Recent Expansions of False Claims Act Retaliation May Allow Claims Against Third-Party Non-Employers

The False Claims Act’s anti-retaliation provision is found at 31 U.S.C. § 3730(h)(1) (2011).  In 2009 and subsequently in 2010 this provision was amended, and now reads as follows:

Any employee, contractor, or agent shall be entitled to all relief necessary to make that employee, contractor, or agent whole, if that employee, contractor, or agent is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done by the employee, contractor, agent or associated others in furtherance of an action under this section or other efforts to stop 1 or more violations of this subchapter.

Prior to amendments in 2009 and 2010 Section 3730(h) stated in relevant part:

Any employee who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment by his or her employer because of lawful acts done by the employee on behalf of the employee or others in furtherance of an action under this section, including investigation for, initiation of, testimony for, or assistance in an action filed or to be filed under this section, shall be entitled to all relief necessary to make the employee whole.

As a comparison of these two provisions indicates, the class of protected individuals was expanded from “employee” to “employee, contractor, or agent.”  Moreover, the amended provision removed the phrase “discriminated against in the terms and conditions of employment by his or her employer” from the provision.  Finally, the amendment also expanded the scope of protected activity from acts “in furtherance of an action under” the FCA, to acts “in furtherance of an action under this section or other efforts to stop 1 or more violations of this subchapter.”  Consequently, as the changes indicate, the FCA’s anti-retaliation provision is now substantially broader than it was in the early 2000s and before.

In particular, the spectrum of potential defendants for a retaliation claim under the FCA was broadened beyond actions taken against a whistleblower “by his or her employer…”  Arguably, this change refects a specific decision on behalf of Congress to allow victims of retaliation by persons other than their employer to assert a claim against that person.  For instance, if an employee of a federal contractor was terminated at the insistance of the contracting agency’s director for blowing the whistle on bribery, that employee would arguably have an FCAretaliation  claim against the agency director, as well as his or her employer.

The caselaw following the 2009 and 2010 amendemnts to the FCA is scarce and has in many cases only addressed the retroactive effect of these amendments and the increased scope of protected activity.  However, even prior to the amendments courts held that the FCA limited the scope of potential plaintiffs, but not the scope of potential defendants.  See, e.g., U.S. ex rel. Kent v. Aiello, 836 F. Supp. 720, 724 (E.D. Cal. 1993)(“It appears relatively clear that properly read, the statute defines the class of plaintiffs who may bring suit under 31 U.S.C. § 3730(h) rather than those against whom suit may be brought. That is to say that while it is true that under the statute a plaintiff must have been an employee, the statute says nothing about the class of defendants. Thus the defendants’ reliance on section 3730(h) as requiring that defendants must have been plaintiff’s employer is unfounded.”).