The Department of Justice recently reported that the healthcare industry accounted for $2.5 billion of the $2.8 billion dollars it recovered in False Claims Act (FCA) cases in Fiscal Year 2018. Qui tam actions (FCA claims brought by private individuals on behalf of the government) allow whistleblowers to receive up to 30 percent of the amount of recovered when a court finds a healthcare organization submitted false claims for payment. Additionally, individuals engaging in protected activity under the FCA may recover damages under the law’s anti-retaliation provision.

Two recent court decisions out of the First Circuit Court of Appeals and Eastern District of Tennessee serve as a reminder that healthcare employers can be liable under the FCA’s anti-retaliation provisions even if there is no finding that they submitted a false claim. In Guilfoile v. Shields, 2019 U.S. App. LEXIS 1322 (1st Cir. Jan. 15, 2019), Guilfoile brought a retaliation claim against his former employer, a pharmacy chain, alleging that he was fired in retaliation for accusing the employer of making false representations in customer contracts and violating the Anti-Kickback Statute by making quarterly payments to a consulting firm for each hospital contract the firm referred. In determining that the plaintiff adequately alleged protected activity (the first element of a FCA retaliation claim), the First Circuit stated: “[R]ather than plausibly pleading the existence of a fire — the actual submission of a false claim — a plaintiff alleging FCA retaliation need only plausibly plead a reasonable amount of smoke — conduct that could reasonably lead to an FCA action based on the submission of a false claim.”

Similarly, in Forsythe v. National Health Corp., 2019 U.S. Dist. LEXIS 15543 (E.D. Tenn. Jan. 31, 2019), in addition to filing a qui tam action, Forsythe brought a retaliatory discharge claim under the FCA. He alleged that his supervisor instructed him and others to code group physical therapy as one-on-one instead of using a group code, contrary to Medicare regulations. Forsythe alleged that he was chastised for refusing to comply with the directive and ultimately complained through the employer’s hotline. He claimed that, thereafter, he was referred to as a “snitch,” his requests for time off were denied, he was “given the cold shoulder,” and eventually was terminated for creating a hostile work environment. Similar to the First Circuit’s decision in Guilfoile, in finding that Forsythe engaged in protected activity, the Eastern District of Tennessee emphasized that, to state a retaliation claim, a plaintiff simply needs to establish “some nexus to the FCA,” not a “concrete violation.”

These decisions illustrate that refraining from illicit activity, alone, will not insulate employers from FCA whistleblower retaliation claims. So what is a healthcare employer to do? There are several steps employers can take to minimize, or mitigate against, such claims:

  • Promote a culture where employees do not presume that wrongful conduct may be occurring. When employees understand an organization’s values and see those values lived day-to-day, they are less apt to jump to assumptions of fraudulent conduct; instead, reporting internally with a justified belief that the employer will investigate and take appropriate action if fraudulent conduct is occurring.
  • Establish multiple, known reporting channels to facilitate internal reporting so that employees do not feel their only recourse is to report externally.
  • Ensure policies contain appropriate language covering issues under the FCA with adequate notice as to where employees can go to raise concerns.
  • Address employee concerns promptly and thoroughly.
  • Train managers on FCA obligations and reporting options, giving them the skills to respond properly to employees who raise concerns.