After the Whistle Blows: Disciplining Whistleblowers without Committing Retaliation

The False Claims Act (FCA) has become the federal government’s primary weapon in combating fraud and abuse. Paradoxically, though, most FCA cases are initiated not by the government but private individuals filing whistleblower claims on its behalf. So called “qui tam” suits accounted for $14.961 billion of the $16.756 billion the government recovered from health care providers under the FCA since 2009, according to the U.S. Department of Justice. (See Box on page 8 for year-by-year totals). Just who are these whistleblowers?

In most cases, they’re employees who believe their company has defrauded the government and want to do right. Another motivation: If fraud is found, whistleblowers get a share of the money recovered. But while winning a qui tam suit can net whistleblowers a big payday, bringing one can cost them their job, professional reputation and peace of mind.

The Retaliation Conundrum
The anti-retaliation provisions of the FCA are designed to ensure that employees don’t get fired or suffer other retaliation for whistleblowing. Nobody would deny that whistleblowers need this protection. But protection from retaliation doesn’t give whistleblowers blanket immunity from discipline or bar labs from legitimately enforcing their work rules and policies.

As a lab manager, you must be prepared to deal with employees who remain at their jobs after blowing the whistle without crossing the line between legitimate discipline and illegal retaliation. This article will explain what you need to know about FCA anti-retaliation requirements to meet that challenge.

The Four Things Employees Must Show to Prove Retaliation

Anti-Retaliation Rule: Any employee, contractor, or agent shall be entitled to all relief necessary to make [them] whole, if [they are] discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done by the employee, contractor, agent, or associated others in furtherance of an action under this section or other efforts to stop one or more violations of this subchapter. (FCA, 31 U.S.C. Section 3730(h))

Employees bear the burden of proof in retaliation cases. To meet it, there are four things an employee must prove. You can defend your lab against a retaliation charge by disproving any one of those elements. So let’s take a close look at each one.

#1. The Employee Engaged in Protected Activity First, employees must show that they engaged in activities protected against retaliation. The FCA defines protected activities broadly to include either: i. “lawful acts . . . in furtherance of” a qui tam action; or, ii. “other efforts to stop one or more” FCA violations.

“Lawful acts”: The word “lawful” is no throwaway. It means that it’s not retaliation to discipline employees for doing something illegal, such as using protected patient records in violation of HIPAA to support their qui tam claims.

“Other efforts”: The “other efforts” language, which was added to the FCA in 2009, means employees don’t actually have to file a qui tam lawsuit to be protected from retaliation. “Other efforts” may include:

• Collecting information about potential fraud and abuse even if the employee hasn’t put all of the pieces of the puzzle together yet;
• Reporting suspected misconduct to supervisors or lab officials; and
• Opposing or refusing to participate in attempts to submit or get paid for false or fraudulent claims.

An employee’s belief that the lab has committed an FCA violation need not be correct. As long as the belief is sincere, held in good faith and reasonable, the employee is protected.

You Make The Call

Situation: A patient transport company provides free hot dogs and burgers at Holzer Health Systems physician picnics. A Holzer compliance officer complains to the CEO that the arrangement is an illegal kickback in exchange for patient referrals. Although well-intentioned, as a compliance officer, she should realize that anti-kickback laws don’t apply to gifts of nominal value like hamburgers and hot dogs. Question: Did Holzer commit retaliation by firing the compliance officer? Answer: No. Although the compliance officer’s belief was sincere and in good faith, it was unreasonable and “manifestly inconsistent with applicable law,” according to the U.S. Court of Appeals for the Sixth Circuit.

#2. You Knew About the Protected Activity Having proven that they engaged in protected activity, employees must show that the lab knew of the activity. Employees can meet this burden by showing that a lab manager, supervisor or other official or agent was aware of the protected activity.

#3. You Took Adverse Action against the Employee Next, employees must show that the lab took an adverse action banned by the FCA. Such actions include:

Termination;	Suspension;	Harassment; or
Demotion;	Threat;	Other discrimination in the terms and conditions of employment.

#4. You Took Adverse Action Because of the Protected Activity
The mere fact that employees received discipline or adverse treatment after engaging in protected activity isn’t enough to prove they suffered retaliation. Maybe the employees deserved to be disciplined for infractions unrelated to their whistleblowing activity. After all, why should a nurse be able to avoid the consequences of showing up for work drunk on Wednesday simply because she happened to have filed a qui tam suit on Monday?

How can you tell whether there’s a causal connection between protected whistleblowing activity and the adverse action? Most courts use a burden-shifting approach:

• Phase 1: The employee must make what’s called a “prima facie” case showing the lab committed retaliation, essentially by proving the first three elements;
• Phase 2: The burden then shifts to the lab to show a legitimate, non-retaliatory reason for the action;
• Phase 3: The burden then shifts back to the employee to show that the legitimate reason was a pretext for the action.

Although it’s a case-by-case determination, timing is often a key factor in determining cause. Accordingly, terminations, demotions, etc. are most likely to be deemed retaliatory when they occur within a month or two of the protected activity (or, more precisely, the lab’s knowledge of the protected activity). Conversely, adverse actions against whistleblowers are easier to justify as non-retaliatory when they occur a year or more after the protected activity or are the culmination of a disciplinary process put into motion before the activity.

Example: A lab fires a billing manager a month after she files a qui tam suit. The timing looks highly suspicious. But the lab may be able to overcome that by showing that the billing manager had been on probation for performance issues for a year and was fired for violating the terms of a last chance agreement signed weeks before she engaged in whistleblowing activity.

Other factors affecting determination of causation may include:

• A history of bad blood between the lab and employee;
• The seriousness of the alleged offense;
• Whether proper disciplinary procedure is followed; and
• The credibility (and likeability) of the parties and witnesses involved.

Five Ways to Protect Your Lab
Dealing with employees who remain at their jobs after blowing the whistle is tricky. Whistleblowers are likely to harbor resentment toward your lab and feel like there’s a target on their back. So it’s critical for all lab personnel to be sensitive of the situation and avoid engaging in needless provocation that the whistleblower may construe as retaliation. At the same time, labs need to ensure that employees follow rules and do their jobs even after they blow the whistle. There are five things you can do to strike the right balance.

#1. Implement a Non-Retaliation Policy First, you need a clearly worded non-retaliation policy. Although it can’t be one-size-fitsall, a standard non-retaliation policy should:

• State your lab’s commitment to comply with all fraud and abuse and other applicable laws;
• Remind employees that they won’t suffer retaliation for engaging in protected activity;
• Define the protected activities employees can engage in without retaliation;
• Define retaliation;
• Require supervisors and managers to follow an open-door policy and refrain from retaliation; and
• State that anybody who commits retaliation will be disciplined up to and including termination.

#2. Build Awareness of Your Non-Retaliation Policy
A non-retaliation policy, no matter how eloquently worded, won’t do much good if nobody believes in it. You must build awareness and remind employees of the policy’s existence. Above all, you must strictly adhere to it in the event employees do engage in whistleblowing activity.

#3. Limit Employees’ Access to Lab Information
Be careful about letting whistleblowers take documents home or giving them full access to your protected information. Explanation: The ban on retaliation protects lawful activity and doesn’t give whistleblowers the right to misappropriate your private and confidential records to support their qui tam claims. This includes patient medical records whose use or disclosure would violate HIPAA as well as your lab’s trade secrets or proprietary business information.

You Make The Call

Situation: The billing manager of a private physician practice secretly downloads confidential patient records and proprietary information for use as evidence to support her false claims qui tam suit. Question: Can the practice discipline the billing manager for violating its confidentiality? Answer: Yes. The protection against retaliation doesn’t apply in this case because illegally misappropriating confidential records is not protected activity under the FCA.

Implementation Tip: Although HIPAA protection is automatic, your right to protect proprietary information may depend on whether the employee signs a clear and enforceable confidentiality agreement. Caveat: A confidential policy, e.g., in an HR Handbook, that the employee doesn’t actually sign may be less easy to enforce since it’s not a contract.

#4. Follow Your Normal Disciplinary Procedures
Although the ban on retaliation doesn’t take discipline completely off the table, it makes it imperative that any discipline you do impose on whistleblowers be for legitimate reasons not related to protected whistleblowing activity. Also keep in mind that courts consider not just the reason for discipline but the process you use to mete it out. So scrupulously follow your normal disciplinary procedures the way you would when disciplining any other employee. Remember that any inconsistencies in the process will count as evidence that the whistleblower was singled out for retaliatory discipline.

#5. Keep Detailed Disciplinary Records
Last but not least, keep detailed records—memos, letters, notes from supervisors, photographs, etc.—documenting the disciplinary actions you take, your reasons for taking them and the procedures you followed in putting those decisions into effect.

Final Caveat: Don’t Count on a Release to Protect You
Employees who complain about fraud and abuse may decide to resign voluntarily. If the employee hasn’t yet filed a qui tam suit, it may be tempting to ask her to sign a written release promising not to sue your lab in exchange for a severance package. But courts consider releases to be a violation of public policy and won’t enforce them. Exception: A release may be enforceable if the lab discloses the employee’s allegations to the government. Explanation: The disclosure neutralizes the public policy argument because it makes the government aware of the allegations.

False Claims Act Damages Recovered in Qui Tam Cases against Health Care Providers Since 2009 (In billions of dollars)
Year	Qui Tam Recovery against Health Care Providers	Total Recovery against Health Care Providers
2009	$1.394	$1.632
2010	$1.969	$2.508
2011	$2.271	$2.449
2012	$2.541	$3.098
2013	$2.642	$2.703
2014	$2.313	$2.401
2015	$1.831	$1.965
Total	$14.961	$16.756