On August 26, 2022, the Third Circuit affirmed a grant of summary judgment in favor of an employer, holding that whistleblower retaliation protections in the False Claims Act did not protect an employee from being discharged for harassing a co-worker.  Crosbie v. Highmark Inc., et al., No. 21-1641.

Background

Plaintiff was a fraud investigator for a health insurance company.  In 2017, he reported to his managers his discovery that some doctors in the company’s network had been convicted for selling opioid prescriptions, and that other doctors lacked required Medicaid licenses.  The managers investigated the concerns but decided not to take any action and told him to drop it, even after Plaintiff repeatedly pressed the issue.

On October 1, 2018, Plaintiff’s co-worker lodged a harassment complaint, alleging that Plaintiff called her “Miss Piggy” and “oinked” at her.  Human Resources then conducted an investigation, during which an eyewitness corroborated the complainant’s story.  The HR investigator also spoke with one of the managers who allegedly told Plaintiff to drop the fraud issue.  The manager stated that although he normally would have questioned the harassment allegations, he believed the allegations were true because he had heard Plaintiff make “coughing” and “snorting” noises earlier that day.  HR then terminated Plaintiff’s employment.

Plaintiff filed suit in the U.S. District Court for the Eastern District of Pennsylvania under the FCA, claiming he was discharged in retaliation for reporting potential fraud.  The company argued that the people in HR who decided to discharge Plaintiff knew nothing about his fraud reports and discharged him for a valid reason—for harassing a co-worker.  The district court granted summary judgment in the company’s favor, concluding that Plaintiff had failed to show “that the employers’ reason was a mere pretext for retaliation.”

Ruling

On appeal, the Third Circuit affirmed.  First, the court concluded that even if the investigation was imperfect, Plaintiff did not present any evidence that the “investigation was so thoroughly flawed that a jury could find [the investigation] unbelievable.”  Second, the timing between Plaintiff’s fraud reports and his termination did not support an inference of pretext because Plaintiff had initially reported the potential fraud more than one year before his discharge, and his last complaint was submitted one month prior.  The court also concluded that Plaintiff could not establish a causal connection between his protected activity and subsequent termination because the HR team that fired him was unaware of Plaintiff’s fraud reports.

The court also rejected Plaintiff’s argument that his manager had used the harassment investigation as a “cat’s-paw.”  Under a cat’s-paw theory, an employee must show that a non decision-maker harbored retaliatory animus and induced a decision-maker to act against the employee.  Plaintiff’s cat’s-paw theory failed because: (i) Plaintiff offered no evidence that his manager wanted to discharge him; and (ii) there was no indication that the HR investigator, who interviewed several other witnesses, was influenced by or relied on the manager’s interview in deciding to discharge Plaintiff.

Implications

This decision serves as a reminder that although anti-retaliation protections under the FCA are broad, employers maintain the right to discipline employees who engage in misconduct in the workplace—even if they are whistleblowers.

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Photo of Steven J. Pearlman Steven J. Pearlman

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

Steven’s practice covers the full spectrum of employment law, with a particular…

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

Steven’s practice covers the full spectrum of employment law, with a particular focus on defending companies against claims of employment discrimination, retaliation and harassment; whistleblower retaliation; restrictive covenant violations; theft of trade secrets; and wage-and-hour violations. He has successfully tried cases in multiple jurisdictions, and defended one of the largest Illinois-only class actions in the history of the U.S. District Court for the Northern District of Illinois. He also secured one of only a few ex parte seizures orders that have been issued under the Defend Trade Secrets Act, and obtained a world-wide injunction in federal litigation against a high-level executive who jumped ship to a competitor.

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.

Steven was recognized as Lawyer of the Year for Chicago Labor & Employment Litigation in the 2023 edition of The Best Lawyers in America. 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.” 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 has served on Law360’s Employment Editorial Advisory Board and is a Contributor to Forbes.com. He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is regularly 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.

Photo of Pinchos Goldberg Pinchos Goldberg

Pinny Goldberg is a senior counsel in the Labor & Employment Law Department. Pinny represents employers in a broad array of matters before federal and state courts, FINRA and other arbitration panels, and administrative agencies, including the EEOC and its state equivalents, and…

Pinny Goldberg is a senior counsel in the Labor & Employment Law Department. Pinny represents employers in a broad array of matters before federal and state courts, FINRA and other arbitration panels, and administrative agencies, including the EEOC and its state equivalents, and in pre-litigation negotiations. Matters he works on include discrimination and harassment, wage and hour, wrongful discharge, whistleblowing and retaliation, covenants not to compete, breaches of fiduciary duty, unjust enrichment, and tort and contract claims.

In addition to handling litigation and dispute resolution, Pinny regularly advises clients on a wide variety of employment issues, including drafting, reviewing and revising handbooks and workplace policies. He also addresses questions and concerns related to hiring, wage and hour issues, employee leave, performance problems, terminations of employment, and separation agreements and releases.

Photo of Margo Richard Margo Richard

Margo R. Richard is an associate in the Labor Department and a member of the Employment Litigation & Counseling Group.

Margo attended Loyola University New Orleans College of Law, where she graduated Cum Laude with a Law, Technology, and Entrepreneurship Certificate. While in…

Margo R. Richard is an associate in the Labor Department and a member of the Employment Litigation & Counseling Group.

Margo attended Loyola University New Orleans College of Law, where she graduated Cum Laude with a Law, Technology, and Entrepreneurship Certificate. While in law school, Margo served as a teaching and research assistant to Professor Masai McDougall. She competed as a team member of the American Bar Association Moot Court Team, a coach of the Mardi Gras Invitational Moot Court Team, and was selected for membership into the Order of Barristers. Margo was also a member of the Loyola Law Review, Phi Delta Phi Legal Honor Society, and Black Law Students Association.