A Whistleblower Hidden in Plain Sight: When Does an Employee Termination Risk a False Claims Act Filing?

Author:Rodziewicz, David J.
 
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Scenario One: (1) Sharon had been the new chief HR officer for just the last quarter at NewCo. Everything was going nicely--one of the smoothest transitions she'd ever made. The company was booming with new defense contracts, and she was busy hiring (her favorite). Processes were a little loose, but that was her specialty, right? Everyone in the c-suite was busy working on the quarterly round-up. That's what made the hush and security officers so unusual on a Wednesday afternoon. Walking toward her in the hall, accompanied by security carrying his belongings, was the long-time director of finance, Richard Dingle. Richard was recently passed over for the CFO role in favor of a younger, "more rounded" outside candidate with merger and acquisition experience. Richard glared at her and said, "This isn't done. You people...." But why hadn't the CEO, Roger, spoken to her about this? Sharon headed to Roger's office, where a mini c-suite meeting was taking place without her. Roger looked at her in the doorway and said, "Sharon, he was threatening our very existence. The damn fool handed me a report he prepared and said we needed to pay the Department of Defense back the entirety of profits from last quarter. Something about how we billed them incorrectly. He said he had more. Well, I've made a decision, and that's all you need to know."

Scenario Two: (2) Sally really enjoyed the collaborative feel of her new office. Although she'd been an ARNP for a few years, this office really seemed to have it together. Beautiful facilities, great automation, and everyone seemed so nice. The supervisory doctor in the practice was super busy but that was normal for gastrointestinal surgeons. The term for her position was an "extender." Like the other providers she met during her interviews, her job was to churn out daily office visits with new patients, yearly checkups, and surgical follow-ups. Sally couldn't imagine why the office manager and one of the other ARNPs she met during her interviews just left the practice. This employer even paid for the fitness club down the street!

One of her repeat patients complained about getting billed for a procedure that wasn't performed. Sally checked her charts to verify, and the patient was correct. It must be another computer glitch. She caught one a few weeks ago where the medical assistants were cutting and pasting patient information during initial patient work-ups. Sally approached the practice manager about it and was met with a friendly yet totally unhelpful response. Over the next few weeks, Sally noticed more charting concerns and more billing irregularities. There was no compliance officer in this medium-sized, multi-office practice. She finally had enough and sent a few emails copying "everyone." Nothing, no response, just silence for what seemed like weeks. Surely, they must be working on it. Did I mention that they provided fresh bagels for staff every morning and hot lunch on Fridays? So, Sally was surprised when the practice manager contacted her to schedule her six-month review. Sally was even more surprised at that meeting when she was met with a severance agreement and cardboard boxes instead of a review.

Employment counsel--you've just received the phone call. For plaintiff's counsel, it's a request for consultation on a wrongful termination. For defense counsel, it's a consult on a problem employee, a pre-termination checklist conversation, an unemployment appeals request, or perhaps your client received a demand letter of some kind. We know that separation is sometimes unavoidable. But sometimes, the continuing consequences of a separation are also unavoidable if managed poorly. This article discusses the ramifications of workforce management in light of federal fraud and abuse statutes, specifically the False Claims Act (FCA). (3) The article begins with the origins and background of qui tam claims, then reviews the characteristics of a whistleblower claim, and finally examines the risks of a qui tam employment retaliation claim plus (or instead of) a qui tam claim, including details on how those retaliation claims develop.

Qui Tam History/Background

The term "qui tam" is an abbreviation of the Latin phrase qui tam pro domino rege quam pro se ipso in hac parte sequitur meaning, "he who sues in this matter for the king as well as for himself." In English common law, a private citizen assisting in the prosecution of a matter could receive a portion of the property forfeited by the defendant.

During the Civil War (1861-1865), Congress sought ways to reduce fraud perpetrated by fraudulent vendors of defective merchandise and spavined mules. In 1863, the False Claims Act or "Lincoln Law" was enacted. (4) The law permits private citizens to file actions against government contractors or vendors claiming fraud against the government. If the case is successful, then the relator may share in a percentage of the monetary recovery. (5)

The False Claims Act was strengthened in 1986 in response to reports of price gouging by military defense contractors. (6) The FCA imposes civil liability upon "any person" who "knowingly presents, or causes to be presented, to an officer or employee of the United States government ... a false or fraudulent claim for payment or approval." (7) A defendant may be liable for up to triple actual damages and a civil penalty of up to $10,000 per false claim, false statement, or false bill, plus attorneys' fees to the relator. (8)

Although an FCA action may be commenced by the government itself, (9) more commonly, it is commenced by the relator filing suit "for the person and for the United States government" against the false claimant "in the name of the government." (10) When the relator files suit, he must deliver a copy of the complaint and all supporting evidence (i.e., a written relator's disclosure statement) to the Department of Justice (DOJ), which then has 60 days to intervene in the action. If it does so, then the DOJ assumes primary responsibility for prosecuting the action though the relator may continue to participate through counsel. If the government declines, the relator may continue the action. (11) The government retains the right to intervene later with leave of court. (12)

In the past 30 years, it is estimated that over $48 billion has...

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