The United States District Court for the Eastern District of Wisconsin recently issued a decision involving protections for employees whose jobs involve the investigation of fraud. The case, brought under the anti-retaliation provision of the False Claims Act (“FCA”), is available here.
Since 2009, the FCA’s anti-retaliation provision,(codified at 31 U.S.C. § 3730(h)(1)), has provided that “[a]ny employee, contractor, or agent shall be entitled to all relief necessary to make that employee, contractor, or agent whole, if that employee, contractor, or agent is 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 employee, contractor, agent or associated others in furtherance of an action under this section or other efforts to stop 1 or more violations of” the FCA.
Prior to 2009, the FCA’s anti-retaliation provision more simply prohibited retaliation against an employee for conduct that was “in furtherance of an action under this section.” Some courts, including the Seventh Circuit, interpreted this to mean that the employee’s conduct, to be protected, must have put the employer on notice of the “distinct possibility” of a qui tam action (rather than protecting one whose job is to prevent fraud and who tried to do just that). Generally speaking, in these courts, the employer would have to be made aware that the employee was involved in or considering an actual FCA complaint. The 2009 amendment added language affording protection from retaliation for employees (and others) who engaged in “other efforts to stop one or more violations” of the FCA.
For some years prior to the 2009 amendment, and in some cases since then, courts recognized a heightened obligation in retaliation cases for employees whose jobs require them to investigate fraud and compliance matters. Those cases require that such employees make clear their intentions to bring or assist in an FCA action. This category of individuals is sometimes called a “fraud alert employee.”
For many FCA litigators, the 2009 amendments have called into question that heightened notice requirement and, in its recent decision, a federal district judge in the Eastern District of Wisconsin weighed in. The Hon. Lynn Adelman observed that “it is not clear that a fraud-alert employee must meet a heightened notice requirement to receive protection.” She noted, for the added protection given in the 2009 amendments, “the employer does not need to be on notice that the employee was prepared to take the extra step of filing a qui tam action.” After reaching this conclusion, the court went on to explain that even if a heightened standard applied to the plaintiff as a fraud-alert employee, she had met the heightened burden. As a result, the court denied the defendant’s motion for summary judgment.
The recent decision from the Eastern District of Wisconsin moves away from FCA retaliation decisions which imposed a higher notice requirement for employees whose job duties involve the investigation and/or prevention of fraud. The court found its position more consistent with the protections, made available under the 2009 amendments, to those who would prevent fraud before it occurs.