam cases to make sure you know your rights. Questions such as “As a whistleblower, what do I need to know before hiring a qui tam attorney” and “Is there a way I can learn more about the laws governing my specific region or case type?”

RETALIATION

For more information, email quitam@bafirm.com

Notice

This website is designed to provide general information only. This information is not and should not be construed to be legal advice. The transmission of the information found on this website also does not result in the formation of a lawyer-client relationship.

You should be aware that qui tam claims are subject to a Statute of Limitations. The area of limitations periods is complex. There are also first to file rules, public disclosure bars, original source issues, and varying limitations in pursuing retaliation claims. If you wish to pursue your claims, you should promptly seek the opinion of an attorney regarding the merits of your qui tam claim and the applicable statute of limitations.