A whistleblower employee who is fired in an act of retaliation can bring a separate claim of wrongful discharge under state law, and does not have to rely exclusively on the whistleblower protection provision of the False Claims Act.
That was the ruling by a Washington state judge in Salazar v. Monaco Enterprises, Inc, a case brought by a former employee claiming wrongful discharge as a result of his whistleblowing activities. The court relied on decisions from several jurisdictions to come to the conclusion that whistleblowers seeking restitution can pursue civil action in addition to the remedies available to them under False Claims Act’s anti-retaliation provision.
Monaco Enterprises Inc. is a Spokane-based company providing fire and security alarm systems to U.S. military bases. On June 28, 2012, a former employee, Maximilian Salazar III, filed a qui tam lawsuit alleging that Monaco Enterprises had violated the False Claims Act by systematically overbilling the U.S. military.
According to Salazar and three other employees (who had earlier filed a separate whistleblower claim) the overbilling went back more than five years and involved hundreds of task orders and contracts with military bases scattered throughout the nation, most worth in excess of $100,000 each.
Salazar, who was Monaco’s former director of applications engineering, claimed he witnessed a variety of instances of fraud. These instances, Salazar said, included Monaco representatives promising to meet deadlines the company knew could not be met, “grossly inflating markups on products”, and charging the federal government per-diem travel costs which exceeded the per-diems the company actually paid employees.
In October 2011, Monaco fired Salazar, allegedly for insubordination after he was told he would no longer head up a department at the company. Salazar claims he was let go after voicing his concerns about the company’s contract practices.
The federal government, after investigating, decided to join the whistleblower actions based on the multiple qui tam allegations levied in the complaints filed by Salazar and the other three whistleblowers. In its complaint, filed in October 2015, the government says that the company routinely submitted one set of documents to the U.S. General Services Administration and different documents to DOD officials as invoices. The company also modified documents it provided to federal law enforcement officers investigating the company, according to the complaint.
“By providing different sets or versions of documents, all purportedly for the same billing activity, [Monaco Enterprises], as the defendants knew, was able to conceal its routine business practice of submitting hundreds of false claims to DOD for years,” the complaint says.
Whistleblowers are entitled to 15 percent to 25 percent of any award, plus lawyers’ fees, if the government joins a case. Based on the allegations, the total dollar amount Monaco Enterprises allegedly overcharged may run into six or seven figures. Additionally, under the protection of the False Claims Act, a whistleblower may receive reinstatement or front pay, double back pay (double lost wages and benefits) and special damages, including damages for emotional distress and other non-economic harm resulting from the retaliation.
But the False Claims Act does not cover punitive damages for wrongful discharge, which is a tort action, and must be filed separately. The decision in Salazar v Monaco Enterprises allows whistleblowers to file a separate civil action to recover punitive damages in addition to the remedies available to them under the False Claims Act.
Our take: The court’s decision is good news for whistleblowers that have been wrongfully discharged in an act of employer retaliation. However, in some states, this option may not be available if a statutory remedy for wrongful discharge already exists under state law.
The best way to make sure your rights as a whistleblower are protected is to consult with an experienced whistleblower law firm and evaluate your options.