A federal court in Louisiana has dismissed claims filed under the federal False Claims Act (FCA) and Consumer Protection Safety Act by the former employee of a company that makes the lining material used in products such as diapers, tampons, adult incontinence products, and food packages. Ricalde v. Evonik Degussa Corp., No. 11-1400 (U.S. Dist. Ct., E.D. La., decided April 5, 2013).
Claiming that he was fired after complaining for many years about the product’s quality and alleged labeling deficiencies, Thomas Ricalde brought his suit under laws prohibiting fraud on the government and requiring companies that make consumer products to comply with applicable product safety standards. He also alleged violation of the laws of some 20 states.
Ricalde apparently claimed that “the end-products are defective when sold, whether to the government or the public, because Evonik’s substandard raw material has been incorporated into them. The FCA is triggered, according to Ricalde, because various government programs like Medicare and Medicaid for example, reimburse consumers who purchase the end-product for personal use. Moreover, government facilities such as veterans’ hospitals purchase products like diapers and incontinence products for their patients.” Because the complaint failed to allege that any specific claim was presented to the government for payment, any false or fraudulent claim was made to the government or that the purported whistleblower was fired because the company knew he was about to expose a fraud on the government, the court dismissed all of his FCA claims.
According to the court, the FCA is not intended to “redress breaches of contract or general allegations of fraud or to punish a manufacturer’s decision to ignore governmental safety regulations.” The court also determined that Ricalde could not prevail under the Consumer Product Safety Act, which defines injury as physical harm or illness, because the only injury he alleged was economic, that is, he was fired for taking steps to force the defendant to comply with the law. Nor could Ricalde prevail under the part of the law allowing interested parties to enforce a consumer product safety rule, because he failed to “identify a single consumer product safety rule that addresses the products at issue in this case.”
The court declined to dismiss the state law-based claims, but ordered the plaintiff to demonstrate by April 19, 2013, that he had notified officials in each of the states whose laws he wished to enforce or explain why such service is not necessary under a particular state’s laws.