On November 13, 2023, following a bench trial, a federal district court in the district of Massachusetts held that an employer's termination of an employee was not a violation of the whistleblower and retaliation protections of the False Claims Act (FCA), despite finding that the employee had engaged in protected activity prior to her termination. Morgan-Lee v. Therapy Res. Mgmt., LLC, No. 13-11997-DWP, 2023 U.S. Dist. LEXIS 202626 (D. Mass. Nov. 13, 2023). This employer-friendly ruling illustrates that employees cannot use protected activity as a shield for behavior that would otherwise warrant discipline or termination.

Factual Background

Plaintiff Rosemary Morgan-Lee was hired in 2003 by Therapy Resources Management (TRM), a company that provided rehabilitation services to nursing home patients. Plaintiff was eventually promoted to director of clinical services, a role that included auditing TRM's medical records for compliance with Medicare reimbursement standards and reporting to management any discovered discrepancies. In anticipation of a 2011 overhaul of Medicare reimbursement procedures impacting skilled nursing facilities, plaintiff and other TRM personnel set out to educate TRM employees about the new requirements and began auditing medical records for compliance with the new standards. During those audits, plaintiff noted issues with TRM's billing procedures and documentation, including some instances that she claimed suggested fraud. While plaintiff's job was to report discrepancies and make recommendations, the court found that she behaved at times as though her role included the "authority to issue directives" and discipline her colleagues for failing to adequately respond to her recommendations.^[1]

At this time, plaintiff began taking unilateral time off with little or no notice. She invoked whistleblower protections "only after her unscheduled absences had been identified as a serious problem" and refused to elaborate on her fraud claims when given an opportunity to do so. The court determined that plaintiff's emails with Human Resources only vaguely alluded to fraud or other unlawful billing practices; however, her supervisors took her concerns seriously and sought to accommodate and retain plaintiff, rather than retaliate against her for protected activity. Plaintiff's employment was terminated in December 2011, and she subsequently sued TRM for violating the whistleblower protections and anti-retaliation provisions of the FCA.^[2]

Legal Analysis

The court found that plaintiff had established by a preponderance of the evidence that she had indeed engaged in protected activity by expressing concerns about improper billing practices that could ultimately lead to FCA violations. The court also found that plaintiff's communications had sufficiently put her employer on notice. However, the court held that plaintiff failed to establish causation—i.e., that her employment would not have been terminated but for engaging in protected activity.^[3] On the contrary, the judge held that TRM had shown a willingness to support plaintiff's billing practice improvements over the years. The court determined that the facts did "not demonstrate that TRM management schemed to silence her," pointing to evidence of plaintiff's supervisors implementing certain of her recommendations despite plaintiff feeling "that her recommendations went unheeded."^[4] The court also found that plaintiff's retaliatory discharge theory was undermined by no adverse employment consequences in the first six months after reporting fraud concerns. Adverse action began only after plaintiff repeatedly missed work with minimal notice and grew increasingly hostile toward colleagues and superiors. The court explained that "there were several key factors that led to [plaintiff's] discharge, none of which implicate protected activity" or "retaliatory animus on the part of TRM," pointing to plaintiff's "escalating pattern of erratic, confrontational, and frequently insubordinate communications . . . with superiors and colleagues."^[5]

Employer Implications

The Morgan-Lee case is a reminder that protected activity is not necessarily an absolute bar against adverse employment action, particularly where an employer can provide ample evidence that an employee's insubordination or hostile behavior provides independent grounds for discipline or termination. This case also illustrates that a robust written record, coupled with an employer's genuine effort to address potential fraud concerns, are critical to properly adjudicating retaliation claims, as shown by the court's heavy reliance on emails among plaintiff and her superiors to establish a pattern of erratic behavior preceding her termination.

[1] Morgan-Lee v. Therapy Res. Mgmt., LLC, No. 13-11997-DWP, 2023 U.S. Dist. LEXIS 202626, at *4, *11 (D. Mass. Nov. 13, 2023).

[2] Id. at *6, *7.

[3] Id. at *69 ("There are, undoubtedly, cases in which even a modest showing of protected activity may support an inference of retaliation, particularly when the timing is suspicious and when there are no other explanatory factors. But this is not such a case. [Plaintiff] had been raising concerns about billing practices for many months – she says years – before there was any hint of disciplinary concerns. On the contrary, her supervisor . . . went to some lengths to retain [plaintiff] as an employee and to support [plaintiff's] efforts to improve TRM's practices and procedures.").

[4] Id. at *11-12.

[5] Id. at *3, *70.