Employment Releases Can (Sometimes) Derail Qui Tam Suits

The employee of a defense contractor brought a qui tam action, alleging that the company was ripping off the federal government during the production of fighter jets for the U.S. Air Force. After filing his qui tam complaint, he signed a general employment release that stated he would not bring any legal actions against the company. Seeking to dismiss his qui tam action, the company argued that the general release precluded him from being able to continue with his False Claims Act case. In U.S. ex rel. Davis v. Lockheed Martin Corp., 2010 WL 3239228 (N.D. Tex. Aug. 16, 2010), the court rejected the defendant’s argument and ruled that the relator could proceed with his case, for his qui tam complaint was filed prior to him signing the general employment release. The court also noted that when the release was signed, the government had not yet made up its mind about whether it was going to intervene in the relator’s qui tam action.  In other words, if the release was enforced, the government’s review process and fraud-fighting efforts would have been short-circuited.

Quite often, companies who are fearful of qui tam actions will encourage departing employees to sign broad employment releases. The enforceability of these releases varies widely from circuit to circuit. Before signing on the dotted line, potential relators should contact an experienced False Claims Act attorney.

For more information about qui tam law and health care fraud, contact Nolan & Auerbach, P.A.