Seventh Circuit Clarifies that False Claims Act Retaliation Claims Do Not Preclude Subsequently Filed Qui Tam Claims

The Seventh Circuit has held that the outcome of a False Claims Act retaliation claim does not preclude a plaintiff from filing a subsequent qui tam action.  In Lusby v. Rolls-Royce Corporation, Curtis Lusby filed a complaint against his former employer Rolls-Royce alleging that Rolls-Royce terminated him for raising concerns about the company’s misrepresentation of the quality of engine parts it sold to the U.S. military.  The retaliation claim was dismissed, and Lusby filed a qui tam action.  Rolls-Royce moved to dismiss the qui tam claim on the basis that the dismissal of his retaliation claim barred him from bringing a related qui tam action.  The Seventh Circuit reversed the district court’s dismissal of the qui tam action, holding that “the resolution of personal employment litigation does not preclude a qui tam action, in which the relator acts as a representative of the public.”  In reaching its decision, the Seventh Circuit concluded that the United States would be prejudiced by the dismissal of the relator’s qui tam action and thus, as a practical matter “ a private [retaliation] suit never precludes a qui tam action.”  The Seventh Circuit also clarified the pleading requirement for qui tam claims.  According to the court, a relator need not exclude all possibility of innocence in the complaint but rather, an employee must “show, in detail, the nature of the charge, so that vague and unsubstantiated accusations of fraud do not lead to costly discovery and public obloquy.”  Thus, the Seventh Circuit reversed the district court’s dismissal of the relator’s qui tam claim under section 3739(a)(1).  For more information about the False Claims Act and The Employment Law Group® law firm’s False Claims Act Practice, click here. 

Tagged: False Claims Act (FCA), Whistleblower Laws (Federal)