The Sixth Circuit Rules that the False Claims Act Prohibits Post-Employment Retaliation

On March 31, 2021, the Sixth Circuit held in United States ex. rel. Felten v. William Beaumont Hospital that the False Claims Act’s (“FCA”) anti-retaliation provision prohibits an employer from engaging in post-termination retaliation. Importantly, this decision creates a split with the only other federal appellate court to consider the issue, the Tenth Circuit in Potts v. Ctr for Excellence in Higher Educ., Inc., 908 F.3d 610 (10th Cir. 2018), in which the court held that the FCA’s anti-retaliation provision does not provide relief for retaliatory acts occurring after the employee has left employment.

The False Claims Act prohibits an employer from retaliating against an employee when that employee engages in acts to further an FCA action or other efforts to stop one or more violations of the FCA.  Specifically:

Any employee, contractor, or agent shall be entitled to all relief necessary to make that employee, contractor, or agent whole, if that employee, contractor, or agent is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done by the employee, contractor, agent or associated others in furtherance of an action under [the FCA] or other efforts to stop 1 or more violations of this subchapter [31 USCS §§ 3721 et seq.].

31 USCS § 3730(h)(1).  Focusing on the definition of “employee” in the FCA, the Sixth and Tenth Circuits came to opposite conclusions regarding whether the word “employee” includes both current and former employees or just current employees when considering retaliation claims.

In August 2010, David Felten filed a complaint asserting that his then-employer, Beaumont Hospital, was violating the FCA and the Michigan Medicaid False Claims Act by paying kickbacks to various physicians and physicians’ groups in exchange for referrals to Medicare, Medicaid, and TRICARE patients. In 2018, Beaumont agreed to pay $84.5 million to settle Felten’s allegations that it provided kickbacks.

Felten then amended his complaint to add claims of retaliation because he was fired after Beaumont falsely represented to him that an internal report suggested that he be replaced. Additionally, Felten stated that he was unable to obtain a comparable position in academic medicine because Beaumont “intentionally maligned [him]…in retaliation for his reports of unlawful conduct.”   The trial court threw out any claims based on Beaumont’s post-termination conduct, finding that the FCA did not protect against such activity, a decision that Felten appealed to the Sixth Court.

The three-judge panel majority of the Sixth Court reversed the trial court’s decision, holding that “there is no temporal qualifier accompanying the term ‘employee’” within the FCA’s anti-retaliation provision, and “that provision’s explicit reference to ‘[a]ny employee’…could mean that it applies to any person who has ever been employed.”  The panel construed the FCA consistent with the roadmap for statutory interpretation laid out by the Supreme Court in Robinson v. Shell Oil Co., where the Court held that Title VII of the Civil Rights Act of 1964 – based on its language – bars discrimination against current and former employees. The panel also ruled that the list of actionable conduct in the FCA includes three operative words that refer to harm against only current employees, but the last three types of conduct specified on the list do not. “…[C]urrent employment is not necessary for a person to be ‘threatened,’ ‘harassed,’ or ‘discriminated’ against…Thus, half of the terms on the list can refer to former employees….”

The Sixth Circuit’s opinion directly contradicts the Tenth Circuit’s decision in Potts, in which the Tenth Circuit held that a former employee—one whose protected acts and the subsequent retaliation by her employer occurred exclusively after her employment ended—could not state a claim for retaliation under the FCA. The Tenth Circuit held that the FCA’s use of the word “employee” in its anti-retaliation provisions only includes current employees. Thus, what matters is the employee’s employment status when the employer retaliates.

Because these are the only two federal appellate courts to address the issue, the Sixth Circuit’s opinion establishes precedent that may be persuasive to other circuits addressing the scope of prohibited retaliation under the FCA and under similar whistleblower protection laws. If followed, the Sixth Circuit’s rationale would provide further protections for whistleblowers, defending them from malignment and other retaliatory acts if they leave their employer.  

The whistleblower lawyers at Correia & Puth, PLLC are committed to ensuring that employees are protected when they take a stand for workplace safety, speak up about their employer’s unlawful behavior, and hold employers accountable for wrongdoing.  Correia & Puth vigorously advocates on behalf of workplace whistleblowers. If you are aware of wrongful workplace conduct, or if you fear or have experienced workplace retaliation because of your reports, please contact us right away.