There are myriad federal and state whistleblower retaliation laws designed to protect an employee who reports unlawful conduct on the part of his or her employer.
The False Claims Act imposes civil liability for “knowingly present[ing]… a false or fraudulent claim” to the government “for payment or approval.” 31 U.S.C. § 3729(a)-(b). The statute provides for public enforcement and private (qui tam) lawsuits. Id. § 3730(b). At the same time that the statute encourages whistleblowers, it discourages “opportunistic” plaintiffs who “merely feed off a previous disclosure of fraud.” U.S. ex rel. Poteet v. Medtronic, Inc., 552 F.3d 503, 507 (6th Cir. 2009). For that reason, individual plaintiffs cannot bring qui tam complaints based upon information already in the public domain. See 31 U.S.C. § 3730(e)(4). But if they can show that they are an original source of the information — someone “who has knowledge that is independent of and materially adds” to the prior public disclosure — the public-disclosure bar does not apply. Id.; see U.S. ex rel. Advocates for Basic Legal Equal., Inc. v. U.S. Bank, N.A., 816 F.3d 428, 430 (6th Cir. 2016).
In addition to satisfying the False Claims Act’s requirements, qui tam plaintiffs must meet the heightened pleading standards of Civil Rule 9(b). U.S. ex rel. Bledsoe v. Cmty. Health Sys., Inc., 501 F.3d 493, 503 (6th Cir. 2007). In all averments of “fraud or mistake,” the plaintiff must state with “particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). The identification of at least one false claim with specificity is “an indispensable element of a complaint that alleges a [False Claims Act] violation in compliance with Rule 9(b).” Bledsoe, 501 F.3d at 504. Adherence to this requirement not only respects Civil Rule 9(b), but it also helps in determining whether the public-disclosure bar applies.
Endeavoring to root out corporate fraud, Congress passed the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) and the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). Both Acts shield whistleblowers from retaliation, but they differ in important respects. Sarbanes-Oxley applies to all “employees” who report misconduct to the Securities and Exchange Commission (SEC or Commission), any other federal agency, Congress, or an internal supervisor. 18 U. S. C. §1514A(a)(1). Dodd-Frank defines a “whistleblower” as “any individual who provides . . . information relating to a violation of the securities laws to the Commission, in a manner established, by rule or regulation, by the Commission.” 15 U. S. C. §78u-6(a)(6). A whistleblower so defined is eligible for an award if original information provided to the SEC leads to a successful enforcement action. §78u-6(b)-(g). And he or she is protected from retaliation in three situations, see §78u-6(h)(1)(A)(i)-(iii), including for “making disclosures that are required or protected under” Sarbanes-Oxley or other specified laws, §78u-6(h)(1)(A)(iii). Sarbanes-Oxley’s anti-retaliation provision contains an administrative-exhaustion requirement and a 180-day administrative complaint-filing deadline, see 18 U. S. C. §1514A(b)(1)(A), (2)(D), whereas Dodd-Frank permits a whistleblower to sue an employer directly in federal district court, with a default six-year limitation period, see §78u-6(h)(1)(B)(i), (iii)(I)(aa). The SEC’s regulations implementing the Dodd-Frank provision contain two discrete whistleblower definitions. For purposes of the award program, Rule 21F-2 requires a whistleblower to “provide the Commission with information” relating to possible securities-law violations. 17 CFR §240.21F-2(a)(1). For purposes of the antiretaliation protections, however, the Rule does not require SEC reporting. See §240.21F-2(b)(1)(i)-(ii). Held: Dodd-Frank’s anti-retaliation provision does not extend to an individual, like Somers, who has not reported a violation of the securities laws to the SEC. DIGITAL REALTY TRUST, INC. v. Somers, U.S. Supreme Court, February 2018.
The anti-retaliation provisions under the Sarbanes Oxley Act of 2002 expressly protect employees who report violations internally to supervisors or other company representatives. 18 U.S.C. §1514A(a)(1)(C) (protecting those who report to “a person with supervisory authority over the employee (or such other person working for the employer who has the authority to investigate, discover, or terminate misconduct)”.
18 U.S. Code §1514A – Civil action to protect against retaliation in fraud cases (a)Whistleblower Protection for Employees of Publicly Traded Companies.—No company with a class of securities registered under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 78l), or that is required to file reports under section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(d)) including any subsidiary or affiliate whose financial information is included in the consolidated financial statements of such company, or nationally recognized statistical rating organization (as defined in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c),[1] or any officer, employee, contractor, subcontractor, or agent of such company or nationally recognized statistical rating organization, may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of any lawful act done by the employee—(1) to provide information, cause information to be provided, or otherwise assist in an investigation regarding any conduct which the employee reasonably believes constitutes a violation of section 1341, 1343, 1344, or 1348, any rule or regulation of the Securities and Exchange Commission, or any provision of Federal law relating to fraud against shareholders, when the information or assistance is provided to or the investigation is conducted by—(A) a Federal regulatory or law enforcement agency; (B) any Member of Congress or any committee of Congress; or (C) a person with supervisory authority over the employee (or such other person working for the employer who has the authority to investigate, discover, or terminate misconduct)….