On July 24, 2013, the Southern District of Illinois found that supervisors cannot be held individually liable for retaliation in violation of the False Claims Act’s retaliation provision, 31 U.S.C. 3730(h), taking a pro-employer position on an issue that has divided courts since that section’s amendment in 2009. The court specifically held that:
- Removal of the phrase “by his or her employer” from the retaliation section of the False Claims Act did not open the door to individual supervisor liability.
- Congress instead likely removed the phrase because it would conflict with Congress’ 2009 extension of the statute’s protections to contractors and agents, as well as employees.
In Russo v. Broncor, Inc. et al., No. 13-cv-348-JPG-DGW (S.D. Ill. July 24, 2013), an employee alleged that she was terminated in retaliation for raising her concerns that her employer’s billing practices were fraudulent and in violation of Medicare regulations. The employee sued both the corporation and its president in his individual capacity under the False Claims Act’s retaliation section, 31 U.S.C. § 3730(h).
Prior to 2009, the text of Section 3730(h) imposed liability only on an “employer”:
Any employee who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment by his or her employer because of lawful acts done by the employee…in furtherance of an action under this section, including investigation for, initiation of, testimony for, or assistance in an action filed or to be filed under this section, shall be entitled to all relief necessary to make the employee whole….
In 2009, Section 3730(h) was amended to permit contractors or agents, as well as employees, to assert retaliation claims. Additionally, the phrase “by his or her employer” was removed:
Any employee, contractor, or agent shall be entitled to all relief necessary to make that employee, contractor, or agent whole, if that employee, contractor, or agent is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done by the employee, contractor, agent or associated others in furtherance of an action under this section or other efforts to stop 1 or more violations of [the FCA].
District courts have reached different conclusions about whether Congress intended to create individual supervisor liability by removing the phrase “by his or her employer” from section 3730(h). The court in Russo concluded that it did not, relying heavily on the statutory analysis in Aryai v. Forfeiture Support Assocs., No. 10 Civ. 8952, 2012 U.S. Dist. LEXIS 125227 (S.D. N.Y. Aug. 27, 2012).
The court in Russo, like the one in Aryai, found no indication that Congress intended to expand the class of individuals who could be liable under section 3730(h). In fact, as Congress was aware that courts had rejected individual liability on the pre-amendment statute, Congress could have replaced “employer” with “any person” as it had done in other anti-retaliation statutes to compel individual liability. As Congress did not do so, the courts in Russo and Aryai agreed that the deletion of “by his or her employer” was most likely intended to avoid confusion in cases where an action was brought by newly-protected contractors or agents, who would have no “employer” against which to assert a claim. Further, the Aryai and Russo courts noted that Congress did not alter the mandatory remedy of reinstatement, which can only be granted by an employer, not a supervisor.
Russo is good news for employers. Until the split in courts is decided on appeal, Russo adds one more pro-employer decision that should help limit the advancement of False Claims Act whistleblower retaliation claims brought against supervisors in their individual capacity.
For questions regarding this case or assistance in reviewing, revising or drafting whistleblower policies and internal complaint procedures, please contact the authors or any other members of the McGuireWoods Labor and Employment group.