The federal government is at a risk of fraud because of contracts it makes with and resources it provides to private companies. For example, the federal government contracts with private construction companies to work on federally funded development projects. Another example is money paid to private health care providers as a result of Medicare and Medicaid claims. Unfortunately, it can be difficult for the federal government to detect fraud. That is where the False Claims Act (FCA) comes into play.
The FCA is a federal law that helps protect the federal government from fraud. In fact, according to the Department of Justice, in the fiscal year ending September 30, 2020, more than $2.2 billion in settlements and judgments were obtained as a result of civil cases brought under the FCA. The FCA allows private citizens to file lawsuits against those defrauding the government on behalf of the government. These are called qui tam lawsuits.
The FCA is structured the way it is because those who are the most likely to learn about potential fraud against the government are the employees of the companies that are receiving the federal funds. For example, an administrative assistant at a healthcare clinic may learn of false claims being submitted to Medicare, or a payroll specialist may learn of improper payment of required prevailing wage on federally funded construction projects.
To establish a winning qui tam action, there must be: (1) a false statement or fraudulent course of conduct, (2) made knowingly, (3) that was material, and (4) caused the government to pay out money or to forfeit moneys due. See United States ex rel King v. Solvay Pharm., Inc., 871 F.3d 318, 323-24 (5th Cir. 2017) (citing United States ex rel. Longhi v. United States, 575 F.3d 458, 467 (5th Cir. 2009)). To simplify, a successful qui tam action requires intentional, successful fraud on the government.
This is a high burden. Accordingly, an employee who suspects fraud may want to investigate first before taking any further action. Indeed, it makes sense for the government to encourage such investigation prior to filing. If an employee determines on their own no fraud is occurring, it will save the government time, energy, and effort it would otherwise have to expend to investigate after an action is filed.
The question remains, would an employee who decides to investigate potential fraud prior to filing be protected from retaliation if their employer discovers the employee was looking into potential fraud? The answer is yes. Again, it makes sense that the law would encourage employees to investigate on their own. And to encourage such action, the employees must be protected from retaliation regardless of whether fraud is actually occurring. If the law did not provide such protection, why would an employee risk investigating? Likely, they would not.
Courts have made clear that employees are not required to establish an underlying violation of the FCA in order to succeed on a retaliation claim. See Hutchins v. Wilentz, Godman & Spitzer, 253 F.3d 176, 187 (3rd Cir. 2001). A successful underlying qui tam action is not necessary to a FCA retaliation claim. See id.
Determining what activities constitute “protected conduct” is a fact specific inquiry. But the case law indicates that “the protected conduct element . . . does not require the plaintiff to have developed a winning qui tam action. . . . It only requires that the plaintiff engage in ‘acts . . . in furtherance of an action under [the False Claims Act].’”
Id. (citing United States ex rel. Yesudian v. Howard Univ., 153 F.3d 731, 739 (D.C. Cir. 1998) (quoting 31 U.S.C. § 3730(h)).).
If you have faced retaliation for investigating or reporting your employer’s potential fraudulent actions against the federal government, you should consult with an employment attorney to explore your options.
Also, to learn more about qui tam actions, check out my Dallas colleague Deontae Wherry’s blog on the subject: