On December 22, a federal court applied the plain language of the “whistleblower-protection provisions” of the False Claims Act, including 31 U.S.C. § 3730(h), to hold that a plaintiff may bring a retaliation claim against a former employer even if that employer was not the subject of any FCA allegations.  In O’Hara v. NIKA Technologies, Inc., the Fourth Circuit reversed the district court’s conclusion that § 3730(h) only applies to retaliation by an employer that is also the alleged FCA violator while upholding the lower court’s grant of summary judgment in favor of the employer on different grounds.

Plaintiff William O’Hara was a senior cost estimator for a project contract awarded by the National Institute of Standards and Technology to O’Hara’s employer, NIKA Technologies, Inc.  O’Hara filed suit under § 3730(h) alleging that a separate company, Northern Taiga Ventures, Inc. (“NTVI”), had defrauded the government by submitting change orders with unnecessary improvements and inaccurate costs and that he was fired because he brought these allegations to the attention of the government.

The district court granted NIKA’s summary judgment motion, finding that the FCA’s retaliation statute applies only to claims alleged against the whistleblower’s employer.  The lower court also found that O’Hara’s second claim under the American Recovery and Reinvestment Act (the “ARRA”) failed to establish that NIKA would not have fired him absent his disclosures.  In so holding, the district court cited O’Hara’s failure to meet his employment responsibilities such as timely submission of cost estimates for various project designs.

Section 3730(h)(1) protects a whistleblower from retaliation for “lawful acts done . . . in furtherance of an action under this section.”  The Court of Appeals emphasized that the provision’s plain language provides protection from retaliation based on the type of conduct disclosed by the whistleblower and not “the whistleblower’s relationship to the subject of his disclosures.”  As a result, the Court held that a whistleblower can bring a retaliation claim even when the FCA disclosures were not directed at the employer.

Nonetheless, the Court ruled that based on the undisputed facts, the retaliation clam failed because O’Hara failed to show that the conduct he disclosed “reasonably could have led to a viable FCA action.”  Specifically, O’Hara’s complaints centered on a bid for a change order that he contended was unnecessary.  However, the government had expressly requested the bid for the change order, and the Court reasoned that a contractor cannot be liable for defrauding the government when it was following the government’s explicit instructions.

Employers receiving whistleblower allegations from their employees or agents should be mindful that § 3730(h)’s protections apply whether the allegations are directed at the employer or a third party such as another contractor.

Troutman Sanders will continue to monitor related circuit court opinions concerning the interpretation of the “whistleblower-protection provisions” of the FCA.