On January 8, 2015, the Fourth Circuit determined that, amid a circuit split, the “implied certification” theory of liability under the False Claims Act (“FCA”) was viable in the Fourth Circuit. United States v. Triple Canopy, Inc., 775 F.3d 628, 635 n.3 (4th Cir. 2015) (“contractual implied certification claims can be viable under the FCA in the appropriate circumstances.”).
In Triple Canopy, the government alleged that a security contractor, with the responsibility of ensuring the safety of an airbase in a combat zone, “knowingly employed guards who were unable to use their weapons properly and presented claims to the government for payment for those unqualified guards.” Triple Canopy, 775 F.3d at 638. The Triple Canopy court endorsed the implied certification theory, finding that “the Government pleads a false claim when it alleges that the contractor, with the requisite scienter, made a request for payment under a contract and ‘withheld information about its noncompliance with material contractual requirements.’” Id. at 636 (quoting United States v. Sci. Applications Int’l Corp., 626 F.3d 1257, 1269 (D.C. Cir. 2010)).
Five months after Triple Canopy established the viability of the implied certification theory in the Fourth Circuit, the Circuit Court analyzed whether this theory could be used to plead an anti-retaliation claim under the False Claims Act in Young v. CHS Middle East, LLC, No. 13-2342, 2015 U.S. App. LEXIS 8732 (4th Cir. Va. May 27, 2015).
In Young, the plaintiffs alleged that CHS Middle East had falsely reported staffing certifications to the State Department by listing “emergency medical technicians as scrub technicians for surgery even though they had no surgical experience.” Young, 2015 U.S. App. LEXIS 8732 at *3. The plaintiffs reported their staffing certification allegations to the State Department and were terminated two days later. The plaintiffs filed an FCA anti-retaliation claim, alleging that they were terminated for reporting the alleged false staffing certification and that this conduct constituted protected activity under the FCA. The district court dismissed, holding that the plaintiff’s conduct could not constitute protected activity under the FCA.
The Fourth Circuit reversed, holding that reporting alleged false certifications constitutes a protected activity under the FCA anti-retaliation statute. The Young court analogized to Triple Canopy for the principle that “[l]ogically, if making false implied staffing certifications to the government can constitute a False Claims Act violation, acts undertaken to, for example, investigate, stop, or bring an action regarding such false implied staffing certifications can constitute protected activity for purposes of a retaliation claim.” Id. at *7 (citing 31 U.S.C. § 3730(h)).
The Young court’s expansion of the implied certification theory to FCA anti-retaliation claims serves as a significant victory for FCA whistleblowers. Whereas an FCA fraud claim is subject to Federal Rule of Civil Procedure 9(b)’s heightened pleading standards and thereby vets otherwise weak FCA claims out at the motion to dismiss stage, an FCA anti-retaliation claim only needs to satisfy Rule 8(a)’s notice pleading standards.
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.