6th Circuit Vacates District Decision to Dismiss Individual’s FCA Retaliation Claim Against Michigan Hospital

Despite a dissent, the Sixth Circuit ruled Wednesday to vacate a district court’s dismissal of a claim that Michigan’s William Beaumont Hospital retaliated against the former employee turned plaintiff after he filed a qui tam complaint under the False Claims Act (FCA), effectively remanding the matter back to the lower court.

Relator David Felten appealed the Eastern District of Michigan’s partial dismissal of his first amended complaint alleging that defendant William Beaumont Hospital terminated and “blacklisted” Felten after he filed suit over his suspicions that the hospital was violating the FCA and the Michigan Medicaid False Claims Act through paying kickbacks to physicians in exchange for Medicare, Medicaid, and Tricare patient referrals. The district court dismissed Felten’s retaliation claim, finding that the FCA’s retaliation provision only protects the relator while still employed; Circuit Judges David W. McKeague and John K. Bush disagreed.

In their analysis, the judges examined the meaning of the word “employee” under the FCA’s anti-retaliation provision, asking, “When this provision refers to an ‘employee’ and proscribes certain employer conduct, does it refer only to a current employment relationship, or does it also encompass one that has ended?”

The court noted that the FCA does not plainly say whether the anti-retaliation provision applies only to current employees; Beaumont, then, argued for adoption of the Tenth Circuit’s interpretation — which the Sixth Circuit said is the only other appellate court to enter judgment on this matter — that held that the statute “unambiguously excludes post-termination retaliation.” The Sixth Circuit conversely found that the statute is ambiguous, following the reasoning of Robinson v. Shell Oil, where the Supreme Court of the United States considered the term “employees,” as written in Title VII of the Civil Rights Act, to flexibly cover current or former employees.

The judges justified their reasoning as intending to “effectuate the statute’s broader context and purpose,” which is that the FCA’s anti-retaliation provision is designed to encourage employees to report what they believe to be fraud.

“If employers can simply threaten, harass, and discriminate against employees without repercussion as long as they fire them first, potential whistleblowers could be dissuaded from reporting fraud against the government,” the judges stted.

Invoking “precedent, dictionary definitions, the canons of statutory interpretation, and persuasive case law,” Judge Richard A. Griffin authored a dissenting opinion, arguing that the at-hand question is not whether “employee” under the FCA may refer to a current or previous employee, but whether the term “employee” under the statute “refers to someone who is not an employee.”

“To ask the question is to answer it,” Griffin said. “Instead of applying tried-and-true tools of statutory interpretation to their logical end, the majority rushes to find ambiguity then divines congressional intent from its own perception of which reading would best serve the FCA’s ‘broader context and purpose.’”

The dissenting judge contended that the majority’s application of Robinson was misplaced, stating, “(w)e have never recognized Robinson as establishing special rules for employee protections.” 

Griffin additionally asserted that the majority opinion engaged in “unauthorized, unnecessary purposivism” that “replace(d) Congress’s judgment with its own.”

Notwithstanding, the matter will return to the district court for further proceedings.

Felten is represented by Bracker & Marcus LLC. Beaumont is represented by Brooks Wilkins Sharkey & Turco PLLC.