Whistle-blowers: They can sue, and they could win
Be careful how you handle concerns
By J. Mark Waxman, JD
General Counsel
CareGroup Healthcare System
Boston
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The Federal False Claims Act (FCA) prohibits entities from making false statements that result in the government being defrauded. That act also covers federally funded research programs. An important section concerns the protection of employee whistle-blowers who expose false statements made by companies or institutions applying for federal funds and as a result are subject to retaliation by their employer.
This section states that: "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 the by employee on behalf of the employee or others in furtherance of 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 [FCA, 31 U.S.C. § 3730 (h)]." Simply put, this section of the act is designed to protect employees who are dismissed because they reported misdeeds.
A recent case, Dookeran v. Mercy Hospital of Pittsburgh [281 F. 3d 105 (3rd Cir. 2002)], involved a physician and a research hospital. Keith Dookeran, MD, was director of clinical oncology trials and research for Mercy Cancer Institute. Dookeran was asked to prepare a grant application to serve as a clinical center for a National Surgical Adjuvant Breast and Bowel Project (known as the Star P-2 Study), a study on the effectiveness of two drugs used to reduce breast cancer in post-menopausal women.
Dookeran prepared the application and turned it over to a colleague to submit, but the colleague refused, stating he believed that inadequate resources for protecting the human subjects were being provided. Dookeran was then instructed to submit the same application and refused for the same reason. Mercy Hospital representatives replaced Dookeran and submitted the application. He cited that retaliatory actions were taken by the hospital and sued.
The first question the court considered was whether the FCA was applicable in this case. An FCA claim is "any request or demand, whether under a contract or otherwise, for money or property that is made by a contractor, grantee, or other recipient if the United States government provides any portion of the money or property that is requested or demanded, or if the government will reimburse such contractor, grantee, or other recipient for any portion of the money or property that is requested or demanded." Because the application to be a clinical center for the study was not itself an application for funds, the Appellate Court held that even if the charges were true, Dookeran could not sue under the FCA.
That determination in effect stripped Dookeran of protected whistle-blower status and protections provided to those so designated. Federal law states whistle-blowers may not be subject to retaliatory conduct if they are engaged in "protected conduct [31 U.S.C. § 3730(h)]." To be engaged in protected conduct requires conduct leading to the distinct possibility that a viable FCA could be filed and knowledge by management of the protected conduct. Here, because no viable FCA claim was even at issue, no viable whistle-blower claim could be filed and, as a result, the court dismissed the claim.
While in this case, the judgment went to Mercy Hospital, the case provides a cautionary tale. The whistle-blower was a current employee who felt the hospital’s conduct was inappropriate. Had a viable FCA claim existed, whistle-blower protection would have applied.
So note, if you receive federal funds, employees not only can report misconduct but also have federal protection from attempts to quiet or dismiss. Had Dookeran been successful, he would have been entitled to damages that could have included compensation for emotional distress.1 On the bright side, however, is the apparent holding that it is only an actual request for money or property that could result in an authorization of the payment of federal funds for the provider that will meet the claim requirements of the FCA. Further, it has also been held that the protection only covers employees and not independent contractors.2
References
1. Hammond v. DPS Associates, 148 F. 3d 407 (4th Cir.,1998).
2. Vessell v. Northland Counseling Center, 218 F. 3d 886 (8th Cir., 2000).
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