The U.S. Court of Appeals for the Sixth Circuit recently upheld a district court’s grant of summary judgment in favor of Abbott Laboratories in an action alleging that Abbott terminated a sales representative in retaliation for reporting a potential FCA violations. The appeals court held that the case should not proceed because the sales representative failed to show she reasonably believed an FCA violation had occurred. The holding potentially is helpful to FCA defendants facing retaliation allegations, but its precedential value may be limited because the court issued the unpublished opinion per curiam and with one judge dissenting.
The relator worked as a sales representative for a division of Abbott that sells nutritional products. When her supervisor announced a competition for sales representatives in which the winner would receive a $100 prize, the relator called a customer to discuss sales opportunities. The customer, however, informed the relator that another Abbott sales representative had already called about the competition and even offered to split the $100 prize. The relator reported the offer back to her supervisor, claiming it constituted an improper “quid pro quo” under the Anti-Kickback Statute.
The supervisor brought the incident to the company’s ethics and compliance department, which investigated the matter, but reached inconclusive results after the sales representative denied making the offer and the customer refused to cooperate in the investigation. The relator’s supervisor then began documenting problems in the relator’s job performance, and the company later terminated the relator’s employment for poor performance.
The relator filed a lawsuit in response, claiming Abbott improperly terminated her employment in retaliation for her reporting the alleged bribe. The district court granted summary judgment to Abbot, finding the relator failed to connect the bribe to any fraud. On appeal, the divided Sixth Circuit panel agreed.
Importantly, the majority followed a previous unpublished Sixth Circuit opinion in holding that the 2009 amendments to the FCA expanded the Act’s anti-retaliation provision to protect not only activity “in furtherance of a potential or actual qui tam action,” but also “internal reports of, or other efforts to stop, fraud on the government.” While this holding potentially expands liability for FCA defendants, the Sixth Circuit also reasoned that relators “must show that [their] allegations of fraud grew out of a reasonable belief in such fraud.”
Applying this reasoning, the Sixth Circuit concluded that the relator “did not have an objectively reasonable belief that an FCA violation would occur” because she testified that when she made her report she did not believe the customer would accept the bribe. Although the Sixth Circuit did not explicitly rely on these facts, it also noted that the customer testified the sales representative made the offer as a joke and that the relator conceded the sales representative may have been joking. The Sixth Circuit declined to consider the relator’s argument that her report constituted protected activity because it would prevent future bribes, stating that the relator’s “testimony does not support that she held this belief.”
The dissent urged that the relator’s “claim should not depend on the integrity or good judgment of the person to whom the inducement was offered.” The dissent reasoned that if the customer had accepted the bribe, “an FCA violation would have reasonably resulted.” The dissent also found “[i]t was reasonable for [the relator] to fear that if the offer was unreported, it might have happened again.” For these reasons, the dissent would have allowed a jury to determine whether the relator reasonably believed she was reporting the bribe to stop fraud.