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New Clarity for FCA Whistleblowers in Eastern District of Michigan

The scope of retaliation protection for whistleblowers alleging government fraud has always been a hard fought issue. The battle has only become more heated since the retaliation provisions of the False Claims Act were amended in 2009. Even though congress' clear intention was to expand the zone of protection for whistleblowers making good faith reports of government fraud, lawyers for the government contractors continue to argue for a narrow and cabined approach to the law. That approach leaves would-be whistleblowers in an uncertain limbo about whether to report suspected fraud or whether they can be fired for doing so.

In a new opinion from the Eastern District of Michigan, District Judge Terrance Berg joins the growing chorus of courts following the language and intent of the revisions to protect whistleblowers: "Defendant's position would hamstring prospective whistleblowers and run counter to the purposes of the FCA's anti-retaliation provision" (31 U.S.C. 3730(h)).

In Ickes v. Nexcare Health Systems, LLC (No. 13-14260, E.D. Mich. Aug 4. 2014) the Defendant, operating a senior care and rehab center in South Lyon, Michigan, had argued that Ms. Ickes' opposition to the practice of discharging patients on the basis of a change in insurance payer from Medicare to the lower paying Medicaid system was not protected activity because compliance with health care regulations was only a "condition of participation" and not a "condition of payment." Rejecting the defendant's argument, the district court noted that violation of Medicare regulations could also lead to cancellation of payments. Citing precedent from the Sixth Circuit Court of Appeals in U.S. ex rel Hobbs v. Medquest (711 F.3d 707) (6th Cir. 2013), the district court noted that "a regulation may in some cases be a condition of payment and a condition of participation." Regarless of the distinction, the district court found plaintiff's efforts can be viewed as "efforts to stop one or more violations of this subchapter"-in the language of the FCA.

The district court's opinion in Ickes v. Nexcare sets out a broad zone of protection for prospective whistleblowers in one of the clearest judicial statements so far available under the FCA amendments: "the Act protects an employee who is punished for his or her 'efforts to stop' violations of the FCA; it's protection is not limited to only those employees whose complaints turn out to prove a violation of the FCA by a preponderance of the evidence. Such an interpretation would afford little protection for (and have a significant chilling effect on) whistleblowers, who are not FCA experts and are only able to report what they expect to be fraud or misconduct."

The case can now proceed to discovery and trial following the Court's clear rejection of unreasonably narrow readings of the False Claims Act's whistleblower protection - and would be whistleblowers can have a little more confidence that the law will protect them from retaliation if they step forward to report suspected Medicare fraud.

Plaintiff Joanne Ickes is represented by the firm of Nacht, Roumel & Walker PC and whistleblower attorney David Blanchard. For case updates and questions about the law inquires can be directed to David Blanchard at www.nachtlaw.com.

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