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Former hospital employee protected by FCA’s anti-retaliation provision

By Wayne D. Garris Jr., J.D.

The court held that the term “employee” as used in the False Claims Act was not limited to a current employee.

The Sixth Circuit vacated a district court’s order to dismiss the False Claims Act retaliation claim of a former employee of William Beaumont Hospital. The employee was terminated after filing a qui tam complaint against his employer; he filed suit alleging that after his termination, the employer blacklisted him and prevented him from finding new employment. Reversing the district court, the 2-1 appeals court held that that the plain language of the FCA and relevant case law required a finding that the FCA’s anti-retaliation provision protects former employees alleging post-termination retaliation. Judge Griffin wrote a dissenting opinion (United States ex rel. Felten v. William Beaumont Hospital, March 31, 2021, Bush, J.).

The employee filed a qui tam complaint alleging that William Beaumont Hospital violated the FCA by paying kickbacks to physicians and physicians’ groups in exchange for referrals to Medicare, Medicaid, and TRICARE patients. The employee later amended his complaint to allege that the employer terminated him in retaliation for filing the complaint and, post-termination, “intentionally maligned” and undermined his applications to 40 prospective employers.

District court proceedings. The district court granted the employer’s motion to partially dismiss the complaint. It dismissed the employee’s post-termination allegations of retaliation, holding that the FCA’s anti-retaliation provision did not cover retaliation against former employees. The district court interpreted the qualifier “in the terms and conditions of employment” in the FCA’s antiretaliation provision to mean that the provision only covered conduct that occurred during the course of employment. The employee appealed.

Statutory language. The issue before the Sixth Circuit was whether the FCA’s references to “employee” only refers to a current employment relationship or whether it also applies to an employment relationship that has already ended. The court began by examining the text of the statute. The employer argued that the court should adopt the Tenth Circuit’s approach in Potts v. Center for Excellence in Higher Education, Inc., which held that the FCA unambiguously excludes post-termination retaliation.

Rejecting the Tenth Circuit’s approach, the court acknowledged that while it typically interprets a statute according to its plain meaning, the Supreme Court, in Robinson v. Shell Oil, outlined three considerations to reach its conclusion that Title VII’s definition of “employee” was ambiguous. The court here concluded that the term “employee” in the FCA met the same criteria: there was no temporal qualifier accompanying the term employee, the dictionary definition of “employee” could be interpreted to included former employees, and other provisions in the FCA allow for former employees to seek post-termination relief. For example, the statute’s remedial provision lists reinstatement as a form of available relief. Following Robinson, the court concluded that the term “employee” as used in the statute is ambiguous.

Statutory purpose. Next, the court looked to the purpose of the FCA. The FCA is designed to “discourage fraud against the government,” and the purpose of the anti-retaliation provision is to encourage the reporting of fraud and “facilitate the federal government’s ability to stymie crime by ‘protect[ing] persons who assist [in its] discovery and prosecution.’” The court reasoned that if employers could escape liability from harassing an employee as long as the employer fired the employee first, potential whistleblowers could be dissuaded from reporting fraud against the federal government. Thus, the court held that a former employee may bring a claim against a former employer under the FCA.

Dissent. In a dissenting opinion, Judge Griffin noted the majority’s opinion created a split with the Tenth Circuit and contradicted the decisions of almost every federal district court that has considered this issue. Judge Griffin also argued that the FCA “unambiguously” reserves retaliation claims for current employees only.

The Sixth Circuit, in Vander Boegh v. EnergySolutions, Inc., said that, for the purposes of the FCA’s anti-retaliation provision, an employee as “[s]omeone who works in the service of another person (the employer) under an express or implied contract of hire, under which the employer has the right to control the details of work performance.” Under Vander Boegh and the plain language of the statute, a former employee does not “work in the service of his former employer under a contract of hire or for pay.”

Judge Griffin also disagreed with the majority’s interpretation of Robinson, arguing that the Supreme Court did not alter the rules of statutory interpretation and did not carve out new theories of interpretation that applied to employee protections. Further, the Sixth Circuit had previously declined to extend Robinson beyond the Title VII context. Even if Robinson did apply, Judge Griffin disagreed that the FCA met the three guidelines set out in Robinson for determining if the statute was ambiguous.