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Federal Court Considers Expansion of FCA Retaliation

By Brian F. McEvoy and Emma Cecil

In a potential expansion of protections afforded to whistleblowers under the federal False Claims Act (“FCA”), a federal judge in the Eastern District of Virginia reserved ruling on whether the anti-retaliation provision of the FCA, 31 U.S.C. § 3730(h), provides relief for post-termination retaliation. The court also declined to decide whether § 3730(h) permits individual liability.

Following his termination from Cardiology Associates of Fredericksburg Ltd. (“CAF”), Dr. Patrick J. Fitzsimmons filed suit against CAF and six individuals, including the clinic’s physicians and practice administrator, alleging, among other things, that Defendants withheld post-termination compensation, to which he was entitled pursuant to his employment contract, in retaliation for his reports of improper billing practices.

Denying CAF’s motion to dismiss Fitzsimmons’ FCA claim on the grounds that § 3730(h) does not cover post-employment retaliation, Judge Lauck found that although the “vast majority” of district courts have agreed with the Defendants’ interpretation of that provision, this case was distinguishable because the terms of Dr. Fitzsimmons’ employment agreement specifically provided for additional compensation in the event of termination. Judge Lauck indicated that the issue of whether the FCA contemplates recovery for an employee’s post-termination retaliation would be more appropriately resolved on a motion for summary judgment.

Judge Lauck also declined to rule on the individual defendants’ argument that § 3730(h) precludes individual liability, noting that the district courts were in disagreement as to whether the 2009 amendment to § 3730(h), which removed language requiring discrimination “by [an employee’s] employer,” was meant to extend liability to individual defendants or preserve the status quo, and that the Fourth Circuit had yet to weigh in on the issue.

Given the lack of guidance from the circuit Courts of Appeal on the issues raised by Defendants in their motions to dismiss, it remains to be seen whether the majority view among the district courts regarding liability for post-termination retaliation will prevail. Judge Lauck’s opinion suggests that, at least in some cases, a broader interpretation of § 3730(h)’s protections may be warranted.

The case is Fitzsimmons v. Cardiology Associates of Fredericksburg Ltd. et al., case number 3:15-cv-00072, in the U.S. District Court for the Eastern District of Virginia. A copy of Judge Lauck’s decision can be found here