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Sixth Circuit Decision Confirms that Employers May Lawfully Choose Not to Hire a Job Applicant with a Prior History as a False Claims Act Whistleblower

Some employers in the health care and other industries who regularly deal with the federal government and are subject to the False Claims Act ("FCA") have felt helpless in trying to weed out serial whistleblowers in the hiring process. After all, most anti-retaliation provisions prohibit retaliation against both employees and applicants. For example, Title VII of the Civil Rights Act of 1964 expressly prohibits retaliation against both employees and “applicants for employment.” Therefore, it is unlawful under Title VII to refuse to hire an applicant for employment because she complained about discrimination in prior jobs. A recent Sixth Circuit decision in the case of Gary Vander Boegh v Energy Solutions, Inc., has confirmed, however, that job applicants who have a history of reporting alleged FCA violations do not enjoy the same protection: employers can lawfully refuse to hire an applicant because of his prior history as an FCA whistleblower.

Gary Vander Boegh was employed by a waste management contractor as the land fill manager at Kentucky gas diffusion plant. While in that position, Vander Boegh had engaged in a protected activity, including reporting environmental violations. When his employer lost the contract to continue  to provide waste management services, Vander Boegh sought to continue as land fill manager at the site by becoming employed by Energy Solutions, which was taking over the waste management contract at the site. Energy Solutions refused to hire Vander Boegh, however, and Vander Boegh responded by bringing suit under the anti-retaliation provisions of the FCA and various environmental statutes claiming that he was refused employment because of his history as a whistleblower. Those claims were dismissed by the trial court, and the United States Court of Appeals for the Sixth Circuit upheld the dismissal, on the ground that the anti-retaliation provisions of the statutes at issue, including the FCA, did not apply to applicants.

The Sixth Circuit is the first circuit court to expressly address whether the FCA anti-retaliation provision applies to job applicants. The FCA’s anti-retaliation provision (31 U.S.C. §3730(h)) provides a cause of action for double damages and attorneys’ fees to “any employee, contractor, or agent who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms or conditions of his employment by his or her employer because of lawful acts . . . in furtherance of [a qui tam action] or other efforts to stop 1 or more violations of [the FCA].”  Relying on its interpretation of the clear language of the FCA and citing decisions by various lower courts who have confronted the issue, the Sixth Circuit concluded that because Vander Boegh was a job applicant and not an “employee, contractor, or agent” of Energy Solutions, he lacked standing to sue Energy Solutions for refusing to hire him based on his history as an FCA whistleblower.   The court reached the same result with respect to Vander Boegh’s claim under the anti-retaliation provision of the Energy Reorganization Act, which also refers only to “employees” and not “applicants.”

The Court’s ruling in the Vander Boegh case is good news for employers who choose not to hire job applicants who are serial qui tam whistleblowers or otherwise have a history of alleging FCA violations. Indeed, the decision confirms that employers (at least in the states covered by the Sixth Circuit: Kentucky, Michigan, Ohio and Tennessee) may lawfully ask applicants to reveal either in their application or interview any instances in which they have reported or brought suit for alleged FCA violations.

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David Barmak

Member / Chair Emeritus, Employment, Labor & Benefits Practice

David Barmak is an experienced trial lawyer at Mintz who focuses his practice on employment law and HR issues. He litigates cases in federal and state courts and arbitrations across the country. David counsels clients on compliance and employee relations issues and risk reduction options.