Heckler & Koch Defense, Inc. ("HKD") was in the business of
selling firearms to the United States military. The government issued a contract
solicitation for rifles and the Statement of Work required two specific
components, namely an ambilever, a device that allows a left-handed person to
operate the rifle, and two stage matched triggers. HKD submitted a bid with its
HK-416 rifle that did not meet these qualifications. The bid noted that while
the rifle did not currently meet the ambilever and two stage match trigger
requirements, HKD would be able to provide those components if it won the bid.
Soon after HKD submitted its bid, sample ambilevers
were provided to the company. Plaintiff reviewed and evaluated the
ambilevers and determined that they were not compatible with the HK-416.
Plaintiff communicated his concerns to supervisors, but was promptly
overruled. Supervisors at HKD arranged for the ambilevers to be delivered to
the government contacts, even though the official close of bidding had
passed.
Plaintiff disagreed with HKD's handling of the bid and
specifically took issue with the submittal of the bid that did not meet
Statement of Work specifications and belated delivery of ambilevers.
Plaintiff investigated whether such conduct violated federal contracting
regulations and also expressed his concerns about the conduct, to numerous
levels of management. HKD senior management hired an attorney to conduct the
investigation and placed Plaintiff on administrative leave.
In June 2008, Plaintiff filed a Complaint against HKD
asserting that the company retaliated against him for engaging in protected
activity under the FCA. The company placed Plaintiff on a second
administrative leave on June 24, 2008 and subsequently terminated his
employment in July 2008. Plaintiff contended that he was dismissed because
of his efforts to stop HKD's bid submittal.
At the trial court, HKD prevailed on a Motion to
Dismiss, and later prevailed on a Motion for Summary Judgment, which
disposed of all of the claims brought against HKD. The trial court found no
evidence that HKD made false or fraudulent claims to the United States.
On appeal to the Fourth Circuit, Plaintiff contended
that HKD retaliated against him for his investigation of and opposition to
the company's attempts to defraud the United States through the bid
submittal. The FCA prohibits any person from presenting a false or
fraudulent claim for payment or approval to the United States. See 31 U.S.C.
§ 3729(a). One of the enforcement mechanisms is allowing a private party to
bring a qui tam action, which is an action
brought in the name of the United States. See 31 U.S.C. § 3730(b).
In 1986, Congress amended the FCA and added an
anti-retaliation provision to protect whistleblowers. The relevant part of
the provision states:
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 relief necessary to make the employee whole.
See 31 U.S.C. § 3730(h).
Plaintiff contended that his opposition to the bid and investigation of
HKD’s bid submittal was protected under this provision.
Employees seeking to bring a cause of action under §
3730(h) must satisfy three elements: 1.) he took acts in furtherance of a
qui tam suit; 2.) his employer knew of these
acts; and 3.) his employer took adverse action against him as a result of
the acts. Here, only the first prong is at issue.
There is no requirement that the employee actually
filed a qui tam suit in order to have engaged
in protected activities. However, the protected activities must have been
taken in furtherance of an action filed or to be filed under the section.
This is evaluated by the distinct possibility standard. This standard is an
objective one. When the issue only relates to an employee's protected
activity, the Fourth Circuit applies the distinct possibility standard from
the perspective of the facts known by the employee at the time of the
protected conduct.
Plaintiff argues that his protected activity, opposing
HKD's bid submittal and investigating HKD's actions, was protected by the
FCA because HKD was made a fraudulent claim to the government through
submitting the bid that did not satisfy the Statement of Work and did not
comply with bid submittal deadlines. After reviewing the facts, the Fourth
Circuit determined that there is no evidence that HKD committed fraud.
First, there was no fraud in the bid submittal because
HKD plainly stated in its bid that the sample rifle submitted is not
currently available for an ambidextrous fire control. But it further stated
that should the company receive the bid, the ambidextrous modification would
be made available. Thus, there is no false or fraudulent statement made in
the bid to the government. Second, Plaintiff points to the quality of the
ambilevers once they are made available. However, the Court found that the
dispute of quality did not rise to the level of fraud. There was no
misstatement or misrepresentation made to the government. Finally, Plaintiff
took issue with the delivery of the ambilevers after the close of bidding.
While this conduct may have violated federal bidding regulations, the FCA is
not concerned with bidding regulations. Still, there was no effort to
mislead the United States into believing that ambilevers were submitted on
time or with the bid.
Similarly, Plaintiff's claim that his investigation
work is protected by the FCA also fails. Here, there is no indication that
Plaintiff was investigating fraudulent activities. Accordingly, his
activities would receive no protection from the FCA.
Accordingly, the Fourth Circuit affirmed the trial
court in its dismissal of the FCA claim when there is no evidence that
Plaintiff opposed or investigated fraudulent activity.
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