William O’Hara sued his former employer, NIKA Technologies, Inc., under the whistleblower-protection provisions of the False Claims Act (the “FCA”), 31 U.S.C. 3730(h), and the American Recovery and Reinvestment Act (the “ARRA”), Pub. L. No. 11-5, 123 Stat. 297-99 (2009). Essentially, O’Hara claimed that NIKA fired him for disclosing another company’s alleged fraud on the government. The district court granted summary judgment in favor of NIKA on both claims. In O’Hara v. NIKA Techs., Inc., 4th Cir., No. 16-1805 (12/22/17), the Fourth Circuit Court of Appeals affirmed, but clarified, the legal standard to be applied to FCA retaliation claims.
The FCA is designed to combat waste, fraud, and abuse in federal government spending. It does this by making it illegal to submit claims for payment or approval that contain certain kinds of deception or misrepresentation. This sort of illegal activity frequently is brought to light by whistleblowers, who often are employees, contractors, and other agents of government contractors. To encourage these individuals to come forward, § 3730(h) of the FCA protects employees and certain others from being “discharged, demoted, suspended, threatened, harassed, or in any manner discriminated against in the terms and conditions of employment” because the individual has engaged in activity in furtherance of an FCA action or other efforts to stop a violation of the FCA.
To prove retaliation, an individual must demonstrate that he or she engaged in protected activity and was discriminated against because of that activity. In the context of the FCA’s anti-retaliation clause, protected activity includes opposing a contractor’s attempt to get a fraudulent claim paid or approved by the government where that opposition could lead to a viable FCA claim. To prove that he or she was discriminated against because of the protected activity, an individual must show that his or her employer knew about the protected activity and some adverse employment action was motivated by the employee engaging in protected activity.
The district court ruled that O’Hara had not engaged in protected activity because NIKA had no reason to know or believe that O’Hara was alleging improper conduct by NIKA. Instead, O’Hara’s whistleblowing allegations focused on potential fraud by another contractor. The appeals court agreed that O’Hara had not engaged in protected activity, but it reached that conclusion for different reasons. The appeals court held that the district court applied an incorrect legal standard, “because § 3730(h) protects activity that reasonably could expose or prevent fraud on the government by any person or company, not just the whistleblower’s employer.” In other words, for O’Hara to be protected from retaliation by NIKA, his employer, O’Hara’s whistleblowing activity did not have to allege fraud by NIKA. It is good enough that O’Hara’s allegations to focus on another contractor, provided they met the other requirements to constitute protected activity.
O’Hara contended that he engaged in protected activity because he revealed that another contractor (not NIKA) attempted to charge the government for unnecessary work by submitting a bid to install a protective slab over certain pipelines that later would be abandoned. The appeals court held that O’Hara did not engage in protected activity because there is no way this disclosure reasonably could prevent fraud on the government or lead to a viable FCA claim. It was undisputed the government solicited bids for the protective slab, and a contractor cannot be liable for defrauding the government by following the government’s directions.
The appeals court also affirmed the grant of summary judgment on the ARRA retaliation claim because clear and convincing evidence established that NIKA would have fired O’Hara absent any whistleblowing activity.