On December 6, 2017, U.S. District Judge Andrew L. Carter Jr. (Southern District of New York) held that a False Claims Act (FCA) whistleblower could not name his boss as an individual defendant in a suit alleging unlawful retaliation.

The plaintiff, Gerard Diffley, was the chief operating and compliance officer at Bostwick Laboratories. He obtained that position after the company’s former CEO and founder, Dr. David Bostwick, stepped down amid allegations that the lab violated the FCA by submitting claims for medically unnecessary testes. According to Diffley, during the government’s investigation in the underlying FCA matter, he gave the government information about remedial measures that he implemented to correct problems that allegedly occurred before Dr. Bostwick’s departure. In January 2016, the defendants to the FCA action agreed to pay $3.2 million to settle the allegations without admitting liability. Dr. Bostwick was reinstated as the lab’s CEO soon after the settlement, and according to Diffley, made it known that he intended to exact revenge on Diffley for his role in the FCA matter.

In February 2017, Diffley filed a retaliation lawsuit under the FCA, naming both the lab and Dr. Bostwick as defendants. Diffley’s suit alleged that Dr. Bostwick treated him harshly and called him “Hitler” for the role Diffley played in assisting the government in the FCA case. The retaliation suit also alleged that Dr. Bostwick stripped Diffley of his job responsibilities, removed his support staff, instructed employees to not assist him, and asked staff if they “had any dirt” on Diffley. Diffley alleged that he eventually went on disability leave, purportedly because of psychological injuries he suffered from the retaliation.

In December 2017, the court granted Dr. Bostwick’s motion to dismiss him as a defendant in the retaliation suit. The court’s explained that permitting Diffley to sue Dr. Bostwick along with the company would contradict “dozens of cases” providing that individuals do not have liability under the FCA’s anti-retaliation provisions. The court held that it was “not persuaded by plaintiff’s calls to depart from the bulk of cases that have declined to read individual liability into the FCA’s whistleblower provision.” The retaliation claims against the lab remain pending.

While the vast majority of federal courts that have addressed the issue have held that the FCA’s anti-retaliation provision (31 U.S.C. § 3730(h)) does not permit individual liability, a handful of district courts throughout the country have held otherwise. See, e.g. United States ex rel. Moore v. Community Health Servs., Inc., 2012 WL 1069474, at *9 (D. Conn. Mar. 29, 2012). Nevertheless, the majority rule remains that only an employer can be sued under the FCA’s anti-retaliation provision, and not individual supervisors.

The attorneys at Chilivis Grubman represent employers of all types and sizes in connection with FCA litigation, as well as employment-related litigation, including suits brought under the FCA’s anti-retaliation provision. For any questions, or if we can assist you in connection with such a matter, please contact us at (404) 262-6505 or sgrubman@cglawfirm.com.