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FCA Qui Notes
November 15, 2018

School's Out: Tenth Circuit Finds Alleged Post-Employment FCA Retaliation Against Educator Not Actionable

Qui Notes: Unlocking the False Claims Act

Last month, readers may have been surprised to read about a Sixth Circuit case in which a Relator successfully pursued a remedy under the False Claims Act's anti-retaliation provision based on her entirely voluntary resignation from the defendant employer. Today we examine a similar case out of the Tenth Circuit where a different whistleblower voluntarily resigned—and then experienced retaliation after the fact. Through a painstaking examination of the text of the FCA, the Tenth Circuit reached the conclusion that such negative actions cannot give rise to liability, provided that they took place entirely after the prospective whistleblower's employment.

The case is Potts v. Center for Excellence in Higher Education, Inc., one centered around accreditation standards required for eligibility to participate in certain federal education programs. No. 17-1143, 2018 WL 5796963 (10th Cir. Nov. 6, 2018). The whistleblower previously worked as the campus director for the defendant, during which time she purportedly observed "unethical" business practices that she felt would have placed accreditation at risk. Apparently, rather than raise these business practices through a qui tam, she opted instead to accept $7,000 from the defendant in exchange for a promise not to "disparage" its reputation in the future. This promise she did not keep, complaining of the Center's practices in private emails to other former employees, as well as lodging a formal complaint with the Center's accreditor. The end result was a lawsuit by the defendant to recover that $7,000 in state court for violation of the agreement. This lawsuit, the whistleblower argued, constituted impermissible retaliation under the FCA.

The question presented to the Tenth Circuit was one of timing. Could this whistleblower avail herself of the FCA's "employee" protection if the alleged retaliation took place entirely after her employment ended? To answer this question, the panel goes back to the basics of statutory construction and English grammar. In an opinion that would perhaps have been just as well-suited to a blackboard as to a Westlaw citation, the court discusses associated words found in the statute such as "threatened" and "harassed" through the lens of noscitur a sociis. It explores application of ejusdem generis to the FCA's listing of possible types of harassment, noting that four of the six are only possible during current employment. The opinion teases out residual clauses and series-qualifiers, verb strings and parallel verbs, in a manner that would make any educator proud. Unfortunately for the plaintiff-educator here, the Tenth Circuit's ultimate conclusion that the FCA's anti-retaliation provision "unambiguously excludes relief for retaliatory acts occurring after the employee has left employment" leaves her several credits short of graduating to a victory on her claims.

© Arnold & Porter Kaye Scholer LLP 2018 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.