The First Circuit ruled that an employer would not have acted against a whistleblower ‘but for’ their engaging in conduct the FCA protects. It joined other circuits that have found the FCA’s statutory protections much like other federal employment statutes.
Background
In this case[1], the Defendant is a medical device company that had several sales accounts. Defendant employed Plaintiff, who was a key account manager (“KAM”). The largest sales account Plaintiff managed was Byram; she also managed the ABC home medical (“ABC”) account. In 2011, she filed an FCA qui tam action naming her employer, Byram, and other parties.[2] Following a request from Byram’s CEO, Plaintiff was placed on indefinite paid administrative leave pending further investigation. She was only permitted to return to work when the qui tam suit settled.
When Plaintiff returned to work, she requested to be assigned back to the ABC account. Defendant denied this request, and the account was managed by a non-KAM employee. When the non-KAM employee left the company, Plaintiff was not reassigned the ABC account because Plaintiff was in a different geographical region than ABC. Later, Plaintiff requested to be assigned to the Cardinal account when the previous manager was promoted. Although Cardinal was in the same geographic location as Plaintiff, this request was denied.
Ultimately, Plaintiff sued Defendant claiming retaliation. At trial, the court instructed the jury that it “could find for [Plaintiff] if she proved that her participation in the qui tam suit was a ‘substantial motivating cause’ of each adverse employment action.” The jury determined that Defendant retaliated against Plaintiff. Defendant appealed alleging, among other things, the trial court improperly instructed the jury, and the evidence could not support the jury verdict because there was no adverse action.
Analysis
On appeal, Defendant argued the court erroneously instructed the jury that a “substantial motivating factor” had to be proven. The appellate court noted that Defendant failed to raise this issue at trial, and reviewed the trial court’s action for plain error. In applying this standard of review, the court examined case law from the Supreme Court to determine the appropriate standard. As a result, it concluded that “retaliation claims under the False Claims Act must be evaluated under the but-for causation standard.” As a result, the trial court applied the incorrect standard, but there was no plain error because this case was the first time the First Circuit addressed the issue.
The First Circuit also determined that the evidence was sufficient to support the jury verdict. It explained that FCA discrimination claims are assessed under the burden‑shifting framework outlined in McDonnel-Douglas.[3] Plaintiff had to prove that:
1) She engaged in protected conduct under the FCA;
2) Defendant knew she engaged in the protected conduct; and
3) Defendant retaliated because of the protected conduct.
If proven, the Defendant must provide a legitimate explanation for its action. If an explanation is provided, Plaintiff must show the explanation was pretext.
Filing an FCA action is protected conduct under the Act, and Defendants knew that she had done so. Thus, the question became whether that lawsuit was the but-for cause of Defendant’s actions.
Defendant argued the lawsuit was not a but-for cause of its actions because Byram’s CEO made a request related to performance issues; however, the Court ruled that there was evidence showing the reassignment request was pretext. Both her employer and Byram were aware of the suit, had discussed the suit, conducted no investigation about purported performance issues and refused to allow the Relator back to work until it was resolved.
Practical Takeaways
The anti-retaliation provision of the False Claims Act can be the basis of a lawsuit in its own right. By adopting the framework used in employment discrimination cases, potential whistleblowers are positioned to rely on very well-developed case law when bringing these claims. For these reasons, employers should ensure their compliance programs are appropriately investigating and responding to employee reports. If an employer learns the identity of the qui tam claimant, it should avoid any actions that would discourage future whistleblowers from filing qui tam actions.
If you would like additional information on this matter, please contact:
- Drew Howk at (317) 429-3607 or ahowk@wp.hallrender.com;
- Dwayne Barrs at (241) 615-2008 or dbarrs@wp.hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.
