The longstanding clash between the False Claims Act and the Eleventh Amendment came to a head again recently in Monroe v. Fort Valley State Univ., et al., 2024 U.S. App. LEXIS 3612 (11th Cir. February 15, 2024, the Eleventh Circuit ruled that states and state agencies are immune from whistleblower retaliation suits under the False Claims Act. In its February 15, 2024 decision in Monroe v. Fort Valley State Univ., the Eleventh Circuit Court of Appeals held that Eleventh Amendment immunity applies to suits against states brought under the retaliation provisions of the False Claims Act.
Can a relator sue a state under the FCA?
A relator may not sue states or state agencies under the False Claims Act as a private individual. The Supreme Court of the United States answered this question in Vermont Agency of Nat. Res. v. United States ex rel. Stevens, 529 U.S. 765 (2000) when it held that a relator, or qui tam whistleblower, may not bring a case in federal court against a state (or state agency) under the FCA. The Supreme Court reasoned that the FCA requires the suit to be brought against a “person.” Because a state or state agency is not a “person,” relators may not bring FCA cases against states. The Supreme Court did not need to decide the case based on whether the Eleventh Amendment sovereign immunity protected states from FCA cases.
But the Supreme Court opinion left open the question of whether the United States can sue states or arms of the state under the FCA on its own, without a relator.
Can the United States sue a state under the FCA?
Currently, there is no controlling authority that answers this question, and the lower courts are split as to whether the United States itself can bring such an action.
Before the Supreme Court’s Vermont Agency ruling, the Fourth Circuit in U.S. ex. rel. Milam v. Univ. of Texas M.D. Anderson Cancer Ctr., 961 F.2d 46, 50 (4th Cir. 1992) and Eighth Circuit in U.S. ex. rel. Rodgers v. State of Ark., U.S. ex rel. Rodgers v. State of Ark. decided that the United States may sue a state or state agency under the FCA independently, without a relator. Those courts reasoned that states are not entitled to immunity because the United States was the “real party in interest” or the victim in the state or state agency’s fraud.
Using a similar analysis as the Vermont Agency a year after the Supreme Court’s decision, the Eastern District of New York ruled that the United States may bring an FCA case itself because a state is a “person” under the FCA. [United States v. Univ. Hosp. at Stony Brook, No. 97-CV-3463, 2001 WL 1548797, at *3 (E.D.N.Y. Oct. 26, 2001).]
Other courts have come to the opposite conclusion.
Conflicting decisions
Eight years after Vermont Agency, the Eastern District of Wisconsin held that regardless of whether the United States brings the FCA case itself or whether the case is brought through a qui tam relator, the United States cannot sue a state. [Menominee Tribal Enterprises, 601 F. Supp. 2d 1061, 1068–69 (E.D. Wis. 2009), judgment entered, No. 07-C-316, 2009 WL 2877083 (E.D. Wis. Sept. 2, 2009).]
The District of Oregon in United States ex rel. Doughty v. Oregon Health & Scis. Univ., No. 3:13-CV-01306-BR, 2017 WL 1364208, at *4–5 (D. Or. Apr. 11, 2017); Western District of Kentucky, in United States ex rel. Brinkley v. University of Louisville, 2017 WL 210244 at *6 (W.D. Ky. January 17, 2017); and District of Puerto Rico in United States v. Puerto Rico Dep’t of Sports & Recreation 2022 WL 1665166 at *3 (D.P.R. May 25, 2022) have all decided that the United States may not bring an FCA claim against a state or state agency.
Without controlling authority on FCA suits against states brought by the government, the United States has continued to settle qui tam FCA cases against states and state agencies. The courts, however, are split again as to whether the relator is entitled to a share of the settlement proceeds. The Ninth Circuit in Donald v. University of California Bd. of Regents, 329 F.3d 1040, 1042 (9th Cir. 2003) and Western District of Missouri in United States ex rel. Galuten v. Univ. of Missouri-Columbia, No. 2:11-CV-04140-FJG, 2017 WL 5953302, at *4 (W.D. Mo. Mar. 29, 2017) denied the relator’s settlement proceeds in an FCA settlement between the United States and a state or arm of the state. In 2022, however, a whistleblower received a relator’s share from a FCA settlement against the state of Utah.
Can a whistleblower sue a state for retaliation under the FCA?
This current tension surrounding a state’s liability under the FCA brings us to the Eleventh Circuit’s recent decision in Monroe v. Fort Valley State Univ. that answered the question of whether a whistleblower can sue a state for retaliation under the FCA.
The FCA recognizes the great risk whistleblowers take when attempting to stop their employer’s fraud by protecting whistleblowers from retaliation. The federal FCA’s retaliation provision, 31 U.S.C. § 3730(h)(1), provides relief to an employee who is discriminated against due to an employee’s acts done to stop FCA violations. FCA whistleblowers bringing retaliation claims may receive “all relief necessary to make that employee, contractor, or agent whole” which may include reinstatement, back pay, interest, and attorneys’ fees and costs.
The plaintiff in Monroe v. Fort Valley State Univ. alleged that she was terminated in retaliation for her complaints that Fort Valley State University misused government funds designated for Head Start services. But the defendants in Monroe v. Fort Valley State Univ., argued that they were protected from liability in FCA retaliation cases pursuant to Eleventh Amendment sovereign immunity.
Determining whether immunity applies
The Eleventh Amendment shields states from liability from suits in federal courts. To determine whether Eleventh Amendment immunity applies, courts first examine whether Congress has eliminated the immunity for claims under the particular law. If Congress did not make an unequivocal abrogation of sovereign immunity, courts would then consider whether the entity is an arm of the state. An entity is an arm of the state depending on:
- (1) How state law defines the entity
- (2) What degree of control the state maintains over the entity
- (3) Where the entity derives its funds
- (4) Who is responsible for judgments against the entity
The Eleventh Circuit applied this analysis, and determined whistleblowers may not sue states or state agencies for retaliation under the FCA. The Monroe Court found that, in the retaliation provisions of the FCA, Congress did not abolish Eleventh Amendment immunity with “unmistakable clarity.” The Court also found that the Georgia Board of Regents, acting through Fort Valley State University, is an arm of the State.
While Monroe, unfortunately, fails to protect from retaliation state employees seeking to stop fraud under the FCA, it is not a surprising decision considering the conflicting case law analyzing states’ and state agencies’ immunity under the FCA.
Notwithstanding the Monroe decision, the FCA provides protection (from non-state individuals and entities) for whistleblowers who often experience retaliation for reporting fraud.
Want to know more about fraud and the False Claims Act?
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