Whistleblower’s False Claims Act case jumps arbitration hurdle

posted on:
October 13, 2017

author:
Archie Grubb

category:
Fraud

archie grubb1 Whistleblower’s False Claims Act case jumps arbitration hurdleA whistleblower suing a Nevada pediatric therapy chain on behalf of the U.S. scored a victory earlier this month when the Ninth Circuit Court of Appeals refused the defendant’s motion to force the dispute into arbitration.

The Ninth Circuit denied a motion to compel arbitration by My Left Foot Children’s Therapy LLC, a small, family-owned company that provides functional therapy to children in the Las Vegas area.

The Las Vegas-based company is being sued by a former employee of My Left Foot under the whistleblower provisions of the False Claims Act (FCA). The whistleblower alleges the company submitted fraudulent claims to Medicaid for reimbursement. Both the U.S. and the state of Nevada support the claims.

On October 19, 2015, the defendants moved to compel arbitration of the whistleblower lawsuit pursuant to the Federal Arbitration Act and the company’s arbitration agreement with the whistleblower, which she signed as a condition of employment. The plaintiff, the U.S. government, and State of Nevada opposed the motion.

On June 13, 2016, the U.S. District Court for the District of Nevada denied the Defendants’ motion to compel arbitration on the grounds that the agreement did not extend to the U.S. or Nevada, which owned the underlying FCA claims.

The Court found that the FCA suit wasn’t necessarily connected to the whistleblower’s employment and that she would have been able to bring the FCA suit regardless of whether she was employed by the defendants.

Similarly, just because the employee observed the fraudulent conduct while employed does not mean that the observation was related to her employment because she could have made the same observations in a non-employee capacity,” the Ninth Circuit found.

The False Claims Act authorizes whistleblowers to file suit on behalf of the U.S. government. In light of that, the whistleblower’s complaints is in this case are not an employee’s personal dispute with the employer as much as they are the government’s complaint.

Accordingly, the Ninth Circuit concluded that the FCA claims were not arbitrable on this basis … because the “underlying fraud claims asserted in a FCA case belong to the government and not to the relator.”

* * *

Are you aware of fraud being committed against the federal government, or a state government? If so, you may be protected and rewarded for doing the right thing by reporting the fraud. If you have any questions about whether you qualify as a whistleblower, please contact an attorney at Beasley Allen for a free and confidential evaluation of your claim. There is a contact form on this website, or you may email one of the lawyers on our whistleblower litigation team: Archie Grubb, Larry Golston, Lance Gould or Andrew Brashier.

Source: Complaint

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