Missouri Relators May Pursue their Fraud and Retaliation Claims Against a College

March 8, 2013

graduates.jpgIn another blow to qui tam defendants on a motion to dismiss, a Missouri federal court recently held in favor of the relators' fraud and retaliation claims. United States ex rel. Miller v. Weston Educ. Inc., No. 4:11-CV-00112-NKL, 2012 U.S. Dist. LEXIS 175637 (W.D. Mo. Dec. 12, 2012). The relators/plaintiffs, two former employees of Heritage College, alleged that they had been retaliated against and wrongfully terminated for complaining to defendant's corporate office about their concerns that fraud was occurring in and questioning whether the government needed to be put on notice of the alleged fraud.

The district court first denied the defendant's motion to dismiss the relators' claims arising under the false claims act, regarding an agreement defendant entered into with the Department of Education and the procurement and use of financial aid funds. Heritage College is a for-profit post-secondary higher education school with campuses in seven states and is required to comply with Title IV of the Higher Education Act of 1965, 20 U.S.C. §§ 1070, et seq. The court next denied defendant's motion to dismiss the relators' retaliation and wrongful termination claims under both federal and Missouri law.

Turning to the relators' requested relief under 31 U.S.C. § 3730(h), which provides a remedy for an employer's unlawful retaliation against an employee for the employee's attempts to blow the whistle on a False Claims Act ("FCA") violation, the court recognized the defendant's attempt to minimize the full extent of the retaliation alleged by the relators. The relators' retaliation claims extended beyond defendant's portrayal of the allegations being that relators "were criticized and experienced stress." In fact, one relator alleged that she was prevented from performing her duties, her project was reassigned to another employee, and she was denied a promotion. As a result she alleged she was forced to resign and was constructively discharged. While the other relator did claim that she was "criticized," she further alleged that she was terminated approximately eleven days after writing her most scathing letter in an attempt to stop the allegedly fraudulent practices. The Missouri federal court held that, on a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), this was sufficient to allege claims for retaliation and wrongful termination under 31 U.S.C. § 3730(h).

The court went on to find that the relators' state law wrongful termination claims were not preempted by their federal retaliation claim under 31 U.S.C. § 3730(h). The relators' § 3730(h) claim was premised on the defendant's retaliation for the relators' attempts to expose and stop the FCA violations whereas the wrongful termination claim was premised on the defendants retaliation for their reporting and refusing to violate state and federal regulations governing a school such as defendant.

Unlike the relators' claims for fraud, which must be pled with particularly at the pleading stage, claims for retaliation are subject to what is referred to as notice pleading under Fed. R. Civ. P. 8. Section 8 of the Federal Rules of Civil Procedure requires a complaint to contain "a short and plain statement of the claim showing that the pleader is entitled to relief." In this case, the court found that there were sufficient facts to set forth plausible claims for false claims act liability, retaliation and wrongful termination, thereby permitting the relators to move forward and prove their case.

The retaliation and wrongful termination claims in this case demonstrate the need for employees to be aware of the various federal and state laws that protect whistleblowers and the relationship between those laws. Thus, employees considering blowing the whistle on their employers should timely seek legal advice and understand their rights. If litigation becomes necessary due to retaliatory action by an employer, an experienced whistleblower law firm can attempt to help you right the wrong.