Opinion ID: 2976477
Heading Depth: 2
Heading Rank: 2

Heading: Claims under Subsections (a)(2) and (a)(3)

Text: Ms. Marlar has similarly failed to comply with Rule 9(b) regarding her claims under 31 U.S.C. § 3729(a)(2) and (a)(3). While Ms. Marlar is correct that we have previously held that proof of “presentment” is not required for actions under subsections (a)(2) and (a)(3), Thacker, 471 F.3d No. 07-6051 Marlar, et al. v. BWXT Y-12 L.L.C. Page 7 at 614-15,1 we have repeatedly held that proof of a false claim is required, e.g., id. at 621 (“For liability . . . under subsection (a)(2), the government . . . would have to present sufficient evidence from which the trier of fact could conclude that . . . use of the false statement resulted in the payment of a claim by the government.”); Bledsoe II, 501 F.3d at 504 (“We hold that pleading an actual false claim with particularity[, as opposed to a false scheme,] is an indispensable element of a complaint that alleges a FCA violation in compliance with Rule 9(b).”); see also Fowler, 730 F.3d at 742 (“Both sections [(a)(1) and (a)(2)] require a false claim or statement and knowledge that the claim or statement is false.”). Indeed, we have agreed with the Eleventh Circuit that a “fraudulent claim is ‘the sine qua non of a False claims Act violation.’ ” Sanderson, 447 F.3d at 878 (quoting United States ex rel. Clausen v. Lab. Corp. of Am., 290 F.3d 1301, 1311 (11th Cir. 2002)). The text of the subsections confirm our interpretation, as both subsections refer to “a false or fraudulent claim.” 31 U.S.C. § 3729(a)(2), (a)(3). Ms. Marlar has failed to allege facts regarding “a false or fraudulent claim.” See id. A “claim” at least requires a “request or demand . . . for money or property.” Id. § 3729(c). Ms. Marlar’s specific factual allegations, however, only refer to omissions in medical records. The only pertinent, specific paragraphs in her complaint generally allege that on particular dates or in particular years an employee was given a prescription drug or prescription device, but the medical records failed to reflect that such a prescription was provided. Medical records, however, are not a “request or demand . . . for money or property.” Id. § 3729(c). Ms. Marlar has also failed to allege specific facts to establish that the medical records were always, or ever, used to compile BWXT’s claims, namely its certifications regarding its performance, which included work-related injuries and illnesses. Instead, Ms. Marlar only alleges “[o]n information and belief” that reports “provided by the [Environment, Safety, and Health] Division to the senior management of BWXT were based on systematic and significant underreporting of work-related injuries and illnesses and time missed from work,” and that the senior management then used this information to compile and submit certifications to DOE. J.A. at 18-19 (Compl. ¶ 53-55). Ms. Marlar has provided no factual allegations, let alone specific factual allegations, regarding how reports regarding work-related injuries and illnesses were compiled by the Environment, Safety, and Health division. For instance, OHS, the subdivision of the Environment, Safety, and Health division for which Ms. Marlar worked, may have reported work-related injuries and illnesses to Environment, Safety, and Health staff. Alternatively, Environment, Safety, and Health staff may have gathered the pertinent information themselves. Either way, it is unknown how such information was in fact gathered (i.e., it is unknown if the information was gathered from the allegedly false medical records). “ ‘[T]he False Claims Act does not create liability merely for a [claimant’s] disregard of Government regulations or improper internal policies unless, as a result of such acts, the [claimant]’ ” makes a false claim. See Atkins, 470 F.3d at 1357 (quoting Clausen, 290 F.3d at 1311). Just because BWXT may have maintained incomplete or sloppy medical records, it does not necessarily follow that BWXT also submitted certifications to DOE that underrepresented the number of work-related accidents and illnesses. BWXT could, for instance, have had an alternate reporting system for collecting information regarding work-related injuries and illnesses so that it could ensure that its certifications to DOE were accurate. Ms. Marlar has alleged 1 We note that the Supreme Court has granted certiorari in Thacker to decide whether “presentment” is in fact required by subsections (a)(2) and (a)(3). Allison Engine Co. v. United States ex rel. Sanders, 128 S. Ct. 491 (2007). Because Ms. Marlar’s claims under subsections (a)(2) and (a)(3) are not pleaded with the specificity required by Rule 9(b) even absent a “presentment” requirement, we see no need to await the Supreme Court’s decision. No. 07-6051 Marlar, et al. v. BWXT Y-12 L.L.C. Page 8 no specific facts to refute such a hypothesis.2 Ms. Marlar’s claims under subsections (a)(2) and (a)(3), therefore, do not comply with Rule 9(b) because they fail to allege a false claim with specificity.3 II. Compliance of Claim under 31 U.S.C. § 3730(h) with Rule 8(a)(2) Federal Rule of Civil Procedure 8(a)(2) requires a plaintiff’s complaint to include “a short and plain statement of the claim showing that the pleader is entitled to relief.” A claim under 31 U.S.C. § 3730(h) requires proof that the plaintiff was “(1) [] engaged in a protected activity; (2) [that] his employer knew that he engaged in the protected activity; and (3) [that] his employer discharged or otherwise discriminated against the employee as a result of the protected activity.” Yuhasz, 341 F.3d at 566. “Protected activity” means “lawful acts done by the employee on behalf of the employee or others in furtherance of an [FCA] action, including investigation for, initiation of, testimony for, or assistance in an [FCA] action filed or to be filed . . . .” 31 U.S.C. § 3730(h). Ms. Marlar has complied with Rule 8(a)(2) regarding her claim under 31 U.S.C. § 3730(h). Specifically, Ms. Marlar has pleaded that she repeatedly “objected to her superiors” about the inaccurate medical records discussed above. J.A. at 19 (Compl. ¶ 57). She raised similar objections during “an open forum where employees could express grievances or complaints.” J.A. at 19 (Compl. ¶ 58). Ms. Marlar alleges that “as a result of these actions,” she “was placed on administrative leave.” J.A. at 19 (Compl. ¶ 59). While these allegations likely do not suffice to show that BWXT was on notice of Ms. Marlar’s protected activity, see Yuhasz, 341 F.3d at 566 (element (2)),4 Ms. Marlar alleges that she took further steps that would constitute notice to BWXT. Specifically, Ms. Marlar alleges that she wrote a letter to the president and general manager of BWXT, Mr. Ruddy, asserting that she had been placed on administrative leave “because she refused to participate in illegal activities at OHS. [The letter further] stated that the illegal activities included the under[-]reporting of occupational injuries and illnesses resulting in large incentive payments to BWXT under the contract [with DOE].” J.A. at 19 (Compl. ¶ 60). When BWXT asked for more information regarding the alleged “illegal activities,” Ms. Marlar told BWXT that “there was under-reporting of work-related injuries and illnesses.” J.A. at 20 (Compl. ¶ 63). Ms. Marlar’s allegations, if true, would mean that BWXT had defrauded the United States government, and Ms. Marlar made it clear that she understood that because she stated that BWXT’s activities, which she more precisely defined as “under-reporting of work-related injuries and illnesses,” were “illegal” and that BWXT obtained “large incentive payments” pursuant to the DOE contract because of its “illegal activities.” 2 Ms. Marlar alleges, for instance, that “[t]he only information upon which [Environment, Safety, and Health] could have based its report, insofar as it related to its OHS[] component, was contained in the [medical] reports [Ms. Marlar] knew to be false.” J.A. at 34. This allegation, however, is not, as discussed above, obviously true on its face, as Ms. Marlar assumes it to be. 3 This rationale, Ms. Marlar’s failure to plead a false claim with specificity, provides an alternative basis for dismissal of Ms. Marlar’s claims under subsection (a)(1). Subsection (a)(1) similarly requires, in addition to “presentment,” that there be “a false or fraudulent claim.” 31 U.S.C. § 3729(a)(1). It is inadequate to simply allege that medical records were incorrect, and therefore assume, without any factual basis, that certifications to DOE regarding events that should have been included in the medical records were false. Such an assumption fails to meet Rule 9(b)’s pleading requirements because it “do[es] not provide any specific information about the [certifications] allegedly [compiled].” See Bledsoe II, 501 F.3d at 512. 4 Indeed, the previous allegations fall into the category of mere “grumbling” about violations, and therefore are not sufficient to prove BWXT was on notice regarding Ms. Marlar’s protected activity. See Yuhasz, 341 F.3d at 56768. No. 07-6051 Marlar, et al. v. BWXT Y-12 L.L.C. Page 9 The district court, however, found Ms. Marlar’s allegations regarding retaliation lacking because Ms. Marlar provided “no allegation from which it could be inferred that [BWXT knew that] [Ms. Marlar] was considering bringing a qui tam action herself or assisting the government in bringing an FCA action.” J.A. at 60-61 (Dist. Ct. Op. at 12-13). The district court’s holding, however, impermissibly narrows the interpretation we have given “protected activity.” See United States ex rel. McKenzie v. Bellsouth Telecomms., Inc. (McKenzie I), 123 F.3d 935, 944 (6th Cir. 1997). We held in McKenzie that a plaintiff must only allege activities “that would have given [the defendant] reason to believe that she was contemplating a qui tam action.” Id. This test was drawn from Mikes v. Strauss, 889 F. Supp. 746, 753 (S.D.N.Y. 1995). Mikes found that a plaintiff is entitled to recovery under § 3730(h) when she alleges that she observed purportedly fraudulent activity, she confronted her employer about it, and her employer fired her because of it. 889 F. Supp. at 752-53. Mikes based part of its understanding of § 3730(h) on Robertson v. Bell Helicopter Textron, Inc. 32 F.3d 948 (5th Cir. 1994). In that case, the Fifth Circuit held that “internal whistleblowers” were protected by § 3730(h). Robertson, 32 F.3d at 951. Robertson described an “internal whistleblower” as “an employee who has made an intracorporate complaint about fraud against the government.” Id. That complaint, the Fifth Circuit suggested, must “characterize[] [the plaintiff’s] concerns as involving illegal, unlawful or false-claims” against the government. Id. at 952. Ms. Marlar’s complaint meets this standard. She alleges that she observed purportedly fraudulent activity and confronted her employer about it. Specifically, Ms. Marlar told BWXT that she believed BWXT was receiving “illegal” “large incentive payments” under its contract with DOE because BWXT was “under-reporting [its employees’] work-related injuries and illnesses.” She therefore connected her complaint of BWXT’s actions, under-reporting, to a concern about fraud on the federal government. McKenzie v. BellSouth Telecomms., Inc. (McKenzie II), 219 F.3d 508,516 (6th Cir. 2000) (holding that to be protected by the FCA when confronting an employer, the employee “must sufficiently allege activity with a nexus to a qui tam action, or fraud against the United States government”). Ms. Marlar further alleges in her complaint that because she informed BWXT of 5her concerns, she was terminated. Given our interpretation of “protected activity” in McKenzie, Ms. Marlar has adequately pleaded that she “(1) [] engaged in a protected activity; (2) [that] his employer knew that he engaged in the protected activity; and (3) [that] his employer discharged or otherwise 6discriminated against the employee as a result of the protected activity.” Yuhasz, 341 F.3d at 566. 5 McKenzie was before us twice. In the initial appeal of the motion to dismiss, the plaintiff won reinstatement of her claim based on her pleadings. Specifically, McKenzie held that the plaintiff had sufficiently alleged protected activity because the plaintiff purportedly (1) showed her supervisors a newspaper article about a qui tam action against a similar company for the same allegedly fraudulent conduct; and (2) the plaintiff had complained about the allegedly fraudulent conduct, a complaint which was outside the scope of plaintiff’s duties. McKenzie I, 123 F.3d at 944-45. On remand, however, the district court granted summary judgment to the defendant after it found that the newspaper article the plaintiff had shown to her supervisors did not refer to fraud against the federal government, did not refer to a qui tam action, and that the newspaper article had been generally distributed and displayed throughout her office. See McKenzie II, 219 F.3d at 514-15. We affirmed its judgment, finding that, absent the newspaper article as originally characterized in her complaint, the plaintiff had failed to establish a sufficient nexus between her internal complaints and a qui tam action. Id. at 517. A sufficient nexus was not established because while plaintiff had shown that she was under pressure to falsify records and had complained about such pressure within the company, she did not connect her complaint to a concern about the company committing fraud against the federal government. Id. 6 Defendant for the first time asserted at oral argument that Ms. Marlar’s retaliation claim should fail because it was part of her official duties to report the allegedly improper activities of which she complained. Cf. Robertson, 32 F.3d at 952; see also United States ex rel. Yesudian v. Howard Univ., 153 F.3d 731, 744-75 (D.C. Cir. 1998); United States ex rel. Ramseyer v. Century Healthcare Corp., 90 F.3d 1514, 1523 (10th Cir. 1996). Failure to allege this in its brief, however, waives the issue. See, e.g., Giesse v. Sec’y of Dept. of Health & Human Servs., __ F.3d __, No. 06-4497, slip op. at 6-7 (6th Cir. Apr. 23, 2008). Additionally, whether Ms. Marlar’s job duties included reporting the alleged conduct is an issue of fact unfit for disposal in a motion to dismiss. No. 07-6051 Marlar, et al. v. BWXT Y-12 L.L.C. Page 10