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Employment – “Whistleblower’s” Disclosures Not Protected; Termination Warranted

Appellant William C. O’Hara, a federal contractor’s former employee, did not make protected disclosures of fraud to the contracting agency and, based on his work performance, would have been terminated from employment notwithstanding such disclosures.

After winning a contract with the National Institute of Standards and Technology to design and estimate costs for several new facilities, Appellee NIKA Technologies Inc. hired O’Hara as a senior cost estimator. NIST compensated NIKA for O’Hara’s services related to the contract.

In 2008, O’Hara informed a NIST manager that the building contractor, Northern Taiga Ventures Inc., had submitted documents to the government that contained misrepresentations and inaccuracies. The manager disregarded these allegations, as did the Office of the Inspector General after an investigation.

In 2009, NIST solicited bids for an additional project related to the ongoing construction of its new facilities. NTVI responded to the bid request with a change-order proposal based on its existing contract, asking the government to increase its compensation under that contract to reflect the additional work. O’Hara reported to the NIST manager that the additional project was unnecessary and, thus, NTVI’s proposal was fraudulent. The manager disagreed, as NIST itself had initiated the project.

NIST subsequently revised the construction design schedule, setting four new deadlines for designs and cost estimates from NIKA. NIKA placed O’Hara in charge of the cost estimates, but he soon fell behind schedule. He submitted the first set of estimates one month after the deadline, and it included several allegations that the construction did not match the site conditions described in NIKA’s contract.

In response, NIST informed NIKA that O’Hara’s delay was unacceptable and complained that the estimates were not correctly formatted, did not explain many of the underlying assumptions, and were not the proper channel to raise concerns about the contract specifications. O’Hara responded by email captioned “NIKA Response,” without consulting NIKA’s management. NIKA’s Vice President reprimanded O’Hara and assured NIST that all future cost estimates would be submitted on schedule.

O’Hara informed NIKA that he could not finish the second set of cost estimates by the deadline. NIKA then hired an outside firm to complete the work on schedule. The outside firm submitted the estimates timely, and NIKA informed NIST that the firm would prepare the remaining cost estimates because O’Hara’s performance demonstrated that he could not keep up with the schedule. Accordingly, when O’Hara’s funds ran out, NIST decided not to allocate new funds for his position. NIKA then fired O’Hara. O’Hara sued under the False Claims Act’s whistleblower protections and the American Recovery and Reinvestment Act.

Disclosures Not Protected

Despite concluding that the district court applied an incorrect legal standard, the circuit court affirmed the grant of summary judgment for NIKA because O’Hara’s disclosures were not in furtherance of a viable False Claims action. Contrary to the district court’s reading, 31 U.S.C. § 3730(h) does not protect only whistleblowing activity directed at the whistleblower’s employer. Rather, protection depends on the type of conduct disclosed – i.e. a violation of the FCA – rather than the whistleblower’s relationship to the subject. Nevertheless, the undisputed facts in this case demonstrate that O’Hara did not disclose any conduct that could have led to a viable False Claims action. NTVI submitted its proposal in response to NIST’s formal request. A contractor cannot be liable for defrauding the government by following the government’s explicit directions. Because he did not engage in protected activity, NIKA is entitled to summary judgment on this claim.

ARRA

ARRA and its associated regulations prohibit employers from terminating an employee for disclosing covered information to a person with supervisory authority over the employee. The employer is not liable if it demonstrates by clear and convincing evidence that the employer would have terminated the employee in the absence of disclosure.

Here, the undisputed facts establish by clear and convincing evidence that NIKA would have fired O’Hara absent any whistleblowing activity. NIKA hired O’Hara to produce cost estimates, but it was ultimately forced to hire an outside firm to complete the work on time. Further, NIST expressed disappointment in the quality of the estimates that O’Hara did produce. To make matters worse, O’Hara then purported to speak for NIKA in defending his work to NIST, necessitating a correction from NIKA. Finally, NIST decided not to allocate any additional funds to compensate NIKA for O’Hara’s services. O’Hara’s contention that NIKA hired the outside firm in order to make his position unnecessary is contradicted by his own acknowledgment that he was unable to finish his estimates on time. Thus, NIKA is entitled to summary judgment on this claim.

Affirmed.

O’Hara v. NIKA Techs. Inc., Case No. 16-1805, Dec. 22, 2017, 4th Cir. (Duncan). Jonathan Louis Gould for Appellant; Clifford Bernard Geiger for Appellee. Lawyers Weekly No. 001-009-18, 16 pp.

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