The Fourth Circuit Court of Appeals recently ruled on a Relator’s appeal in United States ex rel. Grant v. United Airlines, Inc. and adopted the objective reasonableness standard for retaliation claims brought under 31 U.S.C. §3730(h). The Fourth Circuit joins the Seventh, Eighth, and Ninth Circuits in applying this standard to 3730(h) retaliation claims.
In the underlying case, Relator David Grant brought a qui tam action against his former employer, United Airlines, which was contracted to perform service and maintenance on the Boeing C-17 Globemaster military transport planes. Relator alleged that from 2008 to 2014, he observed that United would certify repairs that were not actually completed, that were done with improper tools, and that were done by technicians who were not properly trained.
The district court dismissed the Relator’s False Claims Act (FCA) claims for failure to state a claim under Rule 12(b)(6) and Rule 9(b) because the Complaint failed to sufficiently alleged that United ever presented, or caused to be presented a false claim for payment to the government. Additionally, the lower court also dismissed the Relator’s 3730(h) retaliation claim on the basis that the Complaint did not allege that Grant engaged in the type of activity protected by the FCA.
Of interest, the Fourth Circuit Court of Appeals affirmed the dismissal of the FCA claims and reasoned that the Complaint did not plead Relator’s claims with the requisite particularity, specifically that he failed to show that the scheme necessarily led to the presentment of a claim to the government for payment. Notably, however, the appellate court found that the district court erred in dismissing Grant’s retaliation claim. The Court held that the Plaintiff sufficiently pleaded retaliation under section 3730(h).
Amendment to Section 3730(h) in 2010
Prior to 2009, “protected activity” was defined as measures taken in furtherance of an action under the FCA, but the statute has since been expanded. 31 U.S.C. §3730(h) was amended in 2010 to include a second, broader category of protected activity. Accordingly, 31 U.S.C. §3730(h) now defines two types of protected activity: (1) Acts in furtherance of an FCA action or (2) other efforts to stop one or more FCA violations. The type of activity at issue in this case was the latter. Specifically, the appellate court found that the “distinct possibility” standard (which is used to evaluate protected activity in furtherance of an FCA action) does not apply when evaluating the second type of protected activity. Instead, the court adopted the “objective reasonableness” standard for evaluating other efforts to stop FCA violations.
The “Objective Reasonableness” Standard
Under the objective reasonableness standard, an act constitutes protected activity where it is motivated by an objectively reasonable belief that the employer is violating, or soon will violate, the FCA. A belief is objectively reasonable when the plaintiff/relator alleges facts sufficient to show that he believed his employer was violating the FCA, that this belief was reasonable, that he took action based on that belief, and that his actions were designed to stop one or more violations of the FCA. The court noted that the plaintiff’s actions do not need to lead to a viable FCA action to establish protected activity.
In this case, the court found that it was (1) objectively reasonable for Grant to believe that United committed fraud and (2) his numerous verbal and written complaints, which were direct and specific in alleging the fraud, demonstrated action designed to stop one or more FCA violations. Accordingly, the court found that under the objective reasonableness standard, plaintiff sufficiently alleged that he was engaged in protected activity, United knew about the protected activity, and United terminated plaintiff because he engaged in the protected activity.
In adopting the objective reasonableness standard, the Fourth Circuit Court of Appeals made abundantly clear that retaliation claims can succeed with or without a viable FCA action intact.