Posts Tagged ‘employment’

Employment Cases and False Claims Act Cases: What Happens When They Overlap?

Qui tam attorneys are often approached by potential whistleblowers who have already contacted an employment attorney after being terminated or harassed on the job as a result of blowing the whistle on suspected fraud.  Sometimes the whistleblower has already filed an employment case, and other times he or she is planning to file the employment case at the same times as a False Claims Act (“FCA”) case.  Although every case is unique and must be carefully evaluated by experienced qui tam counsel, there are several potential complications that should be considered when filing parallel cases.

The most significant concern is whether the employment case will jeopardize the FCA’s statutory seal, which requires that the FCA case be filed confidentially and not disclosed to the public or to the defendant company during the initial investigation.  Employment cases often move much more rapidly than FCA cases, so there is a strong possibility that the defendant company may take the employee’s deposition in the employment case while the FCA case is still sealed.  When this situation is unavoidable, there are certain strategies to protect the employee in the deposition, such as claiming a privilege to avoid answering inappropriate questions and then explaining the basis for the privilege in a sealed or ex parte communication to the employment judge.

However, that strategy is far from fool-proof, and risks still exist.

An on-going case in California highlights the potential hazards of parallel cases, though the issue arose in a slightly unique context.  A former employee named Kelly Nelson filed a wrongful termination case against a company called Millennium Laboratories, in which one of Nelson’s colleagues named Ryan Uehling was a witness.  As it turned out, Millennium believed that Uehling had filed an FCA case against the company so, Uehling claims, it sought to use Nelson’s case as an avenue to take an aggressive deposition of Uehling to find out more about the potential FCA case.[1]

Uehling was subjected to a two-day deposition that produced a transcript totaling more than 400 pages.  Notably, Millennium sent its qui tam defense counsel to take the deposition rather than the employment attorney who had been working Nelson’s case.  Millennium’s counsel asked probing questions clearly designed to elicit information about a potential FCA case, such as “Are you familiar with something called the False Claims Act?” and “Do you know what the anti-kickback statute prohibits?”  When Uehling refused to answer certain questions based on an unspecified “statutory privilege,” Millennium asked the court to force him to respond to more than 60 of the questions.  A magistrate judge ordered Uehling to respond, and threatened sanctions for non-compliance, without revieing any sealed documents which might have explained the basis for Uehling’s position.

Uehling’s attorneys have asked the district court judge to reconsider the magistrate’s decision based on several significant errors that they believe the magistrate made.  Not the least among those concerns is the magistrate’s confused holding that sealing the deposition transcript from the public would somehow preserve the goals of the False Claims Act’s seal requirement.

The magistrate’s ruling is a prime example of a court failing to understand the sanctity of the seal in a FCA case and therefore jeopardizing a relator’s confidentiality obligations.  Regardless of how the case is ultimately resolved, the decision is a critical warning of the potential dangers of a FCA relator being deposed in an employment suit while his or her case is under seal.  Although cases like Uehling’s (where he was merely a non-party witness in an unrelated case) may be difficult to avoid, relators should recognize this case as a cautionary tale of why it is important to avoid initiating parallel employment and FCA cases when possible.

This is not to say that relators should simply accept negative employment actions as a result of engaging in protected conduct.  As we have discussed on this blog before, the FCA includes an anti-retaliation provision which protects individuals who bring FCA cases.  The so-called “Section H” claim incorporates the anti-retaliation claim into the FCA case so that both will proceed together and there is no risk of exposure.

If you are a potential relator who is considering bringing an employment case in addition to a FCA case, or if you have already filed an employment case and are now considering a FCA case also, please contact James Hoyer for an evaluation of your claims.  Click here for more information about our firm and to submit your information electronically, or you can contact us by phone at 800-651-2502.

Written by Jillian Estes


[1] James Hoyer has no knowledge of whether Uehling has actually filed a False Claims Act case against Millennium and, if such a case does exist, the allegations or claims contained therein.

 

Can an Employer Retaliate Against an Employee for Bringing a False Claims Act Case?

Whistleblowers who come forward with information about fraud against the government are some of the nation’s most courageous and noble citizens.  These employees should be honored and coveted by employers for helping companies maintain levels of integrity and professional responsibility.  However, the reality is that not all companies respond well to reports of fraud, let alone the actual filing of a qui tam suit.  In those cases, whistleblowers may face harassment, demotions, or even termination.

Because of the very realistic concerns about workplace consequences, one of the most common questions we receive from potential whistleblowers is:

What will happen to me if I become a whistleblower?

Retaliation in the workplace is a nearly universal concern for whistleblowers.  Prior to 1986, that fear was well-founded because there were no real protections in the False Claims Act (“FCA”) to prevent whistleblowers from being harassed, demoted or terminated.  To encourage whistleblowers to come forward without fear of retribution, Congress included an anti-retaliation provision in the modern version of the FCA.  That part of the law is officially known as 31 U.S.C. § 3730(h), but it is often referred to simply as “Section H.”

Section H is designed to discourage employers from taking negative employment actions, and to make an employee “whole” again if the employer does engage in such conduct.  The law provides several remedies for an aggrieved employee: twice the amount of owed backpay plus interest, compensation for special damages, and attorney’s fees and costs related to the Section H claim.  Perhaps most importantly, an employee must be reinstated to his or her position of employment, with the same seniority status as he or she would have had if not for the negative action.

To obtain these Section H benefit, the whistleblower must show two things:

(1) that the employee engaged in protected conduct; and
(2) that the employee was discriminated against because of the protected conduct.

U.S. ex rel.  Yesudian v. Howard Univ., 153 F.3d 731, 736 (D.C.Cir.1998).

“Protected conduct” is a legal term that means that the employee engages in an act in furtherance of efforts to stop a violation of the FCA.  While that can mean actually filing a qui tam case, it can also mean simply investigating and reporting suspicions of fraud.  Hutchins v. Wilentz, et al., 253 F.3d 176, 187-88 (3d Cir. 2001).  It is important to note that an employee may have a Section H claim even without ever filing an FCA case.  Id. at 188.  Courts around the country have taken different approaches to what constitutes “protected conduct” and the analysis will always be fact-specific, so it is very important that an employee concerned about potential retribution consult with an attorney to discuss their case.

To show that the discrimination was “because of” the protected conduct, an employee must show that (1) his employer knew he was engaged in protected conduct, and (2) the retaliation was motivated – at least in part – by the employee’s protected conduct.  This part of the law exists to ensure that Section H isn’t abused by aggrieved employees who are terminated for unrelated reasons and then attempt to “cry fraud” after the fact.  Neal v. Honeywell Inc., 33 F.3d 860, 863 (7th Cir.1994).

Documenting the Process

Because the Section H elements are so fact-driven and unique to each case, the most important thing a whistleblower can do is to take meticulous notes to document the process.  For example, a whistleblower may want to document:

  • To whom did I report my concerns of fraud, and what were their reactions?
  • What other individuals, especially superiors, are aware of my investigation and concerns?
  • Has anyone expressed concerns to me about my activities or reports?
  • Have there been any unfounded complaints about my work product or performance?
  • Have I recently had a job review that did not reflect accurately reflect my performance?
  • Have I been taken off projects, excluded from meetings, excluded from emails, not been permitted to review internal documents, etc.?

All of this information will be critical in proving the elements of a Section H claim.  An employer can defend against an allegation by showing that it had no knowledge of the employee’s conduct or that the negative employment action was not related to the protected activity at all.  Careful notes, including dates and times, will aid in identifying how an employee was treated differently after the employer became aware of the protected activity.  This can rebut the employer’s contentions and give an employee the right to recovery under Section H.

Weathering the Storm

It is important to recognize that a Section H claim is not preemptive, meaning it cannot prevent employers from taking negative action against a whistleblower.  Rather, Section H is a responsive remedy that kicks in after the relator has experienced negative consequences, and provides relief only once the relator has prevailed in proving the elements of the Section H claim.  The unfortunate reality is that an employee must be prepared to weather the storm for the duration of the case, but can find some comfort in knowing that there is a remedy in place to protect his or her interests in the end.

If you believe you have information regarding fraud against the government and are considering bringing a False Claims Act case, please contact James Hoyer for an evaluation of your claims.  Click here for more information about the firm and to submit your information electronically, or you may contact our office at 813-397-2300.

Written by Jillian Estes