In a decision last month, the Eleventh Circuit brought clarity to one of the requirements an employee must fulfill in order to bring a retaliation claim under the False Claims Act (“FCA”). Specifically, the court found that simply because an employee sincerely believes that their employer is violating the FCA does not mean their belief is reasonable.  In order to maintain a retaliation claim under the FCA, the employee’s belief that he or she is attempting to prevent false claims from being submitted to the federal government must be reasonable. In Hickman v. Spirit of Athens, Alabama, Inc., No. 19-10945, 2021 WL 164322 (11th Cir. Jan. 19, 2021), the Eleventh Circuit ruled that two employees of a non-profit organization did not hold a reasonable belief that they were preventing false claims from being submitted to the government.

Spirit of Athens’s executive director discovered expenses in the organization’s tax returns that she believed were inappropriate.  Specifically, $61,000 in expenses were classified as “other expenses.”  The total revenue of the organization was only $113,000, so she thought the $61,000 in other expenses was unusual.  The executive director brought the issue to the attention of the President, but he signed the tax return anyway.  The executive director and her assistant then had the tax returns sent to board members and had an outside firm audit the tax returns.  The president then fired the two employees, who subsequently brought FCA retaliation claims against the organization.

The Eleventh Circuit found that, even though the employees held a sincere belief that they were attempting to prevent false claims from being submitted to the government, their belief was not reasonable.  That was because the process through which the organization received funds from the federal government did not actually require the organization to submit any claims to the federal government.  Because no claims were actually submitted to the government, there could be no FCA violation, and it was unreasonable for the employees to believe they were attempting to prevent the submission of any false claims to the government.  This case contains a lesson for employees attempting to bring to light the purported submission false claims to the government – employees must understand the process through which their employers receive money from the government.  Regular fraud is not enough to establish a False Claims Act violation.  There must be false claims actually submitted to the government.  Without the submission of any false claims, employees cannot avail themselves of the FCA’s anti-retaliation provision.

The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with False Claims Act investigations and related litigation.  If you need assistance with such a matter, please contact us today.