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SCOTUS will not hear whistleblower protection for ex-employees case

On Behalf of | Feb 9, 2022 | False Claims Act, Whistleblower Protection

The United States Supreme Court issued a statement on January 24 saying it will not review a split in federal appeals court rulings over whistleblowers who face retaliation after leaving their jobs. The announcement refers to a 6th U.S. Circuit Court of Appeals ruling on whether a neurologist’s claim that a Michigan hospital blacklisted him and wrecked his career after filing a whistleblower complaint.

Appeals court decision

A Detroit federal judge initially dismissed the case where the doctor was fired after he filed a claim saying that a hospital paid kickbacks to doctors for referrals – the hospital ended up paying $84.5 million in a 2018 settlement. The whistleblower then amended his complaint to say that he was blacklisted after termination, although he did not challenge the legal grounds for his dismissal. The 6th Circuit ruled in 2020 in a 2-1 decision that the term “employee” should have “no temporal qualifier” and should have the broadest possible application, including the doctor.

The Supreme Court petition

The hospital responded by sending a petition to the Supreme Court in September of 2020, saying the appeals court decision would have harmful consequences to employers, particularly those in the healthcare industry. The hospital’s concern was that whistleblowers could wait decades after employment to file a False Claims Act (FCA) claim.

This 6th Circuit ruling seemingly contradicts a 2018 ruling by the 10th Circuit, which held that the FCA does not apply to former employees. An employee at a for-profit college alleged that the school lied to its creditors. She alerted them to the allegedly fraudulent behavior and subsequently resigned her position. The school filed a breach of an agreement lawsuit against the former employee, which the court upheld.

There is more to come

Whistleblower advocates applauded the 6th Circuit ruling, yet there are now two appellate-level decisions on the matter. One says that employers can’t fire employees and then retaliate against them with harassment and threats.

There is also a False Claims Amendment Act of 2021 in the U.S. Senate awaiting a full Senate vote. It addresses the issue of protection for former employees, but there is no guarantee that the bill will make it to the floor. In the meantime, the 6th Circuit decision could lead to other claims and cases.