DME Company Must Pay $762K for Retaliating against Whistleblower

Case: A key account manager (KAM) filed a qui tam lawsuit against the medical device company that employer her for allegedly accepting kickbacks from a leading client. When the client found out that it was named as a defendant in the case, it demanded that the company take the KAM off its account. The company not only agreed to the request but also put the KAM on indefinite paid administrative leave and assigned her to less favorable accounts when she returned. The KAM claimed retaliation. The jury agreed and awarded her $762,525 in damages. The company appealed but to no avail.

Significance: The False Claims Act bans employers from discriminating against employees “because of” their protected conduct. As is often the case in retaliation cases, the key question was whether the company took unfavorable action against the KAM “because” she filed the whistleblower lawsuit. Courts are split over what “because of” means. In some courts, to prove causation the whistleblower need only show that the lawsuit was just one factor. Other courts impose a stricter standard and require the whistleblower to prove that the protected action was the “but for” or motivating cause of the action. Addressing the issue for the first time, the U.S. Court of Appeals for the Third Circuit opted for the “but for” test. But it also concluded that the KAM produced enough evidence to meet this more stringent test and upheld the jury award.

[Lestage v. Coloplast Corp., 2020 U.S. App. LEXIS 38366, 982 F.3d 37]