Protected activity must be ‘but-for’ cause of adverse action to support False Claims Act retaliation claim
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Friday, January 5, 2018

Protected activity must be ‘but-for’ cause of adverse action to support False Claims Act retaliation claim

By Ronald Miller, J.D.

An employee’s protected activity must be the “but-for” cause of adverse actions to support a retaliation claim under the False Claims Act, ruled the Third Circuit. The appeals court observed that the FCA anti-retaliation provision used the same “because of” language that compelled the Supreme Court to require “but-for” causation in Univ. of Texas Southwestern Medical Ctr. v. Nassar and Gross v. FBL Fin. Servs., Inc. Consequently, the district court correctly instructed the jury that to find retaliation, it had to find that the employee’s protected conduct was the “but-for” cause of the adverse employment action (DiFiore v. CSL Behring, LLC, January 3, 2018, Fisher, D.).

Adverse employment actions. Concerned about the company’s activities in marketing drugs for off-label use and including off-label use in sales forecasts, the employee expressed her misgivings to her supervisors. According to the employee, the employer initiated a third-party compliance audit in part because of her complaints. However, she alleged that as a consequence of her protected conduct, she suffered adverse employment actions, including warning letters, a “needs improvement” performance evaluation, deteriorating relationships with her supervisors, a change in duties, and placement on a performance improvement plan (PIP). She argued that by placing her on a PIP, the employer indicated to her that she would be terminated. Two days after receiving the PIP, a supervisor and HR employee reached out to her to discuss an amicable separation. After that meeting was cancelled, she submitted her resignation.

Wrongful discharge claim. The employee brought claims for retaliation in violation of the False Claims Act and for wrongful discharge under a constructive discharge theory, in violation of Pennsylvania law. The district court granted the employer’s motion for summary judgment on the wrongful discharge claim because the employee failed to show constructive discharge as a matter of law. For the same reason, the court did not permit the employee to argue that constructive discharge was an adverse action suffered in retaliation for protected activity.

FCA claim. The FCA retaliation claim proceeded to trial. Under the statute’s anti-retaliation provision, an employee is entitled to relief if she was “discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts” conducted in furtherance of an FCA action. To show retaliation, a plaintiff must demonstrate that he engaged in protected conduct and that he was discriminated against because of his protected conduct.

The judge instructed the jury that the FCA retaliation provision required that protected activity be the “but-for” cause of adverse actions against the employee. The jury found in favor of the employer. On appeal, the employee challenged the district court’s jury instruction using the “but-for” causation standard and the grant of summary judgment on her constructive discharge claim.

Causation standard. The district court concluded the employee had to show that her protected activity was the “but-for” cause of an adverse action she suffered, reasoning that it was compelled by Univ. of Texas Southwestern Medical Ctr. v. Nassar to apply “but-for” causation to her FCA retaliation claim because of the “identical language” in the FCA, the ADEA, and Title VII. Relying on Nassar’s logic, the court instructed the jury that the employee’s protected activity must have been the “but-for” cause of any adverse employment action. The employee contended that a lower standard applied, and she should only have been required to prove that her protected activity was a “motivating factor” in the adverse action. The Third Circuit found the Supreme Court decisions in Gross and Nassar undermined the employee’s rationale for applying the “motivating factor” standard, and held the district court correctly applied Supreme Court case law when it instructed the jury using the “but-for” standard.

The district court’s reasoning was sound given not only the Supreme Court’s precedent, but also the Third Circuit’s case law addressing the effect of Gross and Nassar. The language of the FCA anti-retaliation provision used the same “because of” language that compelled the Supreme Court to require “but-for” causation in Gross and Nassar. Consequently, the district court correctly instructed the jury that to find retaliation under the FCA, it had to find that the employee’s protected conduct was the “but-for” cause of the adverse employment action.

Constructive discharge. Summary judgment in favor of the employer also was proper on the common-law wrongful discharge claim, as was the lower court’s ruling that the grant of summary judgment foreclosed her argument that constructive discharge was an adverse action under the FCA. Under Pennsylvania law, constructive discharge occurs when working conditions become so intolerable that a reasonable employee is forced to resign. The concept of constructive discharge is essentially identical to retaliation claims under federal statutes. The employee failed to prove constructive discharge under both Pennsylvania law and federal law. While she may have been subjected to difficult or unpleasant working conditions, those conditions fell well short of unbearable. The employee made no attempt to comply with the PIP and, when the meeting to discuss the PIP was cancelled, she chose to resign rather than reschedule. Thus, she did not demonstrate that she had no option left but to resign. Accordingly, the orders of the district court were affirmed.

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