In 2012, a jury concluded that Bayer Corporation (Bayer) unlawfully terminated a sales representative, Mike Townsend, because he reported to the Arkansas Attorney General that with the alleged knowledge of Bayer’s sales force, physicians were overbilling Medicaid for Bayer’s drugs. See Townsend v. Bayer Corp., 774 F.3d 446, 452 (8th Cir. 2014).

Shortly before Townsend was terminated, his corporate credit card had been suspended for about six months, because his wife had inadvertently used his expense reimbursements from Bayer to pay other bills. After Townsend paid off the outstanding balance on his corporate credit card account, the account was reactivated. As alleged, however, Bayer terminated Townsend after the account was reactivated, claiming that the closed credit card account did not allow Townsend to entertain physicians. A jury concluded that Townsend was terminated because of his alleged whistleblowing activities, and not for the reasons Bayer had asserted.

After the jury delivered its verdict, the court then ordered Bayer to reinstate Townsend “at the same rate of pay and with the same seniority he held at the time of his termination.” See Townsend v. Bayer Corp., 11-cv-00055-JM, ECF No. 121 (E.D. Ark. 2013). Bayer offered him a position at a lower rate of pay and seniority in Knoxville, Tennessee, more than 500 miles away from his current home in Little Rock, Arkansas. After Townsend’s motion for reinstatement was stayed pending an appeal to the Eighth Circuit, the district court concluded that Bayer’s job offer was not a good faith effort to comply with the Court’s order that Townsend be restored to a comparable position under 31 U.S.C. § 3730(h)(2).

This case presented the rare circumstance of a False Claims Act (FCA) whistleblower who wishes to continue working for a company that has allegedly terminated him for reporting unlawful conduct. In many ways, this case presents some guidance as to how companies should treat whistleblowers. Although it is not the case that companies can never terminate employees who have reported unlawful conduct to the government, they certainly cannot terminate employees because of their whistleblowing activities. See 31 U.S.C. § 3730(h)(1) (providing relief for employees who are “discriminated against . . . because of lawful acts done by the employee . . . in furtherance of an [FCA] action”).

If a company has legitimate non-discriminatory reasons to terminate an employee who has reported alleged fraud, the company should document these reasons in the employee’s personnel file. It is particularly helpful to the employer if the reasons for termination transpired or commenced prior to the employee reporting the alleged fraud to the government.  Many courts have determined that terminated employees are only entitled to relief if their protected conduct was a “but-for” cause—meaning that the employee would not have been terminated if he had not reported the alleged fraud. Accordingly, legitimate reasons for termination, especially if properly documented, can overcome the anti-retaliation provisions of the FCA.