Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-06-05230/USCOURTS-caDC-06-05230-0/pdf.json

Parties Involved:
American National Red Cross
Appellee
Michelle Hoyte
Appellant
United States of America
Appellee

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 5, 2007 Decided March 4, 2008

No. 06-5230

MICHELLE HOYTE, BRINGING THIS ACTION ON BEHALF OF 

THE UNITED STATES OF AMERICA,

APPELLANT

UNITED STATES OF AMERICA,

APPELLEE

v.

AMERICAN NATIONAL RED CROSS,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 04cv01054)

H. Vincent McKnight, Jr. argued the cause for the appellant.

Tracy L. Hilmer, Attorney, United States Department of

Justice, argued the cause for appellee United States of America.

Peter D. Keisler, Assistant Attorney General, Jeffrey A. Taylor,

United States Attorney, Douglas N. Letter, Appellate Litigation

Counsel, and Michael D. Granston and Daniel R. Anderson,

Attorneys, United States Department of Justice, were on brief.

R. Craig Lawrence, Assistant United States Attorney, entered an

appearance.

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1

Ordinarily under the FCA, “the government, or a party suing on

its behalf, may recover for false claims made by the defendant to

secure a payment by the government.” United States ex rel. Bain v.

Ga. Gulf Corp., 386 F.3d 648, 652 (5th Cir. 2004); see 31 U.S.C. §

3729(a)(1)-(6). In a reverse false claim action under FCA section

3729(a)(7), “the defendant’s action does not result in improper

payment by the government to the defendant, but instead results in no

payment to the government when a payment is obligated.” Ga. Gulf

Corp., 386 F.3d at 653.

John R. Fleder argued the cause for appellee American

National Red Cross.

Before: HENDERSON and TATEL, Circuit Judges, and

WILLIAMS, Senior Circuit Judge.

Opinion for the court filed by Circuit Judge HENDERSON.

Opinion concurring in part and dissenting in part filed by

Circuit Judge TATEL.

KAREN LECRAFT HENDERSON, Circuit Judge: Michelle

Hoyte filed this action under the False Claims Act (FCA), 31

U.S.C. §§ 3729 et seq. The complaint alleges that Hoyte’s

former employer, the American National Red Cross (ARC), (1)

violated FCA section 3729(a)(7) by failing to report to the

Federal Drug Administration (FDA) that ARC had mishandled

blood supplies, for which conduct the FDA was authorized to

assess financial penalties pursuant to a district court consent

decree, (Count I) and (2) violated FCA section 3730(h), the

“whistleblower” provision, by discharging Hoyte in retaliation

for her investigating, and complaining to supervisors about, the

mishandled blood (Count II). The district court dismissed Count

I (the reverse false claim1

) on the ground that it was obliged to

defer to the Government’s decision to dismiss the claim under

FCA section 3730(c)(2)(A), which provides that “[t]he

Government may dismiss [an FCA qui tam] action

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3

notwithstanding the objections of the person initiating the

action.” The court dismissed Count II (the retaliation claim) on

the ground that Hoyte did not allege that ARC was under an

“obligation to pay or transmit money or property to the

Government,” as section FCA 3729(a)(7) requires for a reverse

false claim, and therefore Hoyte’s investigation into the blood

mishandling, for which investigation she alleged she was

discharged, was not “in furtherance of” a viable qui tam action

so as to be protected activity under the whistleblower provision.

United States ex rel. Hoyte v. Am. Nat’l Red Cross, 439 F. Supp.

2d (D.D.C. 2006). For the reasons set out below, we affirm the

district court’s dismissal of both counts.

I.

On April 15, 2003, the district court issued a consent decree

incorporating an agreement between ARC and the United States

in which ARC agreed to adopt and follow specified blood

handling and reporting requirements. See United States v. Am.

Nat’l Red Cross, C.A. No. 93-0949 (Apr. 15, 2003) (Consent

Decree), reprinted in Joint App. (JA) at 27. The Consent Decree

provides that the FDA “may assess” financial penalties for

various violations of its provisions “up to” specified maximums.

See, e.g., id. at 35-36, 42, 52, 56-57, 61-64.

Hoyte was an ARC employee from 1997 until June 17, 2004.

She alleges that in February 2004, when she was Director of

Quality Audits, she discovered ARC had mishandled 607 units

of blood at its “Penn-Jersey” facility in Philadelphia. She

further alleges that ARC’s officials and staff were aware of the

mishandled blood but did nothing about it even after she and her

staff urged her superiors to report the matter to the FDA as

required under the Consent Decree. Finally, she alleges that she

scheduled a meeting with ARC’s Senior Vice President for

Quality Assurance and Regulatory Affairs for June 18, 2004 but

was fired by her supervisor over the telephone the day before the

meeting.

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2

Section 3730(b)(1) further provides: “The action shall be

brought in the name of the Government. The action may be dismissed

only if the court and the Attorney General give written consent to the

dismissal and their reasons for consenting.” Thus, a motion to dismiss

by the relator requires the consent of both the Government and the

court “[e]ven where the Government has declined to intervene.”

Ridenour v. Kaiser-Hill Co., 397 F.3d 925, 931 & n.8 (10th Cir. 2005)

(citing Searcy v. Philips Elecs. N. Am. Corp., 117 F.3d 154, 155 (5th

Cir. 1997); United States v. Health Possibilities, P.S.C., 207 F.3d 335,

339 (6th Cir. 2000)). By contrast, as we explain infra, Part II.A, the

FCA does not require the court’s consent if the Government moves to

dismiss. 

3

The FCA provides the United States with two options in a qui

tam action:

Before the expiration of the 60-day period or any extensions

obtained under paragraph (3), the Government shall–

 (A) proceed with the action, in which case the action

shall be conducted by the Government; or

 (B) notify the court that it declines to take over the

action, in which case the person bringing the action

shall have the right to conduct the action.

31 U.S.C. § 3730(b)(4).

On June 25, 2004, Hoyte filed this qui tam action under FCA

section 3730(b)(1), which provides that “[a] person may bring

a civil action for a violation of section 3729 for the person and

for the United States Government.”2

 As noted, the complaint

includes a reverse false claim count under section 3729(a)(7) for

which Hoyte is authorized to bring a qui tam action under

section 3730(b) and a retaliation claim under the FCA’s

whistleblower provision, section 3730(h). The United States

filed a notice of election to decline intervention in the suit on

November 7, 2005, pursuant to section 3730(b)(2).3

 On January

24, 2006, ARC moved to dismiss both Count I and Count II for

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failure to state a claim under Fed. R. Civ. P. 12(b)(6) and to

dismiss Count II for lack of jurisdiction under Fed. R. Civ. P.

12(b)(1) as well. The United States then moved on February 16,

2006 to dismiss Count I, asserting that under section

3730(c)(2)(A) “the United States’ decision to dismiss th[e] case

is not subject to judicial review.” U.S. Mot. to Dismiss 1.

On April 27, 2006 the district court held a hearing on the

motions to dismiss at the conclusion of which it granted the

Government’s motion to dismiss Count I and deferred ruling on

ARC’s motion. 4/27/06 Hr’g Tr. 43-44. On July 14, 2006 the

court issued an opinion and order in which it granted ARC’s

motion to dismiss Count II. United States ex rel. Hoyte v. Am.

Nat’l Red Cross, 439 F. Supp. 2d 38 (D.D.C. 2006). 

Hoyte filed a notice of appeal on August 3, 2006.

II.

Hoyte contends the district court erred in dismissing Count

I and Count II. We consider each count in turn. 

A. Count I: Reverse False Claim Charge

Section 3730(c)(2)(A), which sets out the “[r]ights of the

parties to qui tam actions” brought on behalf of the United

States, provides: “The Government may dismiss the action

notwithstanding the objections of the person initiating the action

if the person has been notified by the Government of the filing

of the motion and the court has provided the person with an

opportunity for a hearing on the motion.” In granting the

Government’s motion to dismiss Count I, the district court

concluded that under this provision, as construed in Swift v.

United States, 318 F.3d 250 (D.C. Cir. 2003), the court did not

“have a role to play” in the Government’s decision whether to

dismiss Count I given “the general presumption of the

Government’s right to end a prosecution” and the absence of

special circumstances that “warrant an exception such as fraud

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on the court.” 4/27/06 Hr’g Tr. 41. The district court correctly

dismissed Count I. 

In Swift, a Department of Justice (DOJ) lawyer filed a qui

tam action alleging that three employees of the DOJ Office of

Legal Counsel had conspired to defraud the Government of

$6,169.20 using falsified time sheets and leave slips. The

Government moved to dismiss the action and the district court

granted the motion. On appeal, we upheld the dismissal,

concluding that the Government has what amounts to “an

unfettered right to dismiss” a qui tam action, citing four bases

for our conclusion: (1) the separation of powers doctrine, (2) the

Government’s broad discretion in initiating or continuing a

criminal prosecution, (3) Federal Rule of Civil Procedure

41(a)(1)(i), which permits a plaintiff to dismiss a civil action

“without order of the court,” and (4) the language of section

§ 3730(c)(2)(A) itself, which grants to “[t]he Government” (not

the court) unilateral authority to “dismiss the action

notwithstanding the objections of the person initiating the

action.” Swift, 318 F.3d at 252. As we there explained:

“Nothing in § 3730(c)(2)(A) purports to deprive the Executive

Branch of its historical prerogative to decide which cases should

go forward in the name of the United States. The provision

neither sets ‘substantive priorities’ nor circumscribes the

government’s ‘power to discriminate among issues or cases it

will pursue.’ ” Id. at 253 (quoting Heckler v. Chaney, 470 U.S.

821, 833 (1985)). In addition, we noted that, although “the

government conceded at oral argument that there may be an

exception for ‘fraud on the court,’ no evidence of that sort was

presented” and therefore we “d[id] not pass on whether this type

of exception, or any other, might be consistent with our reading

of § 3730(c)(2)(A).” Id.

We conclude that under Swift the district court correctly

deferred to the Government’s virtually “unfettered” discretion

to dismiss the qui tam claim. As in Swift, there is no evidence

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4

In Swift, we declined to adopt the judicial review standard for a

qui tam action endorsed by the Ninth Circuit, under which the

Government must initially show that dismissal is “rationally related to

a valid purpose,” after which the relator bears the burden to show the

decision to dismiss is “fraudulent, illegal, or arbitrary and capricious.”

See Swift, 318 F.3d at 252 (quoting United States ex rel. Sequoia

Orange Co. v. Baird-Neece Packing Corp., 151 F.3d 1139, 1145 (9th

Cir. 1998), cert. denied, 525 U.S. 1067 (1999)). We explained that we

“c[ould ]not see how § 3730(c)(2)(A) gives the judiciary general

oversight of the Executive’s judgment” in deciding “that an action

brought in its name should be dismissed.” Id. 

here of fraud on the court or any similar exceptional

circumstance to warrant departure from the usual deference we

owe the Government’s determination whether an action should

proceed in the Government’s name. Hoyte asks us to recognize

a new exception for a dismissal “clearly contrary to manifest

public interest,” Appellant’s Br. at 14, contending that in Swift

we left the door open for future recognition of other types of

exceptions in addition to “fraud on the court.” In Swift,

however, we flatly rejected the relator’s suggestion that we

routinely review the Government’s decision to dismiss a qui tam

action, instead holding the door only barely ajar for review in an

exceptional circumstance—in particular, where there is “fraud

on the court.” See id. at 253. It is clear from Swift that any

exception to section 3730(c)(2)(A)—if there are any—must be

like “fraud on the court” and Hoyte’s proposed “manifest public

interest” exception is not.4

 Hoyte was afforded the hearing the

FCA mandates to give her “a formal opportunity to convince the

government not to end the case.” Id. The Government was not

persuaded to proceed, however, and its decision to dismiss the

case, based on its own assessment, is not reviewable in the

district court or this court. Accordingly, we affirm the district

court’s dismissal of Count I.

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B. Count II: Retaliation Claim

FCA section 3730(h) provides in relevant part:

Any employee who is discharged, demoted, suspended,

threatened, harassed, or in any other manner

discriminated against in the terms and conditions of

employment by his or her employer because of lawful

acts done by the employee on behalf of the employee or

others in furtherance of an action under this section,

including investigation for, initiation of, testimony for,

or assistance in an action filed or to be filed under this

section, shall be entitled to all relief necessary to make

the employee whole. 

31 U.S.C. § 3730(h) (emphasis added). Count II alleges that

ARC violated this provision by discharging Hoyte in retaliation

for her “protected activity,” namely, “repeatedly advising her

supervisors that she believed that the American Red Cross had

violated the law, [standard operating procedures], and the

Consent Decree by not appropriately addressing the problems

associated with the collection of the 607 unsuitable units of

blood in Penn-Jersey.” Compl. ¶ 71. The district court

dismissed Count II on the ground that Hoyte’s investigation and

complaints about the blood handling and reporting were not “in

furtherance of” an FCA action as required by section 3730(h)

because Count I—asserting the reverse false claim under

section 3729(a)(7)—did not allege that ARC had any “obligation

to pay or transmit money or property to the Government” as

section 3729(a)(7) requires. We agree.

This court has established that 

to prevail on a whistleblower claim, an employee must

demonstrate that: 

(1) he engaged in protected activity, that is, “acts done

. . . in furtherance of an action under this section”; and

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5

Although both Williams and Yesudian involved the more usual

type of FCA action to recover for false claims made to secure a

payment by the Government, the retaliation requirements set forth

therein apply equally to a reverse false claim retaliation action. See

Hutchins v. Wilentz, Goldman & Spitzer, 253 F.3d 176, 186 (3d Cir.

2001) (plaintiff asserting reverse false claim retaliation “must show (1)

he engaged in ‘protected conduct,’ (i.e., acts done in furtherance of an

action under § 3730) and (2) that he was discriminated against because

of his ‘protected conduct.’ ” (citing Yesudian, 153 F.3d at 736)).

(2) he was discriminated against “because of” that

activity. To establish the second element, the

employee must in turn make two further showings.

The employee must show that: (a) “the employer had

knowledge the employee was engaged in protected

activity”; and (b) “the retaliation was motivated, at

least in part, by the employee’s engaging in [that]

protected activity.”

United States ex rel. Williams v. Martin-Baker Aircraft Co., 389

F.3d 1251, 1260 (D.C. Cir. 2004) (quoting United States ex rel.

Yesudian v. Howard Univ., 153 F.3d 731, 736 (D.C. Cir. 1998)

(quoting S. Rep. No. 99-345, at 35 (1986) (alterations in

Yesudian))).5 For the first requirement—engaging in protected

activity—“ ‘it is sufficient that a plaintiff be investigating

matters that ‘reasonably could lead’ to a viable False Claims Act

case.’ ” Id. (quoting Yesudian, 153 F.3d at 740). The matters

Hoyte was investigating, however, could not have reasonably

led to a viable FCA case. Section 3729(a)(7), on which Hoyte

relies, imposes civil liability on a person who “knowingly

makes, uses, or causes to be made or used, a false record or

statement to conceal, avoid, or decrease an obligation to pay or

transmit money or property to the Government.” Yet Hoyte has

not alleged that ARC had any “obligation to pay or transmit

money or property to the Government” which it “could conceal,

avoid, or decrease” through a false statement or record so as to

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violate section 3729(a)(7). The Consent Decree imposed no

obligation on ARC to tender money or property to the

Government but only to follow the prescribed blood handling

and reporting requirements. In this respect, ARC is in the same

position as any regulated entity subject to possible sanctions for

violating an administrative requirement and we made clear in

Yesudian that an unassessed potential penalty for regulatory

noncompliance does not constitute an obligation that gives rise

to a viable FCA claim or, consequently, a related whistleblower

claim. 

Like Hoyte, the plaintiff in Yesudian filed a qui tam action

asserting both (1) a false claim count—alleging that his superior

in the Purchasing Department at Howard University (Howard)

falsified time and attendance records, accepted bribes from

vendors, permitted payments to vendors who provided no

services to Howard and took university property home for

personal use—and (2) a whistleblower claim—alleging he was

discharged because he reported the misconduct to various

Howard officials. A jury returned a verdict against the relator

on the false claim count and in his favor on the whistleblower

count but the district court subsequently granted the defendants’

motion for judgment as a matter of law on the whistleblower

count. 

On appeal, we reversed the judgment on the whistleblower

claim. Noting that in a whistleblower claim, “it is sufficient that

a plaintiff be investigating matters that ‘reasonably could lead’

to a viable False Claims Act case,” 153 F.3d at 740, we

concluded that neither the relator’s uncertainty whether a FCA

suit would follow nor the jury’s adverse verdict on the false

claim count precluded success on the whistleblower count. See

id. at 741 (“Nor was it necessary for Yesudian to ‘know’ that the

investigation he was pursuing could lead to a False Claims Act

suit.”), 739 (“[T]he protected conduct element of such a claim

does not require the plaintiff to have developed a winning qui

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11

tam action before he is retaliated against.”). Nonetheless, we

unequivocally stated that “an employee’s investigation of

nothing more than his employer’s non-compliance with federal

or state regulations” is not enough to support a whistleblower

claim. Id. at 740 (citing Hopper v. Anton, 91 F.3d 1261, 1269

(9th Cir. 1996); United States ex rel. Ramseyer v. Century

Healthcare Corp., 90 F.3d 1514, 1523 (10th Cir. 1996)). In

Yesudian, we found that “the nature of [the relator’s] charges

could not have been mistaken for a complaint about mere

regulatory compliance” because his was a “classic false claim”

which charged his supervisor with attempting to defraud the

Government of money. Id. at 744. Not so with Hoyte’s claim,

which cannot be deemed a “classic” reverse false claim—in

which the defendant’s alleged deception “results in no payment

to the government when a payment is obligated,” United States

ex rel. Bain v. Ga. Gulf Corp., 386 F.3d 648, 653 (5th Cir. 2004)

(emphasis added)—but, in contrast to Yesudian, involves “mere

regulatory compliance,” namely, ARC’s failure to follow the

blood handling and reporting procedures spelled out in the

Consent Decree. 

Relying heavily on Yesudian, Hoyte contends the district

court erred in dismissing her whistleblower count because

“winning the underlying claim is not a necessary predicate to

maintaining a Section (h) action.” Appellant’s Br. 27. It is true

that under Yesudian a relator need not ultimately prevail on a

FCA charge in order to recover for retaliation under section

3730(h). See 153 F.3d 739. Indeed, in Yesudian, we concluded

that the evidence supported the jury verdict in the relator’s favor

on the whistleblower claim notwithstanding the jury found

against the relator on the underlying false claim count and we

therefore reversed the district court’s post-trial judgment setting

aside the whistleblower verdict. Nonetheless, we made clear

that the relator must have been “investigating matters that

‘reasonably could lead’ to a viable False Claims Act case,” id.

at 740, and here that is simply not the case. Under no

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reasonable interpretation of the statutory language can ARC be

deemed to have had an “obligation to pay or transmit money . . .

to the Government,” as section 3729(a)(7) requires, at the time

of Hoyte’s investigation and complaints. Hoyte’s investigation

was into mere regulatory noncompliance and did not “concern

‘false or fraudulent claims’ ” as it must to support a retaliation

claim under section 3729(a). Yesudian, 153 F.3d at 740 (citing

31 U.S.C. § 3729(a)). Because the conduct Hoyte was

investigating—ARC’s failure to report its noncompliance with

the Consent Decree—could not have reasonably led to a viable

claim under section 3729 of the FCA, her investigation of it was

not protected activity “in furtherance of an action under [section

3730],” 31 U.S.C. § 3730(h)—that is, an action “for a violation

of section 3729,” id. § 3730(b)(1)—so as to support a retaliation

claim. Cf. Hamm v. Weyauwega Milk Prods., 332 F.3d 1058,

1066 (7th Cir. 2003) (district court properly dismissed Title VII

retaliation claim because complaints to employer and state

agency amounted to claims of sexual orientation discrimination,

not sex discrimination, and therefore “did not concern an

employment practice that violated Title VII”).

Relying again on language in Yesudian, Hoyte contends the

court should focus on “whether Hoyte had a good faith chance

of success at the time that she suffered the retaliation.”

Appellant’s Br. 27. In Yesudian the defendants argued that no

actionable false claim charge existed at the time of the relator’s

investigation because there was no evidence that Howard ever

re-submitted the allegedly false claims to the Government so as

to transform the defendants’ fraud on Howard into fraud on the

United States as well. Without expressly deciding whether resubmission was necessary, the court concluded that Yesudian’s

personal knowledge that “80% of Howard’s money came from

the United States Government” afforded “a good faith basis for

going forward at the time of the retaliation” because, “[g]iven

the information he had about Howard’s finances, it would have

been reasonable to conclude there was a ‘distinct possibility’ he

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would find evidence of resubmission of the claims.” 153 F.3d

at 739-40 (quoting Childree v. UAP/GA AG CHEM., Inc., 92

F.3d 1140, 1146 (11th Cir. 1996) (requiring “distinct

possibility” of suit), and Neal v. Honeywell Inc., 33 F.3d 860,

864 (7th Cir. 1994) (sufficient if litigation was “distinct

possibility” or “could be filed legitimately”)). As we explained

in Yesudian, determining whether the false claims were resubmitted required “the kind of information a plaintiff normally

cannot acquire until he files a suit and obtains the benefits of

court-sanctioned discovery.” Id. at 740. We therefore

concluded Yesudian’s personal knowledge provided the

requisite “good faith basis” at the time of the investigation and

retaliation to believe the defendants were defrauding the federal

Government. Hoyte, in contrast, regardless of her subjective

beliefs, had no objectively reasonable basis to believe that she

was “ ‘investigating matters that reasonably could lead’ to a

viable False Claims Act case.’ ” Martin-Baker Aircraft Co., 389

F.3d at 1260 (quoting Yesudian, 153 F.3d at 740); see Lang v.

Nw. Univ., 472 F.3d 493, 495 (7th Cir. 2006) (“What [FCA

relator] actually believed is irrelevant, for people believe the

most fantastic things in perfect good faith; a kind heart but

empty head is not enough. The right question is whether her

belief had a reasonable objective basis . . . .”). There was not

even a “distinct possibility” that her claim against ARC might

become viable before or at trial because under any view of the

facts as alleged the claim lacked one of the legal requirements

for a reverse false claim charge: the defendant must have an

“obligation to pay or transmit money or property to the

Government,” 31 U.S.C. § 3729(a)(7). ARC had no such

obligation and no amount of discovery could cure this defect.

There being no viable action against ARC under section 3730

for violation of section 3729(a), Hoyte’s investigation and

reporting of ARC’s conduct did not constitute “protected

activity”—“that is, ‘acts done . . . in furtherance of an action

under [section 3730],’ ” Yesudian, 153 F.3d at 736 (quoting S.

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6

The Government argues as amicus on Count II that the district

court erroneously “advanced the view that an actionable ‘obligation’

means ‘a present, existing debt or liability, owed at the time the

alleged false statement is made, and not some future or contingent

liability.’ ” United States Br. 24 (quoting 439 F. Supp. 2d at 43).

Because Hoyte’s allegations identify no obligation on ARC’s part to

tender money or property, we need not decide the extent, if any, to

which such an obligation must be fixed to support a reverse false

claim action under section 3729(a)(7). 

Rep. No. 99-345, at 35 (1986))—and her subsequent discharge

was therefore not unlawful retaliation under section 3730(h).6

The dissent argues that Hoyte can pursue a retaliation claim

even in the absence of a viable reverse FCA claim, relying in

part on language culled from the Supreme Court’s decision in

Graham County Soil & Water Conservation District v. United

States ex rel. Wilson, 545 U.S. 409 (2005). Dissent at 1, 2-3, 4,

8. In Graham County, the question before the Supreme Court

was whether the correct limitations period for an FCA retaliation

claim is the 6-year period prescribed in FCA for “[a] civil action

under section 3730,” 31 U.S.C. § 3731(b)(1), or the period

established under the “most closely analogous state statute of

limitations,” 545 U.S. at 422. The Court held the latter and in

the course of its analysis, observed that “proving a violation of

§ 3729 is not an element of a § 3730(h) cause of action” and

thus, section 3730(h) “protects an employee’s conduct even if

the target of an investigation or action to be filed was innocent,”

id. at 416 & n.1—both points that we made in Yesudian when

we upheld the jury’s verdict in Yesudian’s favor on the

whistleblower claim notwithstanding the jury held against him

on the underlying qui tam claim. While it is true, as the dissent

notes, that “ ‘a well-pleaded retaliation complaint need not

allege that the defendant submitted a false claim,’ ” Dissent at

8 (quoting Graham County, 545 U.S. at 416), the complaint

must allege that “the defendant retaliated against him for

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7

The Court also noted that circuit courts had adopted varying

“formulations” of what constitutes protected activity, without

endorsing any particular one. 545 U.S. at 416 n.1.

engaging in ‘lawful acts done . . . in furtherance of’ an FCA

‘action filed or to be filed,’ Graham County, 545 U.S. at 416

(quoting 31 U.S.C. § 3730(h) (ellipsis in Graham)), that is, for

engaging in protected conduct. Yesudian defines “protected

conduct” as conduct that “ ‘reasonably could lead’ to a viable

False Claims Act case,” 153 F.3d at 740, as the Court

acknowledged in Graham County, 545 U.S. at 416 n.1 (citing

Yesudian).7

As we have explained, supra pp. 11-14, under Yesudian

Hoyte’s investigation could not reasonably lead to a viable

reverse false claim action under section 3729(a)(7) (so as to

support a whistleblower claim under section 3730(h)) because

the activity she claims to have been investigating did not

constitute an attempt to “conceal, avoid, or decrease an

obligation to tender money or property to the Government.”

The plain language of the statute (whether read by a lawyer or

layman) requires that there be an obligation to make payment to

the Government and ARC had no such obligation, “contractual”

or otherwise. See Dissent at 7. It is true, as the dissent asserts,

Dissent at 4-5, that the statute does not require in so many words

that the investigation be in furtherance of a “viable” or “nonfrivolous” action. But section 3730(h) does expressly require

that the whistleblower’s conduct, to be protected, be “in

furtherance of an action under this section” (emphasis added),

that is, in furtherance of an action under section 3730, which in

turn requires that the action be “for a violation of section 3729”

(in this case a violation of section 3729(a)(7)). Thus, to recover

for retaliation under section 3730(h), it is not sufficient that the

whistleblower further an action under some other statutory

scheme or, as here, a non-existent action. In any event, it is the

USCA Case #06-5230 Document #1102760 Filed: 03/04/2008 Page 15 of 24
16

law of this Circuit that “the employee must be investigating

matters which are calculated, or reasonably could lead, to a

viable FCA action.” Shekoyan v. Sibley Int’l, 409 F.3d 414, 423

(D.C. Cir. 2005) (quotation omitted); see also Martin-Baker

Aircraft Co., 389 F.3d at 1260; Yesudian, 153 F.3d at 740. And

a frivolous action is by definition not a viable one. See Brandon

v. D.C. Bd. of Parole, 734 F.2d 56, 59 (D.C. Cir. 1984) (“[I]f the

complaint is viable—it cannot be deemed frivolous.”). Because

there was no viable FCA action here, the district court properly

dismissed Count II.

For the foregoing reasons, we affirm the district court’s

judgment dismissing Hoyte’s complaint.

So ordered.

USCA Case #06-5230 Document #1102760 Filed: 03/04/2008 Page 16 of 24
TATEL, Circuit Judge, concurring in part and dissenting 

in part: Michelle Hoyte, Director of Quality Audits for the 

American Red Cross, discovered that the organization had 

mishandled hundreds of units of blood destined for human 

transfusion and was hiding its mistake from the government. 

Under a consent decree the Red Cross had signed with the 

government, this deception authorized the government to 

impose substantial fines on the organization. Hoyte urged her 

supervisors to report what had occurred, ultimately scheduling 

a meeting with a Senior Vice President to discuss her 

concerns. But the day before the meeting, Hoyte’s supervisor 

fired her because of her actions. 

Acknowledging these sordid allegations, the court 

nevertheless concludes that Hoyte failed to state a retaliation 

claim under the False Claims Act (FCA), 31 U.S.C. § 3729 et 

seq., because she never alleged that the Red Cross actually 

filed a false claim. The Supreme Court has made clear, 

however, that “a well-pleaded retaliation complaint need not 

allege that the defendant submitted a false claim.” Graham 

County Soil & Water Conservation Dist. v. United States ex 

rel. Wilson, 545 U.S. 409, 416 (2005) (emphasis added). 

Rather, as I demonstrate below, plaintiffs need only show 

they reasonably believed their employer violated the FCA—a 

standard Hoyte plainly satisfies. I therefore respectfully 

dissent from Part II.B. of the court’s opinion. 

 Congress enacted the FCA to prevent fraud against the 

government. Because “[d]etecting fraud is usually very 

difficult without the cooperation of individuals who are either 

close observers or otherwise involved in the fraudulent 

activity,” S. REP. NO. 99-345, at 4 (1986), reprinted in 1986 

U.S.C.C.A.N. 5266, 5269, Congress included several 

provisions in the FCA to encourage whistleblowers, see, e.g., 

31 U.S.C. § 3730(d) (allowing whistleblowers to receive a 

portion of any recovery by the government based on 

information they provide). Relevant here, 31 U.S.C. 

USCA Case #06-5230 Document #1102760 Filed: 03/04/2008 Page 17 of 24
2 

§ 3730(h) protects whistleblowers from retaliation by their 

employers: 

Any employee who is discharged, demoted, 

suspended, threatened, harassed, or in any 

other manner discriminated against in the 

terms and conditions of employment by his or 

her employer because of lawful acts done by 

the employee on behalf of the employee or 

others in furtherance of an action under this 

section, including investigation for, initiation 

of, testimony for, or assistance in an action 

filed or to be filed under this section, shall be 

entitled to all relief necessary to make the 

employee whole. 

Id. 

 As we explained in United States ex rel. Yesudian v. 

Howard University, 153 F.3d 731 (D.C. Cir. 1998), to prevail 

on a whistleblower claim “an employee must demonstrate 

that: (1) he engaged in protected activity, that is, ‘acts done 

. . . in furtherance of an action under this section’; and (2) he 

was discriminated against ‘because of’ that activity.” Id. at 

736 (quoting 31 U.S.C. § 3730(h)) (omission in original). To 

satisfy the first requirement—the one the court believes Hoyte 

failed to meet—“it is sufficient that a plaintiff be investigating 

matters that reasonably could lead to a viable False Claims 

Act case.” Id. at 740 (citation and internal quotation marks 

omitted). As the Supreme Court has made clear, this does not 

mean that at the time the employee engaged in the 

investigative conduct there had to be a reasonable possibility 

that she would prevail on an FCA claim, for an employee can 

prevail on a retaliation claim even if the facts ultimately make 

it impossible for any underlying FCA claim to succeed. See 

USCA Case #06-5230 Document #1102760 Filed: 03/04/2008 Page 18 of 24
3 

Graham County, 545 U.S. at 416 (stating that section 3730(h) 

“protects an employee’s conduct even if the target of an 

investigation or action to be filed was innocent”); id. at 416 

n.1 (“[P]roving a violation of § 3729 is not an element of a § 

3730(h) cause of action.”). 

Thus, instead of requiring an actual possibility of success 

on the underlying FCA claim, Yesudian holds only that the 

employee must have reasonably believed her investigative 

acts could lead to a viable FCA claim. Three of our sister 

circuits have described the test this way: “[T]he relevant 

inquiry to determine whether an employee’s actions are 

protected under § 3730(h) is whether: ‘(1) the employee in 

good faith believes, and (2) a reasonable employee in the 

same or similar circumstances might believe, that the 

employer is committing fraud against the government.’” 

Fanslow v. Chicago Mfg. Ctr., Inc., 384 F.3d 469, 480 (7th 

Cir. 2004) (quoting Moore v. Cal. Inst. of Tech. Jet 

Propulsion Lab., 275 F.3d 838, 845 (9th Cir. 2002)); accord

Wilkins v. St. Louis Housing Auth., 314 F.3d 927, 933 (8th 

Cir. 2002). The FCA’s legislative history confirms that this 

test mirrors what Congress intended. The Senate Report 

accompanying the FCA’s retaliation provision explains that 

for an employee to be protected by the Act, “the employer 

would not have to be proven in violation of the False Claims 

Act,” but “the actions of the employee must result from a 

‘good faith’ belief that violations exist.” S. REP. NO. 99-345, 

at 35, reprinted in 1986 U.S.C.C.A.N. at 5300; see also

Graham County, 545 U.S. at 416 (“[A] well-pleaded 

retaliation complaint need not allege that the defendant 

submitted a false claim.”). 

Properly understood then, the question before us is this: 

could Hoyte have reasonably believed that the Red Cross had 

violated the FCA? The answer is plainly yes. 

USCA Case #06-5230 Document #1102760 Filed: 03/04/2008 Page 19 of 24
4 

The FCA makes it illegal to “knowingly make[], use[], or 

cause[] to be made or used, a false record or statement to 

conceal, avoid, or decrease an obligation to pay or transmit 

money or property to the Government.” 31 U.S.C. § 

3729(a)(7). The consent decree the Red Cross had entered 

with the government required the organization to disclose 

certain types of blood handling errors—such as the ones 

alleged here—and failure to do so authorized the government 

to impose substantial fines. Thus, Hoyte could reasonably 

have believed that by hiding its blood handling errors the Red 

Cross was attempting “to conceal, avoid, or decrease an 

obligation to pay or transmit money or property to the 

Government.” Id. To be clear, I take no position on whether 

the Red Cross actually violated section 3729(a)(7); I maintain 

only that Hoyte could reasonably have believed that the Red 

Cross violated the statute by hiding this information. 

Even were the reasonableness of Hoyte’s belief 

debatable, I would give her the benefit of the doubt, for 

several factors counsel a generous approach in deciding 

whether an FCA retaliation plaintiff’s beliefs were reasonable. 

The first is the statute’s plain text, which requires only that 

the act the employee engaged in was somehow “in 

furtherance of an action under this section,” 31 U.S.C. § 

3730(h) (emphasis added), not “an action that is reasonably 

likely to succeed,” or even “a non-frivolous action.” See 

Graham County, 545 U.S. at 416 (“A retaliation plaintiff . . . 

need prove only that the defendant retaliated against him for 

engaging in ‘lawful acts done . . . in furtherance of’ an FCA 

‘action filed or to be filed,’ language that protects an 

employee’s conduct even if the target of an investigation or 

action to be filed was innocent.” (quoting 31 U.S.C. § 

3730(h)) (second omission in original)). Thus, the statute 

itself imposes no requirement—indeed, it includes no 

suggestion—that an employee’s underlying FCA claim must 

USCA Case #06-5230 Document #1102760 Filed: 03/04/2008 Page 20 of 24
5 

be even remotely viable to support a retaliation claim. 

Although courts, including this one, have nonetheless 

imposed this requirement to discourage frivolous claims, see 

Yesudian, 153 F.3d at 740, we should avoid reading into the 

statute any more than is absolutely necessary to achieve this 

goal, and a minimal reasonableness requirement will suffice. 

Requiring anything more would—without any basis in the 

statute—often leave employees unprotected even when they 

acted in good faith to prevent fraud against the government. 

Such a result would directly contravene the FCA’s goal of 

“encourag[ing] any individual knowing of Government fraud 

to bring that information forward.” S. REP. NO. 99-345, at 2, 

reprinted in 1986 U.S.C.C.A.N. at 5267. 

Moreover, we must keep in mind that nearly all 

employees who investigate and bring fraud claims are 

laypeople, not lawyers. Expecting laypeople to know with 

any degree of certainty whether their employers’ actions 

violate the FCA’s often vague provisions is simply 

unrealistic, especially when courts themselves disagree over 

what constitutes a viable FCA claim. Compare United States 

ex rel. Bahrani v. Conagra, Inc., 465 F.3d 1189, 1201 (10th 

Cir. 2006) (holding that the term “obligation” in the FCA 

includes “instances in which a party is required to pay money 

to the government, but, at the time the obligation arises, the 

sum has not been precisely determined”) with United States v. 

Q Int’l Courier, Inc., 131 F.3d 770, 774 (8th Cir. 1997) 

(“[A]n obligation under the meaning of the False Claims 

Act[] must be for a fixed sum that is immediately due.”). As 

we said in the analogous context of Title VII retaliation 

claims, “a layperson should not be burdened with the 

‘sometimes impossible task’ of correctly anticipating how a 

given court will interpret a particular statute.” Parker v. 

Baltimore & Ohio R.R., 652 F.2d 1012, 1020 (D.C. Cir. 1981) 

(quoting Berg v. La Crosse Cooler Co., 612 F.2d 1041, 1045 

USCA Case #06-5230 Document #1102760 Filed: 03/04/2008 Page 21 of 24
6 

(7th Cir. 1980)). Thus, when deciding whether a plaintiff’s 

beliefs were reasonable, we must put ourselves in the 

layperson’s shoes, for “[t]here is no suggestion in the [FCA’s] 

legislative history that Congress meant to extend protection 

only to lawyers, or to others only after they have consulted 

with lawyers.” Yesudian, 153 F.3d at 741. 

Given these considerations, it becomes even clearer that 

Hoyte’s belief was reasonable. The court holds to the 

contrary, but its reasons for doing so are unpersuasive. 

The court first states that no one could have thought the 

Red Cross violated the FCA because “[t]he Consent Decree 

imposed no obligation on [the Red Cross] to tender money or 

property to the Government but only to follow the prescribed 

blood handling and reporting requirements.” Maj. Op. at 10. 

The consent decree, however, expressly authorized the 

government to fine the Red Cross if it failed to disclose 

information like the blood mishandling incident that allegedly 

occurred here. Am. Consent Decree of Permanent Inj., 

United States v. Am. Nat’l Red Cross, Civ. No. 93-0949, at 52 

(D.D.C. Apr. 15, 2003). Thus, at the time Hoyte began 

pressuring her superiors to report the mistake, the government 

already had the authority to fine the Red Cross—all it needed 

was to know of the Red Cross’s error, precisely the 

information the Red Cross hid. Again, I take no position on 

whether this means the Red Cross actually violated section 

3729(a)(7) by lying to avoid an obligation to the government, 

but it certainly made it reasonable for Hoyte to believe as 

much. 

 

 The court next says there was no obligation here because 

the Red Cross “is in the same position as any regulated entity 

subject to possible sanctions for violating an administrative 

requirement and we made clear in Yesudian that an 

USCA Case #06-5230 Document #1102760 Filed: 03/04/2008 Page 22 of 24
7 

unassessed potential penalty for regulatory noncompliance 

does not constitute an obligation that gives rise to a viable 

FCA claim.” Maj. Op. at 10. I would agree if the Red Cross 

had only violated federal statutes or regulations governing 

blood handling. But the Red Cross violated a consent decree 

it had entered with the government, and as we have repeatedly 

held, “a consent decree . . . is essentially a contract.” Segar v. 

Mukasey, 508 F.3d 16, 21 (D.C. Cir. 2007) (citation omitted). 

Given that the Red Cross was violating a contract with the 

government, Hoyte could reasonably have believed the 

organization was violating the FCA, for courts have 

universally held that “a contractual obligation falls within the 

scope of § 3729(a)(7).” Bahrani, 465 F.3d at 1204; see also, 

e.g., Am. Textile Mfrs. Inst., Inc. v. The Limited, Inc., 190 F.3d 

729, 741 (6th Cir. 1999) (“§ 3729(a)’s definition of 

‘obligation’ certainly includes those arising from . . . breaches 

of government contracts . . . .”). 

Third, the court states that “[u]nder no reasonable 

interpretation of the statutory language can [the Red Cross] be 

deemed to have had an ‘obligation to pay or transmit money 

. . . to the Government,’ as section 3729(a)(7) requires.” Maj. 

Op. at 11-12. But this ignores a key part of the statute. The 

reverse false claims provision prohibits making a false 

statement to “conceal, avoid, or decrease an obligation to pay 

or transmit money or property to the Government.” 31 U.S.C. 

§ 3729(a)(7) (emphasis added). Hoyte’s very allegation is 

that the Red Cross was attempting to avoid paying a fine to 

the government by hiding a blood handling error the consent 

decree required it to report. 

Finally, the court asserts that “under Yesudian Hoyte’s 

investigation could not reasonably lead to a viable reverse 

false claim action under section 3729(a) (so as to support a 

whistleblower claim under section 3730(h)) because the 

USCA Case #06-5230 Document #1102760 Filed: 03/04/2008 Page 23 of 24
8 

activity she claims to have been investigating did not 

constitute an attempt to ‘conceal, avoid, or decrease an 

obligation to tender money or property’ to the Government.” 

Maj. Op. at 15. But this is no different from Yesudian itself, 

where we allowed the plaintiff’s whistleblower claim even 

though he never proved that “the activity [he] claim[ed] to 

have been investigating . . . constitute[d] an attempt to 

‘conceal, avoid, or decrease an obligation to tender money or 

property’ to the Government.” Id.; see also Yesudian, 153 

F.3d at 740-41 (stating that Yesudian’s retaliation claim could 

proceed even without “evidence . . . necessary to prove a 

False Claims Act case”). And it again ignores the Supreme 

Court’s directive in Graham County that “a well-pleaded 

retaliation complaint need not allege that the defendant 

submitted a false claim.” 545 U.S. at 416. 

In sum, the Red Cross fired Hoyte for acting on her good 

faith, reasonable belief that the organization had violated the 

FCA by attempting to “avoid . . . an obligation to pay or 

transmit money . . . to the Government.” 31 U.S.C. 

§ 3729(a)(7). Because the FCA requires nothing more to state 

a retaliation claim, I would reverse the district court’s 

dismissal of Hoyte’s claim. 

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