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Court Enforces Arbitration Agreement and Requires Employees to Arbitrate FCA Claims

On Mintz Levin's Employment Matters blog, my colleague David Barmak recently discussed in a blog post a notable case in which a federal court compelled the arbitration of three nurses’ False Claims Act (FCA) retaliation claims against the hospital that employed them.  As described in the blog post, the court went a step further by also requiring the nurses to arbitrate their underlying qui tam FCA claim that the hospital had defrauded Medicare, providing an important precedent for healthcare companies, government contractors, and other employers who do business with the federal government and can be targets of FCA claims.

Arbitration won’t necessarily resolve the qui tam claims. Since the government has a stake in the outcome and is not bound by the arbitration agreement between the hospital and the nurses, the court ruled that, after the arbitration award, the parties must either request that the government consent to the arbitrator’s award or resume litigation of the qui tam claims.

As the blog post points out, this case is another reminder of the important role that arbitration agreements and policies can play as part of a broader dispute resolution strategy for employee claims. The case also underscores the importance of a thoroughly considered and well-drafted arbitration agreement or policy. This is especially so for companies who deal with the federal government and have an opportunity to force employees who become relators and bring qui tam FCA claims to arbitrate those claims.

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Brian P. Dunphy

Member / Co-Chair, Health Care Enforcement Defense Practice

Brian P. Dunphy is a member of the Health Care Enforcement & Investigations Group at Mintz. He defends clients facing government investigations and whistleblower complaints regarding alleged violations of the federal False Claims Act. Brian also handles commercial health care litigation.