In this qui tam action under the False Claims Act, the district court correctly held that the relator failed to plead his former employer’s fraud against the government with sufficient particularity. However, he sufficiently alleged an actionable claim of retaliation after he reported the fraud, and the district court erred in holding to the contrary.
The allegations state with particularity that United Airlines engaged in at least some fraudulent conduct, but the complaint fails to provide the critical last link for liability: That this scheme necessarily led to the presentment of a false claim to the government for payment. The complaint doesn’t allege how, or even whether, bills for fraudulent services were presented to the government and how or even whether the government paid United for the services. The complaint leaves open the possibilities that the government was not billed for and accordingly never paid for the particular alleged fraudulent repairs and that any fraudulent repairs were remedied prior to government payment. Merely alleging fraudulent conduct and an umbrella payment, without more, is insufficient, particularly where United is three levels removed from the government in the contracting chain.
However, the district court erroneously dismissed the relator’s retaliation claim, applying the “distinct possibility” standard to find that he had not sufficiently alleged that he engaged in activity protected by the False Claims Act. The correct standard for 31 U.S.C. § 3730(h)’s second prong is the “objective reasonableness” standard. Under this standard, an act constitutes protected activity where it is motivated by an objectively reasonable belief that the employer is violating, or soon will violate, the Act. Here, the relator sufficiently alleges that he had an objectively reasonable belief that United was violating the False Claims Act and that his actions were designed to stop at least one violation. Thus, the district court erred in holding that he wasn’t engaged in protected activity.
Affirmed in part, reversed in part, and remanded. Judge Keenan dissented in part.