Does the False Claims Act’s antiretaliation provision, 31 U.S.C. § 3730(h)(1), apply to an “employer that fire[s] an employee after discovering that the employee was a whistleblower and relator in an ongoing qui tam action under the FCA against his former, unrelated employer”? Cestra v. Mylan, Inc, No. 14-825, 2015 U.S. Dist. LEXIS 67069 (W.D. Pa. May 22, 2015). The 3rd Circuit may soon answer this “novel question of law” after the Western District of Pennsylvania’s grant of immediate appeal on May 22, 2015.
While employed at Cephalon,–a company unrelated to the Defendants–Plaintiff filed a qui tam action in the Southern District of New York, alleging that Cephalon violated the FCA. Plaintiff’s identity as the relator in the Cephalon case was under seal until July 10, 2013, approximately two years after Plaintiff began working for Defendants. The Plaintiff alleges that on February 10, 2014, he was identified as the relator in the Cephalon action through on a forum website for the pharmaceutical industry. Plaintiff alleges that he was chastised and ultimately fired by Defendants on May 8, 2014, because of his identification as the relator in the Cephalon case.
Plaintiff subsequently filed a claim under the FCA’s anti-retaliation provision, alleging that his termination by Defendants because he had filed a qui tam action against his former employer violated 31 U.S.C. § 3730(h)(1). Defendants subsequently moved to dismiss on the grounds that 31 U.S.C. § 3730(h)(1) does not extend to actions taken by a current employer because “because they were not the target of the FCA investigation and are not related to plaintiff’s previous employer.” Cestra, 2015 U.S. Dist. LEXIS 67069 at *2. In denying Defendants’ motion to dismiss, the district court adopted an expansive reading of the antiretaliation provision; reading it so as to apply to all acts of retaliation by an employer. To support the expansive reading, the court found that the provision’s purpose is “to protect persons who assist the discovery and prosecution of fraud and thus to improve the federal government’s prospects of deterring and redressing crime.” Id. at *4 (quoting U.S. ex rel. Schweizer v. Oce N.V., 677 F.3d 1228, 1237 (D.C. Cir. 2012)). Thereafter, the district court granted Defendants’ request for an immediate appeal.
The appellate court’s decision in Cestra will affect the relationship between relators and their subsequent employers: “While the plain text of § 3730(h)(1) does not restrict liability to employers that are the target or related to the target of the FCA investigation,” Cestra, 2015 U.S. Dist. LEXIS 67069 at *5, it can be argued that the knowledge prong of § 3730 liability simply requires the employee to put his employer on notice of the ‘distinct possibility’ of False Claims Act Litigation” without regard to who is the defendant of the FCA litigation.
The author acknowledges and thanks Matt Gold, a rising 3rd year law student at University of Illinois College of Law, for his help and support in the preparation of this post.