September 17, 2019

September 17, 2019

Subscribe to Latest Legal News and Analysis

September 16, 2019

Subscribe to Latest Legal News and Analysis

District Court Rules Individuals are Not Liable Under the False Claims Act Anti-Retaliation Provision

In a December 2017 ruling, the District Court held that the anti-retaliation provision of the federal False Claims Act (FCA) does not provide for individual liability. In Diffley v. Bostwick, No. 1:17-CV-1410, 2017 U.S. Dist. LEXIS 201967 (S.D.N.Y. Dec. 6, 2017), the former Chief Operating Officer and Compliance Officer of a clinical laboratory alleged that he suffered retaliation for providing information to the government during an FCA investigation. He brought suit under the FCA anti-retaliation provision, 31 U.S.C. § 3730(h), against his employer and the Chief Executive Officer. The District Court granted the CEO’s motion to dismiss, ruling that supervisory employees are not subject to liability under the FCA anti-retaliation provision.

District Courts within the Second Circuit are divided as to whether the FCA anti-retaliation provision provides a cause of action against supervisory employees. A 2012 decision of the District of Connecticut held that a supervisory employee can be liable for retaliation. See United States ex rel Moore v Cmty. Health Servs., Inc., No. 3:09-CV-1127, 2012 U.S. Dist. LEXIS 43904 (D. Conn. Mar. 29, 2012).

The differing interpretations result from a 2009 amendment to the False Claims Act. Before 2009, the anti-retaliation provision prohibited retaliation against a whistleblowing employee “by his or her employer.” Courts across all jurisdictions agreed that this language precluded individual supervisor liability because a supervisor was not an “employer” under the statute. See Brach v. Conflict Kinetics Corp., 221 F. Supp. 3d 743, 747 (E.D. Va. 2016).

In 2009, Congress amended the statute to extend its reach to include a cause of action for non-employee agents and contractors. The amendment also deleted the “by his or her employer” language, such that the anti-retaliation provision now states in part:

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 [the False Claims Act].

31 U.S.C. §3730(h). Some plaintiffs have argued that the 2009 amendment opened the door to anti-retaliation claims against individual supervisors.

In Diffley, the District Court rejected the argument that the 2009 amendment opened the door to claims against supervisors. Relying on legislative history, the District Court concluded that Congress intended to widen the class of potential plaintiffs to include contractors and agents, but that there was no indication that Congress intended to widen the scope of potential defendants to include individuals. The court concluded that if Congress had also intended to widen the class of potential defendants, it would have included explicit language to that effect. It further reasoned that the words “by his or her employer” were dropped as a matter of grammatical necessity in light of other changes to the statute, not in order to open the door to lawsuits against supervisors.

The Diffley decision follows what has emerged as the majority rule. Numerous District Courts and one circuit court have also held that the 2009 amendment to the FCA anti-retaliation provision did not create personal liability on the part of supervising employees. See Howell v. Town of Bell, 827 F.3d 515, 529-30 (5th Cir. 2016). Nonetheless, a minority of District Courts have reached the opposite conclusion and there has so far been only one circuit court that has addressed the issue.

Regardless of whether there is individual liability, employers should continue to stress the importance of compliance with anti-retaliation policies through training, and hold supervisory employees accountable for conduct that violates those policies. Doing so not only reduces the risk of liability under the anti-retaliation provision but ensures that compliance concerns will be aired internally so that they can be properly addressed and resolved.

Katlyn M. Moseley Contributed to this post. 

©2019 Drinker Biddle & Reath LLP. All Rights Reserved

TRENDING LEGAL ANALYSIS


About this Author

Jesse Witten, Drinker Biddle Law Firm, Washington DC, Healthcare and Litigation Attorney
Partner

Jesse A. Witten defends health care providers, pharmaceutical manufactures and other clients in the health industry against fraud and abuse matters in government investigations and litigation, particularly False Claims Act matters. Jesse also assists clients in internal corporate investigations and self-disclosures to the government of regulatory violations and Medicare/Medicaid overpayment. He counsels clients on compliance with Anti-Kickback Statute and Stark Law and laws governing the sale and marketing of medical devices and pharmaceutical products...

(202) 230-5146
Lynne Anne Anderson, Drinker Biddle, Lawyer, Employment Litigation
Partner

Lynne Anne Anderson is a practiced jury and bench trial lawyer who handles a wide range of employment litigation, including whistleblower cases, restrictive covenant disputes and wage and hour class/collective actions. Her litigation background gives her the insights necessary to effectively counsel clients who are dealing with frontline employee issues to effectuate a win-win resolution of workplace disputes, and to implement policies and protocols to limit litigation. Lynne is Co-Chair of the Labor and Employment Group's Fair Pay Act Obligations Team.

Whether providing strategic counseling on reductions in force, or drafting employment contracts and personnel policies, Lynne approaches each situation with sensitivity to the impact to the individuals involved, and on the business operations. Clients trust Lynne implicitly to counsel them through the ever-growing maze of labor and employment laws, and to tenaciously represent their interests in the event of litigation.

Lynne is admitted to practice in the state of New Jersey. 

Court Admissions

  • U.S. Court of Appeals, Third Circuit
  • U.S. District Court, District of New Jersey
  • U.S. District Court, Eastern District of New York
  • U.S. District Court, Southern District of New York

Organizations

  • Academy of New Jersey Management Attorneys (ANJMA)
  • American Bar Association, Labor & Employment Section
  • American Employment Law Council
  • American Health Lawyers Association
  • Diversity Law Institute
  • Litigation Counsel of America, Senior Fellow
  • Morris County Bar Association, Employment & Labor Committee
  • National Association of Women Lawyers (Past Planning Committee member)
  • New Jersey CFO Leadership Council Steering Committee – New Jersey Chapter
  • New Jersey Law & Education Empowerment Project (NJ LEEP), Board of Directors, Chair
  • New Jersey State Bar Association, Employment and Labor Section
  • New Jersey State Bar Foundation, Co-sponsorship Oversight Committee (2011-2017)
  • New Jersey Women Lawyers Association (Past President and Executive Committee)
  • Trial Law Institute
973-549-7140