1. Whistleblower Protections for
Government Contractors and Grantees
Jason Zuckerman
Zuckerman Law
www.zuckermanlaw.com

2. Agenda
• False Claims Qui Tam Actions
• False Claims Act Whistleblower Protection
• NDAA Whistleblower Protection
• Strategies for effective representation of whistleblowers disclosing fraud on
the government

3. False Claims Act Qui Tam
• Whistleblower qui tam cases have led to the recovery of more than
$40B in taxpayer funds
• 30 states have adopted FCAs: https://taf.org/state-false-claims-
acts/
• 80 percent of the cases brought under the FCA are brought by
whistleblowers

4. False Claims Act Qui Tam
• First-to-file bar
• Public disclosure bar and original source exception
• Filed under seal
• Relator share:
• If government intervenes, 15 to 25 percent
• If government declines to intervene, 25 to 30 percent
• Heightened pleading requirement

5. Why Protect FCA Whistleblowers?
• “Few individuals will expose fraud if they fear their disclosures will lead to
harassment, demotion, loss of employment, or any other form of
retaliation.”
• FCA “seeks to halt companies and individuals from using the threat of
economic retaliation to silence whistleblowers, as well as assure those who
may be considering exposing fraud that they are legally protected from
retaliatory acts.” S. Rep. No. 99-345, at 34 (1986).

6. FCA Retaliation: Scope of Coverage
• Protects:
• Employees;
• Contractors; and
• Agents

7. FCA Protected Conduct
• 2 forms of protected conduct:
• lawful acts done by the employee contractor, agent or
associated others in furtherance of an action under this
section;
• or other efforts to stop 1 or more violations of the FCA

8. FCA Protected Conduct
• In furtherance of qui tam:
• Investigating a potential FCA violation
• Opposing FCA violation internally
• Reporting FCA violation to the government
• Assisting a qui tam relator
• Some courts limit the first prong to actions taken in furtherance of a viable
False Claims Act case

9. FCA Protected Conduct
• Efforts to stop FCA violation:
• The focus of the second prong is preventative—stopping “violations” – and it is
met if the whistleblower demonstrates that he took lawful measures to stop or
avert what he reasonably believed would be a violation of the FCA.
• Purpose of second prong is to untether protected efforts from the need to show
that an FCA action is in the offing
• “[A] layperson should not be burdened with the ‘sometimes impossible task’ of
correctly anticipating how a given court will interpret a particular statute.”
Singletary v. Howard Univ., No. 18-7158, 2019 WL 4554535 (D.C. Cir. Sept. 20,
2019).

10. FCA Protected Conduct
• Disclosures about fraud committed by a third party are protected. O’Hara v.
Nika Technologies, Inc., 2017 WL 6542675 (4th Cir. Dec. 22, 2017)
• § 3730(h) does not condition protection on the employment relationship between a
whistleblower and the subject of his disclosures.
• Protection under the statute depends on the type of conduct that the whistleblower
discloses—i.e., a violation of the FCA—rather than the whistleblower’s relationship to
the subject of his disclosures.

11. Duty Speech/“Step Out” Defense
• Malanga v. NYU Langone Med. Ctr., 2015 WL 7019819 (S.D.N.Y. Nov. 12,
2015) (FCA) (duty speech doctrine invalid post-FERA)
• United States ex rel. Reed v. KeyPoint Government Solutions, No. 17-1379, (10th
Cir. Apr. 30, 2019)
• Senior Quality Control Analyst discovered fraud while performing job duties
and reported it through her chain of command.
• Not protected because job duties may have required her to seek remedial action
from employees other than her direct supervisor.

12. FCA Prohibited Retaliation
• Adverse actions:
• discharged;
• demoted;
• suspended;
• threatened;
• harassed; or
• in any other manner discriminated against in the terms and conditions of employment.

13. FCA Prohibited Retaliation
Constructive Discharge
• If an employer ignores or fails to remediate a whistleblower’s internal
disclosures, does that constitute constructive discharge?
• Smith v. LHC Grp., Inc., 727 F. App'x 100 (6th Cir. 2018)
• Smith raised concerns about employees altering reimbursement paperwork and
making false representations about staffing for the purpose of admitting patients
• As Director of Nursing, Smith was concerned about potential prosecution and
jeopardizing her nursing license.
• Company ignored her disclosures and failed to take remedial action
• Requiring an employee “to engage in activity she considers illegal and
immoral” may create intolerable working conditions

14. FCA: Causation
• FCA retaliation claims require proof of ‘but-for’ causation. DiFiore v. CSL
Behring, LLC, 879 F.3d 71, 78 (3d Cir. 2018).
• “But for” caution is not tantamount to sole factor causation. Burrage v. United
States, 134 S. Ct. 881, 888-89 (2014) (an act is a “but-for” cause “[even if it]
combines with other factors to produce the result, so long as the other
factors alone would not have done so – if, so to speak, it was the straw that
broke the camel’s back.”)

15. Proving Causation
• Pretext/inconsistent or shifting explanations
• Close temporal proximity
• Retaliatory animus
• Suspicious timing
• Disparate treatment
• Deviation from company policies

16. FCA Retaliation Remedies
• Reinstatement
• 2 times the amount of back pay
• Uncapped special damages
• Emotional distress
• Reputational harm
• Humiliation

17. FCA Retaliation Remedies
• In lieu of reinstatement, a judge can award front pay to compensate plaintiff
until such time as they can regain their former career track.
• Get expert analysis and testimony about career damage
• Track mitigation efforts
• Analyze available comparable positions
• Document harm to reputation

18. FCA Retaliation Procedure
• 3-year statute of limitations
• Heightened pleading standard does not apply
• No exhaustion requirement
• Retaliation claim can be brought under seal

19. Interplay of FCA Qui Tam and FCA
Retaliation
• Respect the seal (breaching seal waives relator share)
• If retaliation claim is not under seal, it may open the door for
employer discovery
• Settling a retaliation claim with a global release can waive the right
to relator share if the whistleblower has disclosed the fraud to the
government

20. NDAA Retaliation Provisions
•DoD, NASA, and Coast Guard
Contractors, 10 U.S.C. § 2409
•Contractors of other agencies, 41
U.S.C. § 4712

21. NDAA Scope of Coverage
•Covers employees of nearly all government
contractors, subcontractors and grantees,
and personal services contractors
•Excludes contractors of Intelligence
agencies

22. NDAA Protected Conduct
• Broad scope of protected conduct:
• Violation of law, rule, or regulation relating to federal contracts, including
competition for or negotiation of a contract;
• Gross mismanagement, gross waste of federal funds, abuse of authority;
or
• Substantial and specific danger to public health or safety

23. NDAA Prohibited Retaliation
• NDAA whistleblower provisions bar a broad range of retaliatory acts,
including:
• discharging;
• demoting; or
• otherwise discriminating against a whistleblower.

24. NDAA Causation and Affirmative Defense
• “Contributing factor” causation
• Knowledge and timing suffice (WPA standard)
• Same-decision affirmative defense must be proven
by clear and convincing evidence

25. NDAA Remedies
• Reinstatement
• Back pay
• Uncapped compensatory damages (emotional distress
damages); and
• Attorney fees and costs

26. NDAA Procedure
• Must file initially with OIG
• Complainant can remove to federal court 210 days after filing
• OIG investigates and issues report
• Not later than 30 days after receiving IG report, agency head required to act
on findings
• Contractors and grantees have 60 days from the issuance of an order to
appeal to Circuit Court.

27. FCA or NDAA?

28. FCA Anti-Retaliation Provision Sections 827 and 828 of NDAA
Coverage Employee, contractor, or agent Employee of a contractor, subcontractor, or grantee/personal
services contractor
Protected
Conduct
Lawful acts done by the employee, contractor, agent or
associated others 1) in furtherance of an action under the
FCA or 2) other efforts to stop 1 or more violations
-Violation of law, rule, or regulation related to a federal
contract
-Gross mismanagement of a federal contract or grant
-Gross waste of federal funds
-Abuse of authority relating to a federal contract or grant
-Substantial and specific danger to public health or safety
Administrative
Exhaustion
File directly in federal court Must file initially at OIG; can remove to federal court after
210 days
Causation Standard “But for” causation (not sole factor) Contributing Factor
Damages Double back pay, reinstatement, special damages (emotional
distress damages and harm to reputation), attorney fees
Back pay, reinstatement, special damages, attorney fees
Statute of
Limitations
3 years 3 years

29. Pleading Considerations
• With the exception of hostile work environment, each adverse
action has its own statute of limitations (although time-barred acts
are still evidence)
• Administrative exhaustion requirement for each adverse action
• Split of authority about pleading standard at administrative
agencies
• Advantages and disadvantages to pleading multiple claims

30. Additional Claims
• State FCAs
• SOX if employer is public company
• State whistleblower protection statutes
• State common law wrongful discharge claims
• Haddle v. Garrison, 525 U.S. 121 (1998) (intimidation or
retaliation against witnesses in federal-court proceedings)

31. Prohibition Against “Gag Clauses” in NDAs
• The rights and remedies provided for in the NDAA may not be waived by
any agreement, policy, form, or condition of employment
• Federal Acquisition Regulation 3.909-1 prohibits confidentiality agreements
that prevent employees from reporting waste, fraud, or abuse to the
government
• SEC Rule 21F-17

32. FAR 3.909-1
3.909-1 Prohibition.
(a) The Government is prohibited from using fiscal year 2015 and subsequent fiscal
year funds for a contract with an entity that requires employees or subcontractors of
such entity seeking to report waste, fraud, or abuse to sign internal confidentiality
agreements or statements prohibiting or otherwise restricting such employees or
subcontractors from lawfully reporting such waste, fraud, or abuse to a designated
investigative or law enforcement representative of a Federal department or agency
authorized to receive such information. See section 743 of Division E, Title VII, of
the Consolidated and Further Continuing Appropriations Act, 2015 (Pub. L. 113-235)
and its successor provisions in subsequent appropriations acts (and as extended in
continuing resolutions.)

33. Using Company Documents
• Avoid mass, indiscriminate downloading
• Assume that employer will perform forensic analysis of client’s
work computer and network activity
• Avoid reviewing privileged documents
• If client potentially has privileged communications, warn
DOJ/SEC/CFTC so that they can screen the documents using
taint team

34. Using Company Documents
• Determine early on what client possesses and how client obtained
the information
• Warn client about gathering evidence post-termination or
resignation
• If pursuing only retaliation claim, consider having current
employee index key documents and provide the documents to in-
house or outside counsel for preservation