BOSTON BAR ASSOCIATION WHISTLEBLOWER RETALIATION CLAIMS UNDER THE FALSE CLAIMS ACT

1. BOSTON BAR ASSOCIATION WHISTLEBLOWER RETALIATION CLAIMS UNDER THE FALSE CLAIMS ACT By Robert M. Thomas, Jr. THOMAS & ASSOCIATES WHISTLEBLOWER LAW COLLABORATIVE April 4, 2012

2. So what is this False Claims Act qui tam thing? • He who sues in the name of the king… • Originally passed in 1863, at President Lincoln’s urging, to fight unscrupulous defense contractors, e.g., the Shoddy company. • Largely under-utilized until 1986 amendments. www.thomasandassoc.net

3. Now • Has become one of the government’s primary anti-fraud tools. • Over $30 billion recovered since 1986. • Designed to incentivize insiders to alert the government of fraud schemes against the taxpayers. www.thomasandassoc.net

4. The False Claims Act • Codified at 31 U.S.C. § 3730 et seq. • Protects against submission of false or fraudulent claims against the government • Or causing that to happen • Or conspiring to have that happen. www.thomasandassoc.net

5. Plus: State False Claims Acts • Twenty-seven states, including Massachusetts, have FCAs. • State statutes (which address fraud against the state fiscs) are usually similar in structure to the federal FCA. www.thomasandassoc.net

6. How the FCA works • The government is the real party in interest. • The relator may file suit under seal in the name of the government, and the government is allowed time to evaluate the case and decide whether to intervene. • The statute rewards successful relators with 15% -30% of the government’s recovery at the end of the case. www.thomasandassoc.net

7. Anti-Retaliation Provisions • 31 U.S.C. Section 3730(h) • State statutes all have virtually identical language. • Provides for double back pay, interest, reinstatement, and attorney’s fees and costs. • Given that a successful qui tam case can take 5-10 years, the damages can be significant. www.thomasandassoc.net

8. The Statutory Language of Section (h) • Any employee, contractor, or agent shall be entitled to all relief necessary to make that [person] whole, if that [person] is … • Discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against … because of lawful acts … done by the [person] in furtherance of an action under this section www.thomasandassoc.net

9. Statutory Language (cont.) • Relief … shall include: • Reinstatement with the same seniority status that the [person] would have had but for the discrimination, • Two times back pay, interest on the back pay, and compensation for any special damages, … including litigation costs and reasonable attorney’s fees. www.thomasandassoc.net

10. Statutory Language (cont.) • An action under this subsection may be brought in the appropriate district court of the United States … • A civil action under this subsection may not be brought more than 3 years after the date when the retaliation occurred. www.thomasandassoc.net

11. The Liability Case • The McDonnell Douglass framework of employment discrimination applies: • Plaintiff’s prima facie case must show that: • She was engaged in protected activity • The employer knew she was engaged in protected activity, and • Employer retaliated because of this conduct. www.thomasandassoc.net

12. Burden shifts to defendant • Once plaintiff meets the prima facie case, the burden shifts to defendant, who must prove non-retaliatory motive. • Note: Multiple motives gives plaintiff the advantage: defendant must show that there was no retaliatory motive • Plaintiff can rebut this defense by arguing pretext. www.thomasandassoc.net

13. Leading cases • Neil v. Honeywell, 33 F.3d 860 (7th Cir. 1994)(plaintiff need not file a qui tam action to bring a claim under Section (h)). • U.S. ex rel. Karvelas v. Melrose Wakefield Hospital, 360 F.3d 220 (1st Cir. 2004) (discussing what kinds of activities are “in furtherance of” a qui tam action). • Harrington v. Aggregate, 668 F.3d 25 (1st Cir. 2012) (adopting the McDonnell Douglas standards in Section (h) cases. www.thomasandassoc.net

14. Practice Realities • Section (h) claims are usually filed under seal, with the qui tam action, and thus not litigated like other claims. • Not unsealed until the qui tam case is settled or dismissed. • Employer cannot assume that the ex-employee has gone away quietly. www.thomasandassoc.net

15. Practice Realities (cont.)(2) • If the company is settling the qui tam action with the government, it becomes harder to defend the Section (h) claim (see Neil v. Honeywell), because the court will assume “there must be something to this.” • Settlement dynamics will put pressure on everyone to work it out. www.thomasandassoc.net

16. Practice Realities (cont.)(3) • Damage analyses: • Reinstatement can mean “front pay.” • Lengthy seal period can mean a compounding of the company’s exposure • Employee’s duty to mitigate can be hurt if the employer has blacklisted the employee in the industry. www.thomasandassoc.net

17. Practice Realties (cont.)(4) • Incentives: plaintiff and attorney do not have to share the Section (h) award with the government; this is a personal claim. • Emotions can be higher on this claim than in the underlying qui tam case; both sides want some degree of vindication. • The (h) claim can be severed from the settlement. Have fun! www.thomasandassoc.net

18. An ounce of prevention • Most qui tam whistleblowers don’t start out thinking of themselves in this role. • Most are pushed into it by losing their jobs • Serious internal complaints need to be taken seriously. • Termination of the employee ups the ante: where will they go for advice? www.thomasandassoc.net