The 6th U.S. Circuit Court of Appeals is making waves with a March 31 ruling that broadens protections for whistleblowers under the False Claims Act. The decision expands the definition of the word “employee” to include previously employed individuals under the law’s anti-retaliation provisions, paving the way for more whistleblowers to be protected.
Commenting on the March 31 decision United States ex rel. Felten v. William Beaumont Hospital, False Claims Act Counsel’s Julie Bracker, a False Claims Act attorney who worked on the case, explained the importance of the new decision and the problems that the previous precedent caused for whistleblowers. “Prior to this opinion, the Tenth Circuit’s decision in Potts v. Center for Excellence in Higher Education, Inc., 908 F.3d 610, 614 (10th Cir. 2018) was the only appellate-level precedent, and it left whistleblowers subject to a draconian rule that insulated employers against liability if they simply fired whistleblowers before harassing and threatening them,” Bracker said in her comments to WNN.
Writing for the majority of the court for the March 31 decision, Circuit Judge John Bush ruled that because there is “no temporal qualifier” in the wording of the False Claims Act’s whistleblower retaliation provisions, the legal term “employee” will now include former employees. Before this decision, the False Claims Act was interpreted to only protect whistleblowers from retaliation during the period of time that they were employed by the defendant, excluding whistleblowers who suffered post-employment retaliation. Corporations have often exploited this loophole by finding a way to legally fire the employee and then blacklisting them, or retaliating against them in another way. Bush’s decision closes this loophole and restores the spirit of False Claims Act whistleblower protections.
The Potts decision effectively closed the door on whistleblower protections from retaliation as long as their employers fired them quickly and legally — until now. The whistleblower in the case, Debbi Potts, was a former campus director for the Center for Excellence in Higher Education. She came to believe that the for-profit college was lying to its accreditor in an effort to wrongly keep its accreditation. Potts resigned from her position and signed an agreement with the Center for Excellence “providing that she would not disparage or file complaints against the Center in the future.” After alerting the accreditor of the violation anyway, the Center for Excellence sued her for breaching the agreement. This type of lawsuit is the exact type of post-employment retaliation whistleblowers fear and have lacked protection from until recently.
Whether the False Claims Act protects whistleblowers from post-employment retaliation has been a point of contention across circuits. In a March 24, 2017 decision, Judge R. Brooke Jackson agreed with the Center for Excellence’s argument that “the FCA’s anti-retaliation provision does not apply to post-employment retaliation,” rendering all further arguments in the case moot. However, with United States ex rel. Felten v. William Beaumont Hospital, judge Jackson’s argument was rejected, thus clearing a path towards effective protections for all whistleblowers under the False Claims Act.
Bracker further contextualized the importance of the decision by saying: “The Sixth Circuit’s reading of the anti-retaliation provision in accordance with the Supreme Court’s Title VII jurisprudence provides a roadmap for district courts to follow in expanding the reach of whistleblower protections to that which Congress intended.” The interpretation of a single word — “employee” — may seem small, but to whistleblowers who have suffered retaliation after being fired or leaving their job, it may have massive implications for the future of False Claims Act whistleblower retaliation defense.
Read the full United States ex rel. Felten v. William Beaumont Hospital decision here.
Read the full Potts v. Center for Excellence in Higher Education, Inc. decision here.