In a recent opinion, the Sixth Circuit Court of Appeals addressed whether the False Claims Act’s (“FCA”) anti-retaliation provision applies to actions taken against an individual after employment ends. Splitting with its sister appellate court, the Tenth Circuit, the Court compared the FCA’s anti-retaliation provision to a similar anti-retaliation clause in Title VII of the Civil Rights Act of 1964 (“Title VII”) and found that post-employment actions taken by an employer may, indeed, violate the FCA’s prohibition against retaliation.

In August of 2010, the employee in question filed a qui tam complaint alleging that his then-employer was violating the FCA and Michigan Medicaid False Claims Act. Specifically, he claimed that the employer was paying kickbacks to various physicians and physician groups in exchange for Medicare, Medicaid and TRICARE patients. The employee also alleged that the employer retaliated against him for insisting on his then-employer’s compliance with the law. The government intervened and settled all claims except for the employee’s retaliation claim.

After the government settled, the employee filed an amended complaint which alleged, in part, that he was terminated in retaliation for his protected conduct and that his former employer later “intentionally maligned” him and, as a result, was not able to find a comparable position. However, the district court dismissed the employee’s post-employment retaliation claim, finding that the FCA’s anti-retaliation provision did not extend to retaliation against a former employee. In particular, the district court concluded that the qualifier “in the terms and conditions of employment” in § 3730(h)(1) means that only conduct occurring during the course of a plaintiff’s employment was covered under the FCA.

The crux of the Court’s analysis centered around the temporal meaning of the word “employee” and prohibited employer conduct under the FCA’s anti-retaliation provision. Specifically, the Court summarized the question as whether the FCA anti-retaliation provision “refer[s] only to a current employment relationship, or does it also encompass one that has ended?”

The Court began its analysis with the actual text of the statute, finding that the FCA does not explicitly say whether it pertains only to current employment. The defendant then urged the Court to adopt the Tenth Circuit’s interpretation that the plain text of the FCA, when read in accordance with relevant canons of interpretation, excludes post-termination retaliation. The Court refused to do so.

Instead, the Court looked to Robinson v. Shell Oil Co., 519 U.S. 337, 117 S. Ct. 843, 136 L. Ed. 2d 808 (1997), which analyzed Title VII’s anti-retaliation provision and whether it applies to current employment or instead to both current and post-employment actions. Finding similarities between the FCA and Title VII, the Sixth Circuit determined that the FCA’s anti-retaliation provision includes the employment relationship after employment has ended.

The Court conducted essentially a side-by-side analysis of the statutory interpretation of Title VII’s own anti-retaliation provision to determine whether “employee” means current employment only or post-employment, and compared that to the FCA’s antiretaliation provision. In doing so, the Court focused on three particular considerations.

First, the Court explained that Congress added the “no temporal qualifier” to Title VII to clarify whether the statute includes only current employees or current and former employees. Similarly, § 3730(h)(1) of the FCA makes explicit reference to “[a]ny employee,” meaning it could apply to any person who has ever been employed. Further, the FCA contains six operative words: discharged, demoted, suspended, threatened, harassed and discriminated. While the first three apply only to current employees, the latter three could apply to current and former employees. Therefore, the Court concluded that the FCA’s anti-retaliation provision contains no temporal qualifier to indicate that the statute applies only to current employees.

Second, Title VII’s definition of “employee” itself contains no temporal qualifier and therefore includes both current and former employees. The Sixth Circuit looked to the statutory and dictionary definition of “employee,” finding that the FCA does not define “employee” but the dictionary definition includes current and past employees. In particular, the word “employed” includes both current and former employees because it could be read as “was employed.” It is also important to highlight that the Court made a distinction between current and past employees on the one hand and potential employees on the other. The FCA’s anti-retaliation provision does not include applicants. Rather, an employment relationship must have been formed.

Third, Title VII includes other provisions that uses the term “employees” to include more than just current employees. The FCA, too, included other provisions where the term “employee” included more than current employees. In particular, the remedial, special damages and relief provisions in the FCA all support application to former employees.

Finally, the Sixth Circuit looked to the broader purpose of the FCA and compared it to Title VII. Both Title VII and the FCA provide protections to employees who report employer misconduct to the government, and to exclude former employees from being protected by these statutory protections would discourage existing employees from reporting any employer misconduct to the government. Therefore, the Court concluded that the FCA’s anti-retaliation provision may be invoked by a former employee for post-termination retaliation by a former employer.

The Sixth Circuit has effectively set up a conflict between itself and the Tenth Circuit, which may only be rectified by the Supreme Court of the United States. We will watch for further developments on this topic.

Practical Takeaways

It is important for employers to be mindful of their conduct towards employees who exercise their statutorily protected rights even after an employee’s employment has ended because they may be liable for any post-employment actions adversely affecting that former employee. The Supreme Court also may resolve the split between the Tenth and Sixth Circuits because the split involves a major provision of the FCA that could have important implications for employer liability. Finally, while this decision states post-employment retaliation applies to the FCA, the Court made specific reference, in dicta, that the FCA does not cover pre-employment retaliation or discrimination against whistleblowers applying for employment.