Summary
The Third Circuit held that the 2009–2010 amendments to the False Claims Act expanded the retaliation standard under 31 U.S.C. § 3730(h)(1) to protect “lawful acts” in furtherance of an FCA action or “other efforts to stop 1 or more violations” of the Act, eliminating the pre-amendment requirement that an employer be on notice of the “distinct possibility” of FCA litigation. The court adopted this new standard and vacated the district court’s dismissal of a compliance officer’s retaliation claim, finding he sufficiently pled protected conduct by reporting fraud outside his chain of command to the Philadelphia Housing Authority and by disobeying instructions to stop investigating, thus putting his employer on notice of efforts to stop FCA violations. The case establishes that compliance employees must show they acted beyond normal job duties or chain of command to trigger protection, and that the “other efforts” prong applies regardless of whether the employee contemplated filing a qui tam suit.
Topics
Practice areas
Questions Presented
- Whether the District Court abused its discretion in denying Ascolese's motion for leave to file a Second Amended Complaint.
- Whether the District Court abused its discretion in denying Ascolese's motion for reconsideration.
Holdings
- The 2009–2010 amendments to the False Claims Act expanded protected conduct to include 'other efforts to stop 1 or more violations' of the Act, and the district court should apply this new standard. Under the new standard, Ascolese sufficiently pled that he engaged in protected conduct and that MBP was on notice and retaliated against him.
Key quotations
“We take this occasion to formally adopt a reading of the anti-retaliation standard that takes into consideration the 2009–2010 FCA amendments.” (at 10)
“Accordingly, we recognize that the 2009–2010 FCA amendments expanded the anti-retaliation standard to protect 'lawful' acts 'in furtherance of' either 'an action' under the FCA or 'other efforts to stop 1 or more violations of' the Act.” (at 12)
“Ascolese sufficiently pled that he engaged in protected conduct when he went outside of his chain of command to report his concerns of fraudulent work to the PHA.” (at 14)
“We conclude that these facts give rise to a plausible inference that MBP was on notice of Ascolese's efforts to stop FCA violations in the Project and retaliated by firing him.” (at 16)
Factual background
Ascolese was the QA/QC Manager for a federally funded public housing construction project. He identified numerous deficiencies and reported them internally to MBP and Shoemaker. When they did not act, he emailed PHA engineers directly on December 5, 2017, about deficient concrete work. After that, Shoemaker instructed him to stay out of the field and keep his concerns to himself. Ascolese disobeyed and continued documenting deficiencies. On January 18, 2018, MBP fired him at Shoemaker's request.
Procedural history
Ascolese filed a qui tam action under the False Claims Act. The government declined to intervene. The District Court granted MBP's motion to dismiss all counts without prejudice. Ascolese moved for leave to file a Second Amended Complaint, which the District Court denied as futile. Ascolese moved for reconsideration, which was denied. Ascolese appealed.
Remand instructions
for further proceedings consistent with this opinion, specifically to apply the new FCA retaliation standard and reconsider the motion for leave to amend.