The Sixth Circuit held that the False Claims Act anti-retaliation provision applies to retaliatory acts performed after the employment is terminated.

On March 31, 2021, I had what I can only describe as a career highlight – a winning opinion for my client in a matter I had briefed and argued before the Sixth Circuit Court of Appeals. Very few attorneys have the opportunity to argue cases before the Courts of Appeals, so that alone was exciting. Our cause was just, but the deck was stacked against us. You can imagine how thrilled we all were at the outcome!

This blog is my attempt to explain, with minimal legalese, exactly what was at issue in the case and what the Court of Appeals had to say. 

Dr. Felten alleges that Beaumont Hospital fired him after discovering he was a whistleblower and then blackballed him in the industry.

The following are allegations from Dr. Felten’s lawsuit; the facts of the case have not yet been proven in a court of law.

On August 30, 2010, Dr. David Felten filed a qui tam complaint alleging that his then-employer, William Beaumont Hospital, paid kickbacks to various physicians and physicians’ groups in exchange for referrals of Medicare, Medicaid, and TRICARE in violation of the Anti-Kickback Statute and Stark Laws. 

In addition, Dr. Felten alleged that Beaumont had already retaliated against him in violation of 31 U.S.C. § 3730(h) and Mich. Comp. Laws § 400.610c by “continuously and increasingly marginaliz[ing him],” reducing his departmental budget, and expressly threatening to “destroy” him if he continued to resist Beaumont’s unlawful conduct.

Shortly after Beaumont received a CID (Civil Investigative Demand) to produce documents relating to the fraud, the organization began to try and sniff out who the “snitch” was. As a longtime vocal detractor of kickback culture, Dr. Felten quickly came under suspicion and the retaliation accelerated, ultimately leading to his termination.

But that was when the real retaliation started. As is set out in Dr. Felten’s amended complaint, he was repeatedly blackballed within his field and found himself – one of the “most influential neurologists of the century” – unable to obtain work in medicine.

On July 31, 2018, almost exactly eight years after his complaint was filed, the government settled the case against Beaumont for $84,500,000.

Dr. Felten, however, still had his retaliation claim. He amended his complaint to add retaliatory conduct that had occurred during the eight years that the case was under seal, including the termination and blacklisting. 

Judge Murphy granted Beaumont’s motion to dismiss on the amended complaint, based in part on the fact that the False Claims Act’s anti-retaliation provision did not protect whistleblowers from retaliation that occurred after they had been fired.

The District Court granted Dr. Felten an interlocutory appeal to the Sixth Circuit.

When Judge Murphy ruled that post-termination retaliatory conduct was not covered by the FCA, it was not unexpected. At that time, the only Court of Appeals in the country to have considered the question was the Tenth Circuit. In a case called U.S. ex rel. Potts v. Center for Excellence in Higher Education, Inc., it had ruled that whistleblowers were not protected by the FCA after they had been terminated.

Although some district courts had found that Dr. Felten should be protected, there were no binding opinions that our court was required to follow. However, there was one Sixth Circuit case, Vander Boegh v. EnergySolutions. In this case, the Sixth Circuit had mentioned in passing that a Congressional amendment to the FCA seemed to be aimed at protecting employees from, among other things, blacklisting. This was not a ruling, so the district court was not bound to follow it, but it did suggest that the Sixth Circuit just might disagree with the Tenth Circuit on this point of law. 

When that happens, it is called a “circuit split.” When there is a circuit split, those typically have to be resolved – eventually – by SCOTUS.

When we received the ruling, based on this reference in Vander Boegh, we decided to ask Judge Murphy for permission to appeal his ruling to the Sixth Circuit, even though there was no final decision yet in the case. 

Such an appeal in the middle of a case is called an “interlocutory” appeal, and they are not something a party has a right to. You have to ask the trial judge to let you ask the circuit court, and if the trial judge says yes, the circuit court can still say no. Since there were these two hurdles to even getting in front of the Sixth Circuit, we were delighted when Judge Murphy gave us permission to ask for an appeal, and then the Sixth Circuit agreed to take the appeal!

The Sixth Circuit reversed the lower court’s dismissal of our case.

On appeal, the Sixth Circuit was asked to decide whether the FCA anti-retaliation provision, which protects “employees,” should include “former employees” as well as “current employees.” 

To a non-lawyer, the term “employee” might seem straightforward enough. However, in 1997, the Supreme Court told the Courts of Appeals how to interpret the meaning of the word “employee” in a different statute, Title VII, in a case called Robinson v. Shell Oil Co

The Court found the word to be “temporally ambiguous,” meaning that we know what an “employee” relationship is, but just by using that word alone, we cannot tell whether or not it is intended to cover former employees. Whether the word is ambiguous is a critical first step in the analysis, because only if a word is ambiguous is the Court permitted to look at other things, like Congressional intent, to interpret the statute. 

If the Court found the word clear on its face, the analysis, and the case, was finished.

The Tenth Circuit’s decision in Potts had looked at the same Robinson factors and decided that the word was not ambiguous and that it could only refer to current employees. We argued that Potts got it wrong, and also that the Potts case was different from ours in some important ways. In a textbook example of the old saying that “bad facts make bad law,” Ms. Potts was never a relator. She signed a non-disparagement agreement with her former employer, but then she disparaged it anyway. The employer sued her for doing so, and more than two years later, Ms. Potts filed a lawsuit alleging that she was being retaliated against as a whistleblower. 

On these facts, it is hardly surprising that the court found that Ms. Potts was not protected by the FCA’s anti-retaliation provisions. 

In upholding the dismissal of Ms. Potts’s case, the Tenth Circuit repeatedly explained that the question before it was whether a plaintiff could bring an FCA anti-retaliation claim if the whistleblowing occurred after she ceased to be an employee. But it then went on to answer a different question, finding that “what matters is the employee’s employment status when the employer retaliates.”

As we argued to the Sixth Circuit, Dr. Felten’s protected conduct – filing a qui tam lawsuit – occurred while he was still an “employee.” The retaliation he alleges also started when he was an employee, with both the stripping of his department budget and threatening remarks, then with his discharge, and ultimately with harassment and blacklisting. We asked that the Sixth Circuit distinguish Potts on this basis.

Interestingly, instead of ruling that this case was different than Potts, the Sixth Circuit instead took the Potts decision head-on, finding that:

“We acknowledge that our decision creates a circuit split. Our analysis differs from that of the Tenth Circuit primarily with regard to Robinson’s first and third factors: whether the statute includes a temporal qualifier and whether other provisions envision both current and former employees. We deem it a better fit with all of Robinson’s considerations to construe § 3730(h)(1) to effectuate the statute’s broader context and purpose.”

This reference to the statute’s “broader context and purpose” is very important to our firm and our clients. As the Sixth Circuit found, “If employers can simply threaten, harass, and discriminate against employees without repercussion as long as they fire them first, potential whistleblowers could be dissuaded from reporting fraud against the government.” Ultimately, “the purpose of the Act’s anti-retaliation provision is to encourage the reporting of fraud and facilitate the federal government’s ability to stymie crime by “protecting persons who assist in its discovery and prosecution.” 

We could not agree more!

Before the result in this case, district courts only had one appellate model to answer the question of whether or not former employees are protected by the FCA. After this decision, they have two models – the Potts model and the Felten model. It is our hope that many district courts will follow Felten to produce just results for brave whistleblowers across the country.

Are you a potential whistleblower? Get tenacious, experienced representation right away.

If you have concerns about what is happening at your place of work and fear whistleblower retaliation, please contact Bracker & Marcus LLC for a free consultation. If our False Claims Act attorneys determine together that it is in your best interest to file a suit, you can bet we will have your back through any appeal!