Legal Background

Ms H was suing under the federal False Claims Act, which provides a cause of action to an employee who is “discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment” because of acts by the employee to stop fraud against the government. The question before the appellate court was whether the employer must have a “specific intent” for the employee to resign. The court concluded that “the intent required by the statute is a more general intent that takes into account all of the circumstances in addition to the employer’s ‘specific intention.’ The case must therefore be remanded for trial not limited to the defendant corporation’s ‘specific’ or subjective intent but including all of the factors that led to the plaintiff’s resignation,” wrote the court in its decision.

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“If the employee is left to think she may be charged with fraud by the government if she remains as Director of Nursing,” continued the court in its decision, “a jury may find that the employer’s alleged fraudulent behavior is imposing on her fear that would cause a reasonable employee to resign. The jury may find that the employer’s alleged fraudulent behavior plus the employee’s moral conscience and reasonable fear of being accused of participating in the employer’s fraud enough to justify quitting. Whether we call her resignation a ‘constructive discharge,’ ‘harassment’ or a form of discrimination, the employee should be made ‘whole’ under the statute and accorded” the relief set out in the False Claims act if the jury finds in her favor, wrote the court. 

The case was remanded back to the lower court for trial.

Protecting yourself

Ms H was put in a terrible position by her employer. Although she was processing patients properly, she was aware that other employees were not. Reporting the issue to her employer had repeatedly proved fruitless, and a senior manager had confirmed that the employer was aware of the fraud and the company was happily profiting from it. Ms H’s job included processing the Medicare and Medicaid paperwork. Faced with the choice of committing fraud herself or quitting her job, Ms H resigned. But being put in this position, in which one must either quit or commit an illegal act, can be considered a constructive discharge, as the appellate court held.

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Never do anything that will put your license in danger. Ms H was aware that continuing at that job would be putting her license in danger, and she did the wise thing, which was to resign. If you are in a position in which you realize that your employer is defrauding the government, you should be aware that the False Claims Act is in place to protect you.

As with everything legal, documentation is key, so keep notes about interactions with management, reports of potential fraud issues, and reactions by management when such issues are reported to best protect yourself in the event you must quit. 

Ms Latner, a former criminal defense attorney, is a freelance medical writer in Port Washington, NY.