Background. Plaintiff worked with the Senior Advisor for Veteran Employment for the Department of Veteran Affairs (“Senior Advisor”) to develop an online veterans’ employment assistance program. The Senior Advisor’s husband had a company that sold software to help veterans transition to new careers. In 2014, certain incidents allegedly caused Plaintiff to become concerned regarding the alleged overlap between the Senior Advisor’s husband’s software and the Senior Advisor’s employment program initiative. Plaintiff sent an e-mail to the Deputy City Manager expressing his concern and subsequently e-mailed the Senior Advisor to ask whether her husband was associated with employment assistance program’s operations. The next week, Plaintiff’s employment was terminated by the City Manager, who allegedly stated that “[t]his is just not a good fit.”
Procedural History. On November 23, 2016, Plaintiff filed a complaint against the City of Norfolk, Virginia, the City Manager, and Interim City Manager for, among other things, whistleblower retaliation in violation of the False Claims Act (“FCA”). He alleged that he was discharged for investigating a potential FCA claim—i.e., that the Senior Advisor’s husband was pursuing a business relationship with the City that would result in inappropriate financial benefit to the Senior Advisor.
Ruling. Defendants moved to dismiss, arguing that Plaintiff failed to engage in protected activity because Defendants themselves did not engage in any acts that potentially violated the FCA, there was no pending “claim” for government money (since the City of Norfolk had not yet contracted with the Senior Advisor’s husband), and there was no “false or fraudulent conduct”—only speculation that such conduct may occur in the future. Plaintiff responded that Defendants did not have to commit any fraud themselves to be liable for retaliation under the FCA, and that the Senior Advisor’s financial interest in her husband’s software foreseeably tainted her husband’s ability to certify that his software was free from conflicts of interest, which would later result in a claim for government funds. Denying the motion to dismiss the FCA claim, the court ruled that Defendants themselves did not have to engage in the underlying fraud to be liable for retaliation under the FCA. The court also found that Plaintiff could have formed a good-faith belief that the Senior Advisor and her husband intended to perpetuate fraud upon the government based on the facts alleged, that such a belief was objectively reasonable, and that Plaintiff acted in furtherance of that belief. The court also ruled that Plaintiff took reasonable actions to prevent an FCA violation by attempting to investigate the extent of any potential fraud and raising his concerns to government officials.
Implications. Plaintiffs can be expected to rely on this case for the proposition that an employer need not be involved in the alleged fraud to be liable for a FCA violation and that complaints regarding alleged future fraudulent acts can amount to protected activity under the FCA.
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