Are FCA Retaliation Claims Against Supervisors, Executives Viable?

01 September 2015 Health Care Law Today Blog

When the False Claims Act (FCA) retaliation provision was amended in 2009, the amendment was not explicit as to whether plaintiffs could only recover for retaliation claims against companies, or whether plaintiffs also could bring successful retaliation claims against the individuals within the company alleged to have retaliated, such as supervisors or executives. Federal courts are split on whether retaliation claims against individuals survive motions to dismiss, as most recently shown by two August 2015 federal court decisions that disagree on that issue – United States ex rel. Sibley v. A Plus Physicians Billing Service, Inc. (N.D. Ill.) (finding they could not) and Fitzsimmons v. Cardiology Associates of Fredericksburg (E.D. Va.) (finding the issue of individual liability was more appropriate for evaluation at the summary judgment stage).

While the majority of courts reject individual liability under the FCA retaliation provision and hold that the 2009 amendments were not intended to so extend retaliation liability, not all courts are bending to the weight of the law.

2009 Amendments to the FCA

The issue of whether individual liability for retaliation is permitted emerged due to amendments by the Fraud Enforcement and Recovery Act of 2009 (FERA). Prior to those amendments, the retaliation provision of the FCA provided an “employee” could recover from a retaliation claim against his or her “employer” for adverse employment action resulting from certain whistleblowing activities. The 2009 amendments expanded this provision beyond employee-plaintiffs to provide that “any employee, contractor or agent” could recover under the retaliation provision. The amendments deleted the word “employer” and did not expressly specify whether a suit may be brought against an employer, contracted party, or principal of the plaintiff. Because of this deletion and omission, plaintiffs have since attempted to argue that they could recover against their supervisors and other individuals, and that they were not limited to only suing the corporate entities.

United States ex rel. Sibley v. A Plus Physicians Billing Service, Inc. (August 2015)

Most recently, in the case of United States ex rel. Sibley v. A Plus Physicians Billing Service, Inc., No. 13-C-1733, 2015 U.S. Dist. LEXIS 110085 (N.D. Ill. Aug. 20, 2015), an Illinois federal district court dismissed a retaliation claim against the relator’s supervisor at A Plus Physician Billing Service and against A Plus’s president (who was also an A-Plus co-owner). The relator alleged her supervisor and the company president instructed her to bill for claims that lacked supporting documentation and to alter billing codes to maximize reimbursement. The relator refused, and the company president fired her. The district court granted the supervisor and president’s motion to dismiss, finding there could be no individual liability for retaliation claims under the FCA, adding its voice to the growing chorus of cases holding the same.

Like most courts considering whether individual liability is available under the FCA retaliation provision, the Sibley decision cited Aryai v. Forfeiture Support Associates, LLC, 25 F. Supp. 3d 376 (S.D. N.Y. 2012). In Aryai, the court examined the legislative history of the retaliation provision and concluded Congress deleted the word “employer” via the amendment “not to provide for individual liability but as a grammatical necessity of expanding the statute’s protections to cover a ‘contractor’ or ‘agent’ in addition to an ‘employee.’”

The Aryai court reviewed the House Report on the 2009 amendments which explained the amendment was meant to expand coverage to those who were not technically “employees,” such as contract workers. The court found the House Report contained no similar statement of intent to expand liability to cover individuals. The court presumed that Congress was aware that, prior to the 2009 amendments, courts uniformly rejected individual retaliation liability under the FCA. The court found it unlikely Congress would have sought to overturn precedent simply by negative implication, and it observed that, if Congress had meant to expand liability to individuals, it could have provided that “any person” is entitled to relief rather than any “employee, contractor, or agent,” with Congress’s chosen approach implying that retaliation suits could only be brought successfully by employees, contractors, or agents against their respective employers, contracted parties, or principals (and not against individuals).

Aryai has a growing progeny, signaling the weight of the law is that individual liability is not available under the FCA retaliation provision.

Fitzsimmons v. Cardiology Associates Of Fredericksburg (August 2015)

On the other side of the issue is Fitzsimmons v. Cardiology Associates of Fredericksburg, No. 3:15-cv-72, 2015 U.S. Dist. LEXIS 108925 (E.D. Va. Aug. 18, 2015). There, the plaintiff physician alleged he had complained about improper billing practices to various employees, offices, directors, and shareholders of his employer, Cardiology Associates of Fredericksburg. The plaintiff ultimately voluntarily withdrew his hospital privileges, resulting in his termination. According to the plaintiff, the defendants subsequently refused to provide him his appropriate termination pay per his employment agreement, in retaliation for his billing complaints. The court explained that no appellate court had yet considered whether individual liability was available, and concluded that, “[i]n the absence of binding precedent from the Fourth Circuit, given that courts within the Fourth Circuit disagree, and in the absence of a specific statutory analysis offered by either side . . . summary judgment will provide the most appropriate stage to evaluate this argument.”

Notable is the court’s reference in Fitzsimmons to the “absence of a specific statutory analysis offered by either side.” Perhaps the inclusion of that reference was a nod to Aryai and the court’s willingness to eventually side with that line of cases if defendants were to offer a compelling statutory analysis. However, given the current split of authority, it is yet to be seen if this purported ambiguity will be resolved conclusively in favor of the current weight of the law and against individual liability, so that individuals would be able to count on defeating FCA retaliation claims against them at the motion to dismiss stage.

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