RETALIATION IN FALSE CLAIMS ACT CASES: WHISTLEBLOWER RETALIATION CLAIMS

1. RETALIATION IN FALSE CLAIMS ACT CASES: WHISTLEBLOWER RETALIATION CLAIMS

2. RETALIATION IN FALSE CLAIMS ACT CASES: WHISTLEBLOWER RETALIATION CLAIMS Taxpayers Against Fraud Education Fund Conference • Panel Presentation – October 2019 • Ann Lugbill, Murphy Anderson PLLC, Moderator • Janel Quinn, The Employment Law Group (TELG) • Jason Zuckerman, Zuckerman Law

3. Common Employment Retaliation Claims for Relators 1.False Claims Act Retaliation Statute 3730(h) 2. Department of Labor (OSHA)—Investigated Claims 3. State Whistleblower Statutes & Public Policy Common Law Theories, State Tort Claims, State Discrimination & Retaliation Claims, State Breach of Contract; Defamation & Slander; State Breach of Duty of Good Faith; Intentional Infliction of Emotional Distress, New York retaliation claim (applies when defendant does business in New York, NOT where client worked) 4. Title VII-Sex, Race, National Origin, Color, Religion, Gender, Sexual Orientation, LGBT, ADEA & Disability Discrimination and Retaliation Statutes 5. FLSA and other Wage & Hour Claims and Retaliation Statutes 6. The Whistleblower Protection Act of 1989, 5 USC § 1211 et seq. Covers federal employees

4. Anti-Retaliation Provision of the Federal False Claims Act, 31 U.S.C. § 3730(h) Protects employees and contractors who engage in protected activity under the False Claims Act Prima Facie Case of Retaliation (1) Engaged in protected conduct; (2) [the defendant] knew worker engaged in such conduct; and (3) [the defendant] retaliated against worker because of the conduct. Relief available: reinstatement/front pay; 2 times back pay plus interest; special damages (emotional distress); fees and costs.

5. Department of Labor (DOL)Office of Occupational Safety and Health Administration (OSHA) Directorate of Whistleblower Protection Programs (DWPP) oversees 22 different whistleblower protection regulations The covered persons and the protected conduct under each statute is very specific: Aviation, environmental, transportation, nuclear energy (from healthcare to power plants) and other workplaces are covered. WARNING: Most regulations have extremely short statutes of limitations! At most 180 days, but many claims must be filed within 30 days

6. Consumer Finance Protection Act • Protected activity:  opposition to violations of Title X of the Dodd-Frank Act, a CFPB regulation, or any other consumer financial protection law that the CFPB enforces, including laws regulating “unfair, deceptive, or abusive practices . . . related to the provision of consumer financial products or services.” • Industries: includes mortgage lending and servicing, student loans, credit cards, consumer credit reporting, etc. • Causation standard: ‘contributing factor’ standard • Filing: file with OSHA within 180 days of the adverse action • Litigation: can appeal to DOL Office of Administrative Law Judge, with option to “kick-out” to federal court • Damages: back pay / front pay, compensatory damages, reinstatement, attorneys’ fees

7. Office of Occupational Safety and Health Administration (OSHA) Directorate of Whistleblower Protection Programs (DWPP) OSHA’s website is surprisingly helpful https://www.whistleblowers.gov/ https://www.whistleblowers.gov/sites/default/files/whistleblowers/whistleblower_acts-desk_reference.pdf https://www.osha.gov/sites/default/files/AnnotatedWIM.pdf As is the DOL Office of Administrative Law Judges, which is the first judicial forum to examine most of these retaliation claims: https://www.oalj.dol.gov/PUBLIC/WHISTLEBLOWER/REFERENCES/CASELISTS/FEDERAL_2019.HTM

8. Traditional Employment Discrimination and Retaliation Claims • Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e covers race, sex, religion, ethnic origin, color discrimination • Remedies Available: reinstatement/front pay; back pay plus interest; compensatory damages (emotional distress); attorneys’ fees and costs; punitive damages for intentional conduct • There is a cap of compensatory and punitive damages based on the size of the employer. • Plaintiff must administratively exhaust by filing simple charge of discrimination with EEOC or State EEO Agency

9. TraditionalEmployment Discrimination and Retaliation Claims • Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e • Protects employees who oppose discrimination under Title VII or who participate in the complaint process from retaliation or who have a hostile work environment • Prima Facie Case of Retaliation: (1) Plaintiff engages in protected conduct; (2) Employer took an adverse action ; and (3) Protected conduct was causally connected to adverse action. • Prima Facie Case of Hostile Work Environment: • (1) Unwelcome conduct (2) Based on a protected class, (3) Conduct is severe or pervasive to extent that it alters conditions of employment, and (4) Can be imputed to employer.

10. Employment Claims Americans with Disabilities Act, 42 U.S.C. § 12112 • Protects discrimination against persons with disabilities: • has a physical or mental impairment that substantially limits one or more major life activities; • has a record of such an impairment; or • is regarded as having such an impairment. • Must administratively exhaust with the EEOC • McDonnell Douglas burden shifting framework • Prima Facie Case of Discrimination: • Person is disabled or regarded as disabled; • the person is qualified, with or without reasonable accommodation, to perform the essential functions of the job held or desired; and • the person suffered discrimination by an employer or prospective employer because of that disability.

11. Employment ClaimsThe Americans with Disabilities Act, 42 U.S.C. § 12112 Retaliation Claims • Protects employees who oppose discrimination under the ADA or who participate in the complaint process from retaliation. • Prima Facie Case of Retaliation: • Engaged in protected conduct; • Employer took an adverse action against you; and • Causal link exists between the protected conduct and the adverse action. • Remedies Available: reinstatement/front pay; back pay plus interest; compensatory damages (emotional distress); attorneys’ fees and costs; punitive damages for intentional conduct • There is a cap of compensatory and punitive damages based on the size of the employer.

12. Employment Claims Age Discrimination in Employment Act (ADEA), 29 U.S.C. §§ 621 et seq. • Protects employees over age 40 and offers anti-retaliation protections for those filing claims or supporting or assisting those filing claims • McDonnell Douglas burden shifting framework • Prima Facie Case: (1) Discharged [or not selected] (2) Qualified for the position (3) Within the protected class at the time of discharge; and (4) Was either i) replaced by someone outside the protected class, ii) replaced by someone younger, or iii) otherwise discharged [or not selected] because of his age. • Must be administratively exhausted with the EEOC • Remedies Available: reinstatement/front pay; back pay plus interest; attorneys’ fees and costs; liquidated damages (two times economic damages) for intentional or malicious acts.

13. Employment ClaimsFamily Medical Leave Act (FMLA) 29 U.S.C. 2601, et seq. • FMLA creates an entitlement to a total of 12 work weeks of leave during any 12–month period to care for the employee or employee’s direct family member experiencing a serious health condition. • Protects employees who take protected medical leave from interference or discrimination • Prima Facie Case of Retaliation: • Engaged in activity protected under the Act, • Suffered an adverse employment action by the employer, and • Causal connection existed between employee’s action and adverse employment action. • Remedies Available: reinstatement; back pay plus interest; compensatory damages (emotional distress); attorneys’ fees and costs; • 2-year Statute of limitations, except for willful violations which have a 3-year SoL from the discovery of the violation. • No administrative exhaustion required.

14. Federal Employment Claims • Practice Tip: Don’t forget 42 U.S.C. 1985(2) and Haddle v. Garrison, 525 U.S. 121 (1998)US (1998), protecting witnesses from employment retaliation. • Third-party interference with at-will employment relationships states a claim for damages under §1985(2). *The statute proscribes conspiracies to “deter, by force, intimidation, or threat, any … witness in any [federal] court … from attending such court, or from testifying in any matter pending therein, … or to injure [him] in his person or property on account of his having so attended or testified,” and provides that if conspirators “do … any act in furtherance of … such conspiracy, whereby another is injured in his person or property, . . . the party so injured … may” recover damages” under §1985(3). • The gist of the wrong at which §1985(2) is directed is not deprivation of property, but intimidation or retaliation against witnesses in federal-court proceedings. The terms “injured in his person or property” define the harm that the victim may suffer as a result of the conspiracy to intimidate or retaliate. Thus, the fact that employment at will is not “property” for purposes of the Due Process Clause, see Bishop v. Wood, 426 U.S. 341, 345—347, does not mean that loss of at-will employment may not “injur[e] [petitioner] in his person or property” for §1985(2)’s purposes. The Court found such harm has long been, and remains, a compensable injury under tort law, and there is no reason to ignore this tradition.

15. NO FEDERAL CLAIM? DON’T DESPAIRMany non-federal Whistleblower laws protect contractors and employees, such as the Employees of District Contractors and Instrumentality Whistleblower Protection, D.C. Code §§ 2-223.01 et seq. State Whistleblower Protections include (just a few): Maryland Healthcare Worker Whistleblower Protection Act, Md. Ann. Code., Health Occ. § 1-501, et seq. New York Whistleblower Retaliation Statute California Statutes

16. Wrongful Termination in Violation of Public Policy • Exception to the “at-will” employment doctrine • Protects employees who are terminated for opposing or refusing to participate in conduct that violates a specific public policy. Often broad coverage. • Typically based on common law, but sometimes statutory. Claims vary by state: • DC: federal or DC statute or regulation, DCWPA • VA: Virginia law only, plaintiff within class to be protected • MD: covers only external reports to government agency • Defendants allege potential preemption issues where a retaliation remedy is available under federal statute, but this is increasingly just a diversion

17. State Wrongful Discharge in • Violation of Public Policy • Common Law Tort established by • State Courts • Typically involves a violation of a State Constitutional provision, state statute, or a specifically enumerated State public policy. • For example, to establish a wrongful discharge in violation of public policy claim in West Virginia, courts look to “Constitution, legislative enactments, legislatively approved regulations, and judicial opinions.” Birthisel v. Tri-Cities Health Servs. Corp., 188 W. Va. 371, 377 (1992).

18. State Employment Claims Similar to Federal Employment Claims • States and some localities have Title VII analogous statutes that are often broader than Title VII • Maryland Fair Employment Practices Act, Maryland Code Ann. Art. 49B, § 15 as amended, (repealed and recodified by 2009 Md. Laws Ch. 120, H.B. 51) (“FEPA”) • Montgomery County Maryland Human Relations Ordinance § 27-29 (“MCHRA”) codified at Md. Ann. Code, State Gov’t, § 20-1202 et seq. • Some have administrative exhaustion requirements

19. Common Employment Retaliation Issues for Relators • Constructive Discharge Quit in order to avoid wrongdoing, could not put up with harassment What would a reasonable person do in the plaintiff’s shoes?

20. 33730(h) Hot New Issues: Compliance Professionals & Fraud InvestigatorsJason ZuckermanConstructive Discharge Standard • If an employer ignores or fails to remediate a whistleblower’s internal disclosures, does that constitute constructive discharge? • Smith v. LHC Grp., Inc., 727 F. App'x 100 (6th Cir. 2018) • Smith raised concerns about employees altering reimbursement paperwork and making false representations about staffing for the purpose of admitting patients • As Director of Nursing, Smith was concerned about potential prosecution and jeopardizing her nursing license. • Company ignored her disclosures and failed to take remedial action • Requiring an employee “to engage in activity she considers illegal and immoral” may create intolerable working conditions

21. Emotional Distress DamagesMake sure to allege Pain, Suffering, and Emotional Distress from retaliation, working for dishonest employer, discrimination against whistleblowers • Areas of non-economic damages to consider • Emotional pain and suffering • Loss of sense of identity, loss of self worth, changes in activities, routines, emotions, physical well-being. • Inconvenience • Mental anguish • Loss of enjoyment of life • Reputational impact • Health consequences • Impact on family and personal life

22. Common Employment Retaliation Issues : Statutes of Limitation??? 1. Some are very short (30 days for DOL environmental statutes and short deadlines for federal employees), some have prerequisites like reporting to employer, federal/state /local government official or filing a claim 2. Statutes tend to run from last wrongful employer act, but watch out for those clients receiving notice of termination in advance, then statute may run from date of notice 3. Breach of Contract statutes of limitations may vary depending on whether the contract was written oral

23. Whistleblower Statute of Limitation Pleading Considerations • With the exception of hostile work environment, each adverse action has its own Statute of Limitations (although time-barred acts are still evidence) • Administrative exhaustion requirement for each adverse action • Split of authority about pleading standard at administrative agencies • Advantages and disadvantages to pleading multiple claims • What to do if statute might have run? Allege tolling, fraudulent concealment, continuing acts of discrimination, as in retaliation after termination notice….

24. MORE EMPLOYMENT LAW OPTIONS • National Defense Authorization Act for Fiscal Year 2016 (NDAA) / Defense Contractor Whistleblower Protection Act-Anti-Retaliation Contractors and subcontractors are prohibited from discharging, demoting, or otherwise discriminating against an employee as a reprisal for disclosing information that the employee reasonably believes is evidence of gross mismanagement of a Federal contract, a gross waste of Federal funds, an abuse of authority relating to a Federal contract, a substantial and specific danger to public health or safety, or a violation of law, rule, or regulation related to a Federal contract….

25. DCWPA / NDAA Retaliation10 U.S.C. § 2409, 41 U.S.C. § 4712 • Covers: employees, contractors, and subcontractors of government contractors • Protected activity: includes disclosures related to a federal contract or grant of – • Gross mismanagement, gross waste of funds, or abuse of authority • Violation of law, rule, or regulation • Danger to public health or safety • Causation standard: plaintiff proves that protected activity a “contributing factor” to adverse action; burden then shifts to defendant to prove by “clear and convincing evidence” that it would have taken the same action notwithstanding the protected activity • Filing and Litigation: complaint filed with the DOD or relevant agency’s Office of Inspector General within 3 years, with a 210-day option to “kick-out” to federal court • Damages: back pay, special damages, reinstatement, attorneys’ fees and costs

27. Common Employment Retaliation Claims for Relators Sarbanes-Oxley Act of 2002 (SOX): Covered in depth in another panel Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010/SEC Whistleblower Retaliation: Covered in depth in another panel New IRS Whistleblower Retaliation Protections : Covered in depth in another panel

28. Sarbanes-Oxley (“SOX”) Retaliation, 18 U.S.C. § 1514A • Covers: employees and contractors of publicly traded companies and their subsidiaries • Protected activity – includes reports of: • Mail, wire, bank, or securities fraud; • Violation of SEC rules and regulations; or • Violation of federal laws related to fraud against shareholders • Causation standard: ‘contributing factor’ standard • Filing: complaint must be filed with OSHA within 180 days of the adverse action • Litigation: can appeal to DOL Office of Administrative Law Judge, with 180-day option to “kick-out” to federal court • Damages: include back pay, front pay, compensatory damages, reinstatement, and attorneys’ fees

29. SEC Whistleblower Program Retaliation Provision, 15 § 78u-6(h)(1) • Protected activity: providing information to the SEC regarding violations of U.S. securities laws in accordance with the SEC whistleblower rewards program; testifying or assisting in SEC investigations related to this program; and/or making disclosures required/protected under SOX or other laws, rules, and regulations of the SEC • SEC reporting only: to be protected, plaintiff must have made protected disclosures to the SEC pursuant to the SEC’s procedures for the whistleblower rewards program • Litigation: file directly in court, subject to three year statute of limitations “after the date when facts material to the right of action are known or reasonably should have been known to the employee” (but further subject to an outer bounds of six years) • Damages: double back pay, front pay, reinstatement, and attorneys’ fees

30. Distinctions Between Section 806 of SOX and Section 922A of Dodd-Frank

31. Proposed Legislation Expanding Dodd-Frank Whistleblower Protection • Fixes Digital Realty v. Somers • House enacted Whistleblower Protection Reform Act of 2019 (H.R. 2515) by an overwhelming bipartisan majority of 410-12 in July 2019. • S. _____ introduced September __ 2019

32. 3730(h) Hot New Issues: Compliance Professionals & Fraud Investigators Jason Zuckerman New York District Court Judges reject a “duty speech” heightened burden for fraud alert and compliance employees to prove protected conduct: Yang v. Navigators Group, Inc., 2014 WL 1870802 (S.D.N.Y. May 8, 2014) (SOX) Malanga v. NYU Langone Med. Ctr., 2015 WL 7019819 (S.D.N.Y. Nov. 12, 2015) (FCA)

33. 3730(h) Hot New Issues: Compliance Professionals & Fraud Investigators Jason Zuckerman False Claims Act interpreted to impose especially onerous burden on compliance personnel: United States ex rel. Reed v. KeyPoint Government Solutions, No. 17-1379, (10th Cir. Apr. 30, 2019) Senior Quality Control Analyst discovered fraud while performing job duties and reported it through her chain of command. Found that she did not plead notice of protected conduct because her job duties may have required her to seek remedial action from employees other than her direct supervisor. 10th Cir. seems to carve out an exception to 3730(h) that is not in the text of the statute. Practice Tip: Allege broad reporting to all kinds and to all kinds of people, co-workers, supervisors, folks in the lunchroom, chairman of the board…. Consider that routine reports, meeting comments and minutes, and emails that touch on the fraud can be considered act of reporting.

34. 3730(h) Hot New Issues: Post Employment Retaliation Jason Zuckerman The 10th Circuit says no, Southern District of Ohio (6th Circuit) says yes. Potts v. Center for Excellence in Higher Education, Inc., 2018 WL 5796963 (10th Cir. Nov. 6, 2018) After Potts resigned, for-profit college sued her for disparaging it to accreditation commission regarding alleged deceptions in accreditation renewal. She alleged suit violated 3730(h) FCA anti-retaliation provision. Ruling: FCA retaliation applies only to current employees, not former employees. But , Judge Black (S.D. Ohio, Cincinnati): , says otherwise in Bourne v. Provider Services Holdings, LLC No. 1:12-cv-935, May 7, 2019. (https://www.leagle.com/decision/infdco20190507d09). A Rick Morgan/Jennifer Verkamp win for the whistleblower!

35. False Claims Act Retaliation Claims Don’t Forget Hiring Protections

36. Taxpayer First Act Whistleblower Protection Law • Effective July 1, 2019 • Modeled on SOX and FCA whistleblower protection provisions • Broad scope of coverage, prohibiting any “employer, officer, employee, contractor, subcontractor, or agent” of an employer from retaliating against a whistleblower. • Applies to law firms, accounting firms, public companies and private companies

37. Taxpayer First Act Whistleblower Protection Law • Protected Conduct: • Providing information or assisting in an investigation regarding underpayment of tax or any conduct which the employee reasonably believes constitutes a violation of  the internal revenue laws or any provision of Federal law relating to tax fraud • Testifying or participating in any IRS judicial or administrative action regarding tax underpayment or violation of internal revenue law • Protects internal disclosures • Reasonable belief standard

38. Taxpayer First Act Whistleblower Protection Law • Broad scope of actionable retaliation • Contributing factor causation • 180-day statute of limitations • Must file initially at OSHA • Option to litigate in federal court 180 days after filing • Exempt from mandatory arbitration

39. Taxpayer First Act Whistleblower Protection Law • Remedies • double back pay with interest; • reinstatement; • uncapped special damages (comp damages); and • attorney fees, litigation costs, and expert witness fees.

40. Anti-SLAPP (Strategic Lawsuit Against Public Participation) Statutes • Some States (including California and Arizona) have Anti-SLAPP Statutes which prohibit claims against parties for alleged injuries resulting from a “party’s exercise of the right of petition.” See A.R.S. § 12-752 • “The hallmark of a SLAPP suit is that it lacks merit, and is brought with the goals of obtaining an economic advantage over a citizen party by increasing the cost of litigation to the point that the citizen party’s case will be weakened or abandoned, and of deterring future litigation.” U.S. ex rel. Newsham v. Lockheed Missiles & Space Co., 190 F.3d 963, 970–71 (9th Cir. 1999) (finding Anti-SLAPP statute may be applied to defendant’s counter-claims in an FCA action).

42. Anti-Gag Provisions • Several whistleblower protection laws, including NDAA and SOX, expressly bar gag provisions in employment agreements, employment policies, and settlement agreements that prohibit communications on the topic of the fraud reported • Federal appropriations law bars the use of federal funds to impede lawful whistleblowing • SEC has taken enforcement actions under Rule 21F-17 to penalize companies for policies and employment , severance, and settlement agreements that bar whistleblowing • SEC Rule 21F-17 prohibits actions that “impede communications to the Commission about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement ” or order. • DOL will not approve settlement agreements that include gag provisions.

43. Using Company Documents in Whistleblower Case • Be cautious counseling a current employee to take documents • Confirm dos and don'ts in writing • Warn client of risks, including after-acquired evidence • Ideally, do not comingle personal and work data • Focus on access permitted by employer and reasonable belief of relevance • Avoid mass, indiscriminate downloading • Assume that employer will perform forensic analysis of client’s work computer and network activity • Avoid reviewing privileged documents • If client potentially has privileged communications, warn DOJ/SEC/CFTC so that they can screen the documents using taint team

44. Using Company Documents in Whistleblower Case • Determine early on what client possesses and how client obtained the information • Warn client about gathering evidence post-termination or resignation • If pursuing only retaliation claim, consider having current employee index key documents and provide the documents to in-house or outside counsel for preservation • Consider retaining computer forensics expert to create bit-by-bit image of client’s computer • Work with SEC/CFTC/DOJ to shield client’s identity when agency requests documents from employer

45. Honest Abe Practice Tips • Clients should not over-gather documents, take only documents related to the qui tam • After reviewing the documents, do not keep irrelevant documents. Delete, retain, or leave with filter counsel? • “What Not to Do”: U.S. ex rel. Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047 (9th Cir. 2011) • Relator gathered nearly 11 gigabytes of data (tens of thousands of pages) from company computers • Indiscriminate copying of whole folders • Including attorney-client privileged communications, trade secrets, etc. • Discovery violations

46. RETALIATORY COUNTER-ATTACKS AND CLAIMS AGAINST WHISTLEBLOWERS

47. Common Counterclaims against Relators • Misappropriation of Documents (Breach of Contract) • Breach of Fiduciary Duty • Disparagement

48. Misappropriation of Documents (Breach of Contract) • Breach of contract counterclaims typically based on provisions in employment or separation agreements requiring employee to not disclose company’s confidential information • Documents related to the qui tam, as necessary for the qui tam: generally dismissed on public policy grounds • Documents unrelated to the qui tam, or beyond what is necessary for the qui tam: generally tend to survive motion to dismiss stage

49. Breach of Fiduciary Duty • Premised either on disclosure of company secrets to attorney/DOJ, or failure to disclose claimed violations of law to the company before disclosing to attorney/DOJ • Dismissed where claims amount to claims for indemnification or contribution • Dismissed on public policy grounds, where damage from alleged breach is essentially the damage caused by the act of being a relator • Typically dismissed at the motion to dismiss stage

50. Disparagement • Disparagement outside of the FCA reporting process • Counterclaims may be premised on a breach of a non-disparagement provision in an employee contract or separation agreement • Claim may be viable if it involves conduct that is independent of the FCA claims, i.e. not premised on defendant’s liability