Labor & Employment Law Daily Particularity requirement doesn’t apply to FCA retaliation pleadings; reprisal claim reinstated
Wednesday, January 17, 2018

Particularity requirement doesn’t apply to FCA retaliation pleadings; reprisal claim reinstated

By Lindsey Firnbach, J.D.

A False Claims Act (FCA) retaliation claim brought by a former employee of a rehabilitation center survived a motion to dismiss, despite the dismissal of her underlying allegations of a FCA violation and her wrongful discharge claim. Although the employee failed to plead sufficient, particular facts that a FCA violation occurred, the Sixth Circuit declared, in an unpublished opinion, that the particularity requirements of Federal Rule 9(b) did not apply to retaliation claims, and the employee had pled sufficient evidence to survive a motion dismiss with respect to this claim (Crockett v. Complete Fitness Rehabilitation, Inc., Rodgers, K., January 9, 2018).

The employee worked as an occupational therapist and rehab manager at the rehabilitation center. The center received patients enrolled in Medicare Part A and Part B from doctor referrals, and would make an assessment regarding the level of care for each patient. That assessment served as the basis for the compensation received from the federal government for the rehabilitation services. The employee disagreed with her supervisor regarding the standard of care given to the Medicare patients. She believed the center was providing more treatment than necessary for Medicare patients, and expressed her concern through emails to her supervisor. In her final email, the employee declared that she would not comply with the request to give the same, higher level of care to all patients on Medicare Part A despite their medical status. Nine days after the email was sent, she was terminated.

The employee filed suit, alleging the center violated the FCA because it had induced the government to pay for more services than required. She also alleged a “reverse” false claims argument and an FCA violation claim contending there was a billing conspiracy between the center and the third party that submitted the claims to the government. Additionally, she alleged a FCA retaliation claim stating she was fired because she refused to be part of the alleged improper billing practices, and a claim that her discharge was a violation of Michigan public policy. The lower court dismissed all her claims, stating that in order to prevail, she must meet the particularity requirements of Federal Rule 9(b) and demonstrate that a false claim was actually made.

No False Claim Act violations. The appeals court upheld the dismissal as to the claims of an underlying FCA violation, declaring that in order to demonstrate a violation, evidence must be presented which showed that a false claim was actually made, and the complaint presented by the employee failed to do so. The employee did demonstrate that inflated bills were sent to the third party, but did not show that the third party actually submitted these bills to the government for payment. An allegation of improper billing was not enough to prove a FCA violation, and although there was a narrow exception for employees with personal knowledge of the billing practices, this exception did not exist in this case. The employee failed to demonstrate personal knowledge of the billing practices, and there were many individuals in between her and the billing process. Likewise, the appeals court affirmed dismissal of the FCA violations claims based on reverse false claims and conspiracy, noting these claims can only survive if there is a demonstration of a FCA violation.

Retaliation. Although the employee failed to establish the existence of an FCA violation, the Sixth Circuit noted that a retaliation claim under the Act did not require the same heightened standards, and held the emails between the employee and the supervisor served as sufficient evidence. The emails served as testimony that the employee was fired nine days after sending an email which she claimed was sent as an attempt to prevent fraud on the government through overpayment. Moreover, a retaliation claim did not require proof that an actual FCA violation occurred, just that her allegation was founded on her reasonable belief that a fraud against the government existed, and this was established in her complaint. Therefore, the appeals court overturned the dismissal of her FCA retaliation claim.

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