December 4, 2014

Sixth Circuit Finds Job Applicants Not Covered By FCA Whistleblower Retaliation Provisions

6cirBy the C|C Whistleblower Lawyer Team

The whistleblower retaliation provisions of the False Claims Act offer broad relief to “employees” who are terminated, suspended, harassed or otherwise discriminated against by their employers for engaging in protected whistleblowing activity.  Congress amended the statute in 2009 to expand these provisions beyond employees to also reach “contractors” and “agents” of a company.  In Vander Boegh v. EnergySolutions, Inc., the Sixth Circuit recently considered the question of whether these provisions also extend to job applicants.  The appeals court ruled they do not.  For the Court, it was not even a close call.

The facts of the case are quite simple. Gary Vander Boegh applied for a job with EnergySolutions, a provider of waste management services. He did not get the job because of what he claims was his prior whistleblowing activity where as a landfill manager he reported a series of environmental violations. He sued the company claiming illegal retaliation under the False Claims Act (and several environmental protection statutes). The district court dismissed the case on summary judgment finding Vander Boegh lacked statutory standing to assert whistleblower retaliation claims because he was a job applicant, not an employee. The Sixth Circuit affirmed the dismissal of Vander Boegh’s claims.

The basis of the appellate court’s decision was also quite simple. First, the court looked to the plain meaning interpretation of “employee” and found it does not extend to applicants. The court considered the dictionary definition of the term and how it has been defined under the common law and in other statutory contexts. From this it concluded that extending the term to include applicants “would require a strained an unnatural reading of ’employee.'” The Court “decline[d] to read ’employee’ in such a peculiar fashion.”

Second, the court looked to the False Claims Act’s legislative history, in particular, the 2009 amendments which extended its coverage to contractors and agents. The Court noted Congress expanded the statute’s reach “to correct recent court decisions that denied FCA retaliation protection to persons in employment-like relationships that were not technically ’employees.'” Nowhere in this rationale did the Court find any suggestion that job applicants would fit within the statutory “loophole” these amendments were supposed to remedy. The Sixth Circuit concluded just the opposite — that job applicants fall well outside the “employment-like relationship” the False Claims Act is designed to protect.

Unfortunately, the Court did not go beyond this simple analysis and address the policy implications of excluding job applicants from these whistleblower retaliation protections. If the Court had done so, it could have addressed this additional “loophole” in the False Claims Act and the potential ramifications it could have for would-be whistleblowers, all of whom face a serious threat of retaliation for stepping up and speaking out. See The Stubborn Persistence of Whistleblower RetaliationThis could have set the stage nicely for the next court that considers this issue, and ultimately for Congress to address this lapse in its next pass at tightening up the reach of the False Claims Act.

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