E-Alert Case Updates
Plaintiff’s Complaint Failed to State an Actionable Claim of Retaliation under the Federal False Claims Act
Philip Layman v. MET Laboratories, Inc.
In this recently issued opinion by Judge Richard D. Bennett in the U.S. District Court for the District of Maryland, the Court granted MET Laboratories, Inc.’s motion to dismiss. The Court held that Plaintiff failed to state a claim under the False Claims Act (31 U.S.C. § 3730) or a claim of wrongful discharge.
The Plaintiff, Philip Layman, filed a complaint in Federal Court against his former employer, MET Labs. The Plaintiff alleged that his employment with MET Labs was terminated after he refused to approve a product testing report containing fraudulent data concerning product testing results of an Air/Hydraulic Pumping Unit that he believed was being tested for an eventual sale to the United States military.
Specifically, in May 2011, a company known as Windward Inc. (“Winward”) hired MET Labs to test an Air/Hydraulic Pumping Unit in its dust chamber. MET Labs’ dust chamber simulates a desert environment and can be manipulated for testing by changes in the temperature, humidity, and dust concentration. The Plaintiff alleged that the pumping unit was being tested so that Winward could sell the device to the U.S. military, making approval from MET Labs’ critical.
The Plaintiff contended that the dust chamber was riddled with problems, requiring constant repair. On May 31, 2011, Plaintiff informed his supervisor of the continuing malfunctions and indicated he would not approve test results unless the chamber was satisfactorily repaired. The Plaintiff’s supervisor and test engineers proceeded with the testing and prepared a final report without his signature. The Plaintiff confronted his supervisor about “fraudulent calculations” included in the report. Approximately a month after this confrontation, the Plaintiff received a significant demotion including a 15–20% cut in pay, no supervisory role, and no opportunity for advancement. The Plaintiff in turn resigned from MET Labs.
The Plaintiff filed his Complaint claiming retaliation under § 3730(h) of the False Claims Act, and Met Labs filed a Motion to Dismiss pursuant to FRCP 12(b)(6). The Court noted that under Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009) a complaint must be dismissed if it fails to allege “a plausible claim for relief” even when all facts are accepted as true.
The False Claims Act, 31 U.S.C. §§ 3729 et seq., prohibits persons and entities from knowingly presenting false or fraudulent claims to the federal government for payment or approval. The Act may be may be enforced through its qui tam provisions which allow private individuals to initiate civil actions on behalf of the United States. Additionally, § 3730(h) of the Act is often referred to as the “whistleblower” provision of the Act as it “prevents the harassment, retaliation, or threatening of employees who assist in or bring qui tam actions.” Zahodnick v. IBM Corp., 135 F.3d 911, 914 (4th Cir. 1997).
In viewing the complaint, the Court found that Plaintiff failed to state a claim under the Act on several bases. First, the Plaintiff did not allege that the report at issue was submitted to the government for payment, but only that there were circumstances which caused him to believe that the pumping unit was to be sold to the military. Further, Mr. Layman was not involved in protected activity because he alleged only that he confronted his supervisor about the report. He did not allege having conducted an investigation or beginning some type of action against his supervisor as contemplated by the Act. As such, Plaintiff’s claim for retaliation under the Act was dismissed by the Court.
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