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Protecting Whistleblowers: Retaliation and the False Claims Act

Protecting Whistleblowers: Retaliation and the False Claims Act

Whistleblowers play a crucial role in exposing fraud against the government. However, many are hesitant to come forward out of fear of retaliation from their employer. The False Claims Act contains important protections for whistleblowers against retaliation, but these protections have limits.

The False Claims Act (FCA) imposes liability on any person or company that knowingly submits false claims to the government for payment. The law includes a qui tam provision that allows private citizens, known as “relators,” to file suit on behalf of the government against entities engaged in fraud.

To encourage whistleblowers to come forward, the FCA contains an anti-retaliation provision that prohibits employers from retaliating against employees for investigating, filing, or participating in a qui tam lawsuit. This provision protects employees from being “discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against” for engaging in protected activity under the FCA.[1]

What is Protected Activity?

The anti-retaliation provision protects a broad range of whistleblowing activity, including:

• Investigating potential fraud against the government
• Filing or preparing to file a qui tam lawsuit
• Assisting with a False Claims Act investigation or lawsuit
• Testifying in a False Claims Act proceeding

Employees are protected whether or not their allegations of fraud turn out to be true. They do not need to explicitly mention fraud or use the words “illegal” or “unlawful.” As long as the employee had a good faith belief that the employer was defrauding the government, whistleblowing activity is protected.[2]

Proving Retaliation

To prevail on a retaliation claim under the False Claims Act, an employee must show that:

1. They engaged in protected activity
2. Their employer knew about the protected activity
3. They were subjected to an adverse employment action
4. There is a causal link between the protected activity and the adverse action

Common adverse employment actions include termination, demotion, denial of promotion, and reduction in pay or hours. Courts take a broad view of adverse actions. For example, placing an employee under heightened scrutiny or excluding them from important meetings could constitute retaliation.[3]

The timing between the protected activity and the adverse action often provides the key evidence of a causal connection. Suspicious timing alone is not enough, but temporal proximity is an important factor courts consider. For instance, termination shortly after an employer learns of an employee’s whistleblowing is strong circumstantial evidence of retaliation.

Remedies

Available remedies for whistleblowers who have suffered retaliation include:

• Reinstatement to their prior position
• Back pay for lost wages
• Compensation for special damages like medical expenses
• Attorney’s fees and litigation costs

If reinstatement is not feasible, courts may order front pay to cover future lost wages. Whistleblowers can also receive “emotional distress” damages for pain and suffering caused by retaliation. There are no caps on the amount of damages available.

Statute of Limitations

An employee must file a False Claims Act retaliation lawsuit within 3 years of the date they knew or should have known about the retaliatory action. The timeline can be extended if the employer’s retaliation is considered a “continuing violation” that occurred over an extended period.[4]

Burden-Shifting Framework

Retaliation claims under the FCA operate under a burden-shifting framework:

1. The employee must make a prima facie case of retaliation
2. The burden shifts to the employer to offer a legitimate, non-retaliatory reason for the adverse action
3. The employee can rebut the employer’s reason as pretext for retaliation

At the summary judgment stage, if the employee makes a prima facie case and the employer’s reasons are questionable, the retaliation claim will typically survive dismissal and proceed to trial.[5]

Weaknesses of the Anti-Retaliation Provision

While the False Claims Act prohibits retaliation, there are limitations in the law’s protections:

• No protection for colleagues or family members – Only the actual whistleblower is shielded from retaliation.
• No protection after employment ends – Former employees cannot sue for retaliation under the FCA.
• High burden of proof – Circumstantial evidence of retaliation may not be enough to win at trial.
• Lengthy litigation – These cases often take years to resolve.

Furthermore, corporate culture and peer pressure often discourage potential whistleblowers from reporting fraud. One study found that only 54% of employees actually blow the whistle when they witness misconduct. Fear of retaliation is a major factor driving the silence.

Recommendations for Strengthening Protections

To better protect whistleblowers and encourage fraud reporting, lawmakers could:

• Extend anti-retaliation coverage to colleagues, not just the individual whistleblower
• Allow former employees to sue for retaliation after their employment ends
• Shift the burden of proof more onto employers to show that adverse actions were not retaliatory
• Impose additional damages against employers who retaliate, such as double back pay

Employers can also take steps to reduce retaliation and encourage internal whistleblowing, such as:

• Implementing anonymous reporting mechanisms
• Proactively communicating anti-retaliation policies
• Providing compliance training for managers
• Instituting channels for whistleblowers to raise concerns of retaliation

The Bottom Line

The False Claims Act’s anti-retaliation provision provides important protections for whistleblowers who report fraud against the government. However, gaps in coverage and high burdens of proof leave many employees vulnerable. Stronger legislative protections, combined with proactive employer policies, can help prevent retaliation and encourage whistleblowing.

When employees observe fraud, they should not have to choose between keeping their job and doing the right thing. Continued improvement of whistleblower safeguards will help combat the tremendous problem of fraud against the government.

References

[1] Department of Justice False Claims Act Primer

[2] Zuckerman Law, FAQ: Whistleblowing Protected by the False Claims Act

[3] The False Claims Act: Retaliation Lawsuits

[4] False Claims Act Retaliation Claims

[5] Elements of a False Claims Act Retaliation Case