The False Claims Act Also Protects Former Employee Whistleblowers from Retaliation

By Julie K. Bracker of Bracker & Marcus LLC

If you are retaliated against for reporting fraud on the government at your workplace, do you have any protection? In 1986, Congress answered this question with a resounding “yes” when it added the retaliation provisions of the False Claims Act, empowering whistleblowers to sue employers who punish them for blowing the whistle. These provisions apply whenever the employer has fired, demoted, or discriminated against the whistleblower who has taken steps to stop a fraud on the government, including filing a False Claims Act case against their employer.


But what about after you leave your job? Can you be retaliated against for reporting fraud at your former workplace?


On March 31, 2021, the Sixth Circuit federal Court of Appeals issued a groundbreaking decision in US ex rel. Felten v. Beaumont Hospitals, holding that the anti-retaliation provision of the False Claims Act prohibits employers from insulating themselves from retaliation liability by first firing the whistleblower. The decision directly affects the law that governs federal courts in the Sixth Circuit (which includes Ohio, Michigan, Kentucky, and Tennessee), but is also a clear and persuasive roadmap for the other federal appeals courts.[1]

My firm represents Dr. David Felten, the whistleblower. Dr. Felten is a MacArthur Genius Grant recipient listed among the “Thirty Most Influential Neuroscientists Alive Today.” His research created the field of psychoneuroimmunology (the study of how the mind affects the immune system).


In 2010, while serving as Vice President of Research, Dr. Felten brought a qui tam False Claims Act case against the Beaumont hospital system, alleging that it was rife with fraud that went to the very top. Eight years later, the Government intervened and settled the case for $84.5 million.


When he filed the case in 2010, Dr. Felten was already being harassed for putting a stop to physician-researchers’ “slush funds.” After the case was made public, we asked to amend his lawsuit to add that Beaumont had later become aware that Dr. Felten was “the snitch” and set out to “destroy him.” We alleged that not only was Dr. Felten forced out under an inapplicable mandatory retirement policy, he was also blacklisted from academic medicine by his then-former employer.


The trial court did not allow these additions, finding that the FCA did not prohibit post-employment retaliation like blacklisting. However, the Sixth Circuit agreed to hear our appeal. The crux of our argument was a 1997 Supreme Court case Robinson v. Shell Oil Co., which found the word “employee” in a different federal law to be ambiguous as to whether it included former employees. When a word in a statute is ambiguous, the court is permitted to look at other things, such as Congress’ intent in creating the law, to decide what the word means.


We knew we faced an uphill battle because, using the same Robinson analysis, a different circuit court, the Tenth Circuit, had already ruled that the word employee in the FCA was not ambiguous. We argued Dr. Felten’s conduct was different, because in that case the relator’s whistleblowing did not include filing a qui tam lawsuit and occurred years after she left the company. By contrast, Dr. Felten filed his qui tam lawsuit while he was still an employee.


Interestingly, instead of ruling that this case was different, the Sixth Circuit disagreed directly with the Tenth Circuit’s application of Robinson:


“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” the Sixth Circuit said. 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.”


The most important impact of the decision—other than protecting Dr. Felten—is that when trial courts decide whether you can sue for retaliation after you are fired, this case provides a roadmap to protect whistleblowers.


[1] Federal lawsuits, such as whistleblower cases under the False Claims Act, are filed in federal district (trial) court and can be appealed to the federal Circuit Courts of Appeals. Decisions of the Circuit Courts are binding on the federal trial courts within the Circuits, unless the Supreme Court overrules them. The Sixth Circuit hears appeals from federal courts in Ohio, Michigan, Kentucky, and Tennessee. For more information on how the federal courts are structured and operate, see https://www.uscourts.gov/about-federal-courts/court-role-and-structure