Relator Persuades District Court to Consider Whether FCA Protects Whistleblowers from Post-Termination Retaliation; U.S. District Court, E.D. Michigan, Southern Division, Case Nos. 2:10-cv-13440, U.S. and State of Michigan ex rel. David L. Felten M.D., Ph.D, et al. v. William Beaumont Hospitals et al.

The relator’s motion to amend an order partially dismissing his complaint alleging FCA violations and retaliation is denied in part, where the relator did not demonstrate substantial grounds for disagreement over whether the court can dismiss untimely allegations that do not relate back to the original complaint. The motion is granted in part, where the court held that it should resolve the question of whether 31 U.S.C. § 3730(h) protects a relator from defendant’s retaliation after the defendant has terminated his employment.

After the court issued an order granting a motion by William Beaumont Hospitals to partially dismiss an FCA complaint, relator David Felten moved the court to amend the order and certify it for interlocutory appeal.

In his motion, Felten raised two questions: 1) Whether a relator who has pled a count of retaliation is required, during the seal period, to amend his complaint to add additional acts of retaliation; and 2) Whether 31 U.S.C. § 3730(h) protects a relator from defendant’s retaliation after the defendant has terminated his employment.

In response to the first question, the court explained that the Rule 15(c)(2) standard applies to new allegations in a complaint, even if they are not new claims. In U.S. ex rel. Bledsoe v. Cmty. Health Sys., Inc., 501 F.3d 493, 516–19 (6th Cir. 2007), the Sixth Circuit permitted relation back only for factual allegations that arose out of the same conduct set forth in the relator’s prior pleadings. The court did not permit relation back for new allegations that merely alleged additional conduct that went to the same “cause of action” that the relator had previously alleged. Because the Sixth Circuit did not distinguish between new allegations and new claims for purposes of the relation-back analysis under Rule 15(c)(2), the district court declined to do so. The district court denied this portion of the motion, finding that Felten had not demonstrated substantial grounds for disagreement over whether the court can dismiss untimely allegations that do not relate back to the original complaint.

However, the court found the second question merited certification for interlocutory appeal, finding the application of 31 U.S.C. § 3730(h) to allegations of post-employment retaliatory conduct was a question of law and a controlling question of law. The district court concluded that if the Sixth Circuit holds that 31 U.S.C. § 3730(h) applies to allegations of post-employment retaliatory conduct, Felten could proceed on a set of retaliation allegations that the Court dismissed. Felten’s post-employment retaliation question is therefore a controlling question of law.

The court also found the relator presented grounds for a different of opinion in the matter, and that an immediate appeal would materially advance the ultimate termination of the litigation. In this case, if the parties litigated Felten’s one remaining retaliation claim through to its conclusion and then Felten appealed and succeeded based on his post-employment retaliation argument, the court would have to re-litigate the entire retaliation dispute between Felten and Beaumont. The court concluded that resolving the question now would save significant resources.