On March 31, 2021, the Sixth Circuit addressed an issue of first impression in the circuit, holding that the False Claims Act’s (“FCA”) whistleblower protection provisions protect former employees from post-employment retaliation.  United States, ex rel. Felten v. William Beaumont Hospital, No. 20-1002.

Background

Plaintiff was employed as a doctor at a Michigan hospital.  He filed a qui tam action against the hospital alleging that it was paying kickbacks to various physicians and physicians’ groups in exchange for patient referrals.  Plaintiff also claimed that the hospital terminated his employment and then maligned him in retaliation for his reports of illegal conduct, thus undermining his employment applications to numerous other institutions.

The U.S. District Court for the Eastern District of Michigan dismissed Plaintiff’s retaliation claims pertaining to conduct that occurred after his termination, holding that the FCA’s anti-retaliation protections apply only to conduct occurring during the course of employment.  Plaintiff requested that the dismissal order be amended to restore all of his claims, and the district court certified for interlocutory appeal the question of whether the FCA’s anti-retaliation provision applies to allegations of post-employment retaliation.  The Sixth Circuit granted interlocutory review.

Ruling

A split Sixth Circuit panel vacated the district court’s dismissal order, holding that the FCA’s anti-retaliation provision protects former employees from post-employment retaliation.  Following the statutory interpretation framework laid out by the Supreme Court in Robinson v. Shell Oil, 519 U.S. 337 (1997)—in which the Court held that Title VII covers former employees—the court concluded that the term “employee,” as used in the FCA, is ambiguous and could encompass both current and former employees.

Given the statute’s ambiguity, the court examined the “broader context” and “primary purpose” of the FCA’s anti-retaliation provision to determine whether it covers former employees.  Explaining that the provision is meant to encourage the reporting of fraud against the government by protecting individuals who assist in the discovery and prosecution of such fraud, the court held that former employees can invoke the statute’s protections.  The court reasoned that potential whistleblowers would be dissuaded from reporting fraud if employers had the ability to retaliate against them without repercussion as long as they terminate the employee first.  Notably, however, the court did not address whether blacklisting is a form of retaliatory conduct that is prohibited by the FCA, and it remanded the issue for the district court to decide.

Implications

This decision creates a circuit split, as the Sixth Circuit’s holding contradicts the decisions of the Tenth Circuit and numerous federal district courts which have held that former employees are not covered by the FCA’s anti-retaliation provision.

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Photo of Steven J. Pearlman Steven J. Pearlman

Steven J. Pearlman is a partner in the Labor & Employment Law Department, where he is Head of the Restrictive Covenants, Trade Secrets & Unfair Competition Group and Co-Head of the Whistleblowing & Retaliation Group.

Employment, Whistleblower, Restrictive Covenant and Trade Secret Practice.

Steven J. Pearlman is a partner in the Labor & Employment Law Department, where he is Head of the Restrictive Covenants, Trade Secrets & Unfair Competition Group and Co-Head of the Whistleblowing & Retaliation Group.

Employment, Whistleblower, Restrictive Covenant and Trade Secret Practice. Steven’s national practice focuses on defending companies in federal and state courts and arbitration against claims of: discrimination, retaliation and harassment, including claims brought by high-level executives; whistleblower retaliation; restrictive covenant violations; theft of trade secrets; and wage-and-hour violations (including class, collective and PAGA actions).

Illustrating his versatility, Steven has successfully handled bench and jury trials in multiple jurisdictions (e.g., Illinois, California, Florida and Texas); defended one of the largest Illinois-only class actions in the history of the federal courts in Chicago; and prevailed following his oral arguments before the Seventh Circuit and state appellate courts. Steven brings his litigation experience to bear in counseling clients to minimize risk and avoid or prepare for success in litigation.

Investigations. Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has testified in federal court. His investigations have involved complaints of sexual harassment involving C-suite officers; systemic violations of employment laws and company policies; and fraud, compliance failures and unethical conduct.

Thought Leadership and Accolades. Steven was named Lawyer of the Year for Chicago Labor & Employment Litigation in the 2023 edition of The Best Lawyers in America. He was also named as One of the Top 10 Impactful Labor & Employment Lawyers in Illinois for 2023 by Business Today. He is a Fellow of the College of Labor and Employment Lawyers. Chambers describes Steven as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field.” Chambers also reports that “He is someone who can navigate the twists and turns of litigation without difficulty. Steven is great with brief-writing, crafting arguments, and making sure the client is always happy.”

Steven was 1 of 12 individuals selected by Compliance Week as a “Top Mind.” Earlier in his career, he was 1 of 5 U.S. lawyers selected by Law360 as a “Rising Star Under 40” in the area of employment law and 1 of “40 Illinois Attorneys Under Forty to Watch” selected by Law Bulletin Publishing Company. Steven is a Burton Award Winner (U.S. Library of Congress) for “Distinguished Legal Writing.”

Steven was appointed to Law360’s Employment Editorial Advisory Board and selected as a Contributor to Forbes.com. He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is often quoted in leading publications such as The Wall Street Journal.

The U.S. Chamber of Commerce has engaged Steven to serve as lead counsel on amicus briefs to the U.S. Supreme Court and federal circuit courts of appeal. He was appointed to serve as a Special Assistant Attorney General for the State of Illinois in employment litigation matters. He has presented with the Solicitor of the DOL, the Acting Chair of the EEOC, an EEOC Commissioner, Legal Counsel to the EEOC, and heads of the SEC, CFTC and OSHA whistleblower programs. He is also a member of the Sedona Conference, focusing on trade secret matters.

In 2024, Steven received the Excellence in Pro Bono Service Award from the United States District Court for the Northern District of Illinois and the Chicago Chapter of the Federal Bar Association.

Photo of Julia Hollreiser Julia Hollreiser

Julia Hollreiser is an associate in the Labor & Employment Department and a member of the Employment Litigation & Arbitration Group.

Julia represents employers in a wide range of employment-related disputes, including defending clients against claims of discrimination, harassment, retaliation, wrongful discharge, and…

Julia Hollreiser is an associate in the Labor & Employment Department and a member of the Employment Litigation & Arbitration Group.

Julia represents employers in a wide range of employment-related disputes, including defending clients against claims of discrimination, harassment, retaliation, wrongful discharge, and wage and hour law violations.  She has experience assisting in single-plaintiff, multi-plaintiff, and class and collective action litigations, in federal and state courts as well as before administrative agencies.  Julia represents clients across a variety of industries including sports, financial services, media and entertainment, higher education, and law firms. Julia also counsels clients on a broad range of employment issues, including investigations into sensitive employment matters, employee terminations and discipline, and employment policies and procedures.

Julia earned her J.D., summa cum laude, from Cornell Law School, where she was a member of the Order of the Coif and graduated first in her class. Julia was also the Managing Editor of the Cornell Law Review and a member of the Moot Court Board. While at Cornell, Julia worked as a student attorney in several clinical programs, representing clients in immigration matters and in employment discrimination matters before the New York State Division of Human Rights. While in law school, Julia was a judicial intern for the Honorable Ronnie Abrams in the Southern District of New York.