Tenth Circuit Rules that False Claims Act (FCA) Does Not Cover Post-Employment Retaliation
In a win for employers, the Tenth Circuit Court of Appeals recently held that “…the False Claims Act’s anti-retaliation provision unambiguously excludes relief for retaliatory acts occurring after the employee has left employment.” Potts v. Center for Excellence in Higher Education, Inc., No. 17-1143 (10th Cir. Nov. 6, 2018) (emphasis added).
Debbi Potts, a campus director at an educational organization, resigned her employment in July 2012. In September 2012, Potts and the organization entered into an agreement whereby Potts promised not to disparage the organization or “contact any governmental or regulatory agency with the purpose of filing any complaint or grievance.”
In February 2013, several months after her resignation and agreement, Potts sent a complaint to the organization’s accreditor regarding “alleged deceptions in maintaining its accreditation.” (After entering into the agreement, Potts also sent a disparaging email.)
The organization sued Potts for breach of contract, citing Potts’s complaint to the accreditor. Potts, in turn, filed a lawsuit in federal court, claiming the organization retaliated against her in violation of the False Claims Act (“FCA”) when it sued her. The organization moved to dismiss Potts’s FCA lawsuit, which the district court granted.
The Tenth Circuit Court of Appeals affirmed the dismissal of Potts’s FCA retaliation claim, engaging in extensive statutory interpretation to support its conclusion that “employees” under the False Claims Act are limited to “persons who were current employees when their employers retaliated against them.” (emphasis added). In contrasting the False Claims Act with Title VII’s anti-retaliation provision, the Tenth Circuit concluded that “…the False Claims Act, by its list of retaliatory acts, temporally limits relief to employees who are subjected to retaliatory acts while they are current employees.” The Tenth Circuit ultimately held that “[b]ecause Potts alleges that the [organization] retaliated against her after she resigned her employment, she cannot have a cognizable claim under the statute.”