May June CBA Report

Safeguarding The Public Fisc By Protecting And Compensating Whistleblowers: Recent False Claims Act retaliation protection decisions T he False Claims Act and its qui tam provisions allow whistleblowers to alert the Federal Government to undis- covered fraud and false claims for public money and to file lawsuits to recover these lost funds on the Government’s behalf. 1 The Act allows whistleblowers to enhance Government efforts by bringing in lawyers who can investigate the wrongdoing, assist the Government’s own investigative and litigation efforts, and even litigate qui tam cases on behalf of whistleblowers for the ultimate benefit of the Government. 2 In return, the whistleblowers are awarded a portion of the recovery. 3 Whistleblower-initiated qui tam cases were responsible for over 75% of the Federal Govern- ment’s $2.2 billion dollars in civil False Claims Act recoveries in FY 2020. 4 It’s no surprise that the False Claims Act is the Govern- ment’s primary fraud-fighting tool 5 and that amendments to keep the Act strong have met with bipartisan support in Congress. 6 The mere existence of the Act is a deterrent, leveling the playing field for honest and fair competition. But whistleblowers often provide this valuable public service at great personal expense. Blowing the whistle is not an easy road. Employment prospects, industry reputation, and the mental well-being of whis- tleblowers are all too often unfairly and irrevocably damaged. Providing some measure of protection, the False Claims Act’s anti-retaliation provision affords relief from discrimination against whistleblowers for their efforts to stop False Claims Act violations or for actions taken to further a False Claims Act case. 7 When a whistleblower has an actionable retaliation claim, they are entitled to specific remedies, including reinstatement, double back pay, interest on the backpay, compensation for special damages, litigation costs, and reasonable attorney’s fees. 8 Enforcement of the Act’s anti-retaliation provision is vital to protecting whistleblowers and compensating them for the harm they endure due to their efforts to protect the public fisc. 9 In a pair of recent decisions, federal Courts of Appeals ruled in favor of two such whistleblowers. In a December 9, 2020 opinion, Lestage v. Coloplast , the First Circuit recognized that actionable retaliation extends to adverse employment actions other than termination. 10 Following a five-day trial, a jury found that placing a whistleblower on paid leave after learning of her qui tam suit and then reassigning her to inferior client accounts on her return to work were both adverse actions. 11 The jury awarded her over $760,000 in damages. 12 The First Circuit affirmed the verdict, ruling that the jury could conclude that both adverse employment actions were made in retaliation for filing a qui tam False Claims Act action. 13 The Lestage decision rightfully recognizes that retaliation extends beyond termination, explaining: “an employment action is materially adverse when it would dissuade a reasonable worker from engaging in protected activity.” 14 Thus, retaliation that primarily harms an employee’s reputation, career prospects, and mental well-being is properly deemed actionable retaliation. A few weeks later, the Sixth Circuit ruled in United States ex rel. Dorsa v. Miraca Life Sciences that it lacked jurisdiction to hear an interlocutory appeal of an order denying a motion to dismiss for failure to initiate arbitration of a retaliation claim. 15 The employment agreement required that “any dispute, claim or disagreement arising out of or in connection with this Agreement” would be submitted to binding arbitration. 16 The district court held that this arbitration clause did not cover the False Claims Act retaliation claim because while the claim was connected with the employment relationship, it did not arise from or have a connec- tion with the employment agreement. 17 Declining to accept the appeal (over a dissent), the Sixth Circuit explained that the some statutes do allow interlocutory appeal of orders refusing to stay an action pending arbitration or denying a petition for arbitration. 18 However, no statute autho- rizes jurisdiction over a denial of a motion to dismiss for failure to initiate arbitration. 19 By Erin M. Campbell 8 l May/June 2021 CBA REPORT Feature