Monday, May 26, 2014

A Corporate Plaintiff May Not Bring Suit for False Claims Act Retaliation

Retaliation claims are increasingly commonplace in False Claims Act cases. The issues as to who may bring a retaliation claim -- an individual or corporate relator -- and whether they may sue just the employer accused of retaliation or also individual co-workers or supervisors as well have not been definitively determined by the courts.

For example, I recently learned that only people -- not corporations --  can bring retaliation claims under the False Claims Act. In US ex rel Fryberger v. Kiewit Pacific Company, 2014 WL 1997151 (N.D. Cal. 5/14/2014), the Court held that the False Claims Act (FCA), 31 USC 3730(h), does not permit a relator or plaintiff that is a corporation to sue for retaliation: only an individual "employee, contractor, or agent" may bring a claim that he or she was "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 individual in furtherance of an FCA action or in an "effort to stop one or more violations of" the FCA.

Prohibiting a corporate relator from bringing a retaliation claim appears to be an issue of first impression as the Court observed that "[n]either party cites any case law on this question, and the Court has not located any." In making its ruling, the Court looked to the language of the FCA's anti-retaliation provision and the legislative history which accompanied its amendment in 2009. First, the Court noted that the relief provided by sec. 3730(h) for retaliation such as reinstatement and back pay "are directed to individual plaintiffs, not entities." The Court explained further that the 2009 legislative history which added the "contractor or agent" references to the prohibition against retaliation against an employee was "in response to court decisions limiting retaliation plaintiffs to employees and not independent contractors . . . .  Nothing suggests it was Congress's intent to broaden the retaliation entitlement to entity plaintiffs as well as individual plaintiffs."

The Fryberger Court also joined the increasing number of district courts that have held that a relator/plaintiff may only bring retaliation claims against an "employer or entity with whom the plaintiff has a contractor or agency relationship." Prior to the 2009 amendment to the retaliation provision, sec 3730(h), the retaliation provision was generally interpreted only to apply to employers and the Court found that the 2009 did nothing to change that. The Court cited a recent Arizona decision Wichansky v. Zowine, 2014 WL 289924, at *3-5 (D. Ariz. Jan. 24, 2014) as a thorough and persuasive decision along with a number of other cases. (See also an interesting article which discusses this issue, J. Tyler Robinson and Roger R. Clayton, "Beware the Whistleblower: Whether Congress’s Omission of the Term 'Employer' from Section 3730(h) of the False Claims Act Was Intended to Extend Liability to a Whistleblower’s Individual Supervisors," IDC Quarterly Volume 24, Number 1).

A. Brian Albritton
May 26, 2014

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