In its Young v. CHS Middle East, LLC decision last week, the Fourth Circuit provided an expanded view of the anti-retaliation protections afforded whistleblowers under the False Claims Act.* In doing so, it is one of the first courts of appeals to explicitly acknowledge the broadened whistleblower protections that follow from the False Claim Act amendments under the Fraud Enforcement and Recovery Act of 2009 (FERA). These amendments enlarged the scope of what is considered “protected activity” for whistleblowers under the statute.
The case was brought by Ronald and Ramona Young who allege their former employer, CHS Middle East, defrauded the U.S. State Department in its government contract to provide medical services to non-military personnel in Iraq. Specifically, the Youngs, who worked as CHS nurses, claim the company did not provide properly trained medical personnel under the contract. After escalating their concerns up the company line, they ultimately contacted the State Department and were fired immediately thereafter. They filed a whistleblower retaliation action, which the district court dismissed on the pleadings twice, finding the Youngs had not plausibly alleged they engaged in “protected activity” under the False Claims Act.
The Fourth Circuit reversed based on its finding the district court applied to narrow a view of whistleblower conduct covered by the False Claims Act. Looking to the newly expanded language of the Act, the Court noted that protected activity means acting “in furtherance of an action under” the statute as well as any “other efforts to stop one or more violations” of the statute. According to the Court, this means protected activity would include “collecting information about a possible fraud, even before the [potential whistleblower] puts together all the pieces of the puzzle.” By contrast, it would not include conduct in which an employee “fabricates a tale of fraud to extract concessions from the employer, or . . . just imagines fraud but lacks proof.”
Given the Youngs’ efforts to “investigate” and “stop” what they viewed as CHS’ false staffing on the government contract and the potential liability it posed for the company, the appeals court found the Youngs acted well within what the statute contemplates as protected activity. The Court found its decision earlier this year in United States v. Triple Canopy, Inc., which took an expanded view of what constitutes fraud and materiality under the False Claims Act, further “bolsters the plausibility of the Youngs’ protected activity allegations.”
In reaching its decision, the Court also rejected any challenge to the specificity of the whistleblower retaliation allegations in the complaint. The Court stressed these allegations need only pass Rule 8’s “relatively low notice-pleadings muster.” And while the allegations may well be insufficient to state a False Claims Act fraud claim subject to Rule 9(b)’s heightened pleading standards, the Court noted the Youngs have no such claim. Their case is limited to whistleblower retaliation only. Another sound legal victory in the Fourth Circuit for whistleblowers.
* The decision is “unpublished” and thus “not binding precedent in this circuit.” However, it does provide useful guidance other courts may choose to follow.
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