Divided Sixth Circuit Dismisses Compliance Officer’s FCA Whistleblower Retaliation Claim
Last week, the U.S. Court of Appeals for the Sixth Circuit rejected a former compliance officer’s whistleblower retaliation claim because she did not establish that she had an objectively reasonable belief that she was investigating illegal conduct when her employment was terminated.
The plaintiff, Sara Jane Jones-McNamara (“Plaintiff”) alleged that the defendant, Holzer Health Systems, Inc. (“Holzer”) terminated her employment after she began investigating Holzer’s relationship with a patient transport company. McNamara claimed that she believed – and reported to her Holzer’s CEO – that the transport company was providing jackets to Holzer physicians and free hotdogs and hamburgers at Holzer health and wellness fairs, among other alleged kickbacks, in exchange for preferential referrals for patient ambulatory transports.
The United States District Court for the Southern District of Ohio granted summary judgment for Holzer on Plaintiff’s False Claims Act (“FCA”) retaliation claim. The district court concluded that Plaintiff failed to rebut Holzer’s non-retaliatory reasons for her firing, including a lack of professionalism and interpersonal skills and insubordination. The Sixth Circuit, in a divided opinion, affirmed the district court, but on different grounds.
The majority found that Plaintiff did not establish that her investigation was protected activity. Among other things, the Sixth Circuit cited the low monetary value of the gifts that she reported as well as her failure to link those gifts to any individual who had procurement authority for Holzer’s patient transport services. Summarizing these failures, the Sixth Circuit found that “[a] jury could not find [Plaintiff] engaged in protected activity when she based her allegations of illegal kickbacks solely on a high referral rate to a contractually (and legally) preferred supplier who gave a token jacket and hotdogs to unidentified Holzer employees that may or may not have had referral power.” Accordingly, the Sixth Circuit determined that Plaintiff did not have an objectively reasonable belief that she was investigating illegal kickbacks.
The decision shows the current conflict among the courts about the precise scope of the phrase “protected activity” under the FCA. Increasingly, as with the Sixth Circuit in this case, courts have been willing to review the information known to the putative whistleblower when she complained to determine whether it was sufficient to find an objectively reasonable belief that her employer had committed or was committing fraud.