Federal appeals court dismisses whistleblower’s anti-retaliation lawsuit News
Federal appeals court dismisses whistleblower’s anti-retaliation lawsuit

The US Court of Appeals for Tenth Circuit on Tuesday dismissed a whistleblower lawsuit, holding that the False Claims Act (FCA) does not protect whistleblowers from retaliation once they are no longer employees.

Debbi Potts was a campus director at “CollegeAmerica Denver, Inc. (CollegeAmerica), a predecessor of the Center for Excellence in Higher Education, Inc.” Potts resigned when she learned that CollegeAmerica was violating accreditation standards. CollegeAmerica filed a lawsuit after Potts breached her contract not to discuss the accreditation violations upon her resignation. Potts responded by submitting a whistleblower complaint to the Accrediting Commission of Career Schools and Colleges against CollegeAmerica, and a lawsuit alleging CollegeAmerica violated the anti-retaliation provision of the FCA.

The district court dismissed Potts’ complaint, finding “that a former employee—one whose allegedly protected acts had occurred exclusively after employment ended—could not rely on the False Claims Act’s anti-retaliation provision.” The challenged provision of the FCA states:

Any employee … shall be entitled to all relief necessary to make that employee … whole, if that employee … is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment because of lawful acts done by the employee.

The court held that “employee” under the FCA does not include former employees, saying, “what matters is the employee’s employment status when the employer retaliates.” The retaliatory acts stated in the FCA can only occur when the employed is still employed; thus, the FCA could not be read to include former employees.