Texas Medical Center Escapes Nurse’s Fca Retaliation Lawsuit

• Posted on: Feb 10 2017

The Anti-Retaliation Provisions of The False Claims Act:

The decision to blow the whistle is not an easy one to make, especially when the person blowing the whistle does so on his/her employer. A person’s career, financial security, reputation and sometimes personal safety can be at risk. This is true whether the person worked for the company that is the subject of a potential whistleblower (or “qui tam”) action.

Recognizing the risks, Congress amended the False Claims Act (the “FCA” or the “Act”) in 1986 by adding employment protections to stop employers from using the threat of retaliation to keep whistleblowers quiet, and to assure those considering exposing fraud that they are legally protected from retaliatory acts. The protections extend to the whistleblower, anyone assisting the whistleblower, and anyone working with the government “in furtherance of” an action under the Act.

Under the Act, any employee who is discharged, suspended, demoted, harassed, or otherwise discriminated against because he/she lawfully reported a violation of the Act is entitled to all relief necessary to make the employee whole. Such relief may include reinstatement with the same seniority status, double back pay, and compensation for any special damages sustained as a result of the retaliation, including litigation costs and reasonable attorneys’ fees.

To establish a claim for retaliation, the whistleblower must engage in conduct protected by the Act. The courts require a showing that the defendant have some notice of the protected conduct that the whistleblower was either taking action in furtherance of a qui tam action, or assisting in an investigation or actions brought by the government. Complaining about an employer’s internal misconduct unrelated to false claims is not enough. Nor is it sufficient to allege a non-governmental third party was the victim of fraud.

The protection against retaliation extends to whistleblowers whose allegations could support a qui tam action even if the case is never filed. Finally, the whistleblower must show that the discharge, suspension, demotion, harassment or threat was in retaliation for the protected activities. A claim of retaliation can be based upon the whistleblower claims and other violations of state and federal law, and may be brought in federal court.

Endicott v. Oakbend Medical Center:

On January 30, 2017, a Texas federal court dismissed a retaliation claim brought under the Act by Jana Endicott (“Endicott”), a nurse formerly employed by Oakbend Medical Center (“Oakbend” or the “Hospital”). Endicott alleged that she was fired after she blew the whistle on several hospital executives for using Medicare and Medicaid funds to operate EMR Support Group, LLC (“EMR”), a private company owned by Sue McCarty, Oakbend’s Chief Nursing Officer, and Timothy Earl McCarty, Sue McCarty’s husband and an employee in the Hospital’s IT Department. In particular, she claimed that the Hospital allowed its IT employees to perform work for EMR while being paid by the Hospital.

The defendants moved to dismiss, arguing that Endicott’s alleged whistleblowing activity (an internal complaint to Oakbend) did not qualify as protected activity under the FCA because it was not aimed at matters that reasonably could lead to a viable claim under the Act. The Court agreed.

The court found that Endicott was not discharged for reporting a fraud on the government:

Plaintiff alleges that when she complained about Oakbend paying IT employees who were performing work for EMR, Oakbend terminated her employment. Plaintiff s internal complaints were not that Oakbend submitted false claims to the United States government, but that Oakbend improperly used funds it legitimately obtained from the government.

The court concluded that “Plaintiff’s assertion that she believed this constituted fraud against the government is insufficient to state a claim of retaliation under the FCA” because “[t]he FCA does not … prohibit an employer from paying its employees, even those who are simultaneously performing work for a different employer, from a bank account that includes funds obtained legally and properly from Medicaid and/or Medicare.” Instead, the court said, the Act “prohibits only conduct involving false claims submitted to the United States which cause the government to suffer an economic loss.” Endicott failed to allege that the government suffered an economic loss.

The case is U.S. ex. rel. Endicott v. Oakbend Medical Center, Civ. Action No. H-16-1835 (S.D. Tex.).

Takeaway:

Endicott teaches a simple, but valuable lesson: a whistleblower must engage in protected whistleblowing activities to succeed in a retaliation claim for damages under the Act. This means, the conduct being reported must be of the type that could reasonably lead to a viable claim under the FCA. Anything else, as Endicott learned, will not suffice.

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