Texas Whistleblower Statute Not Analogous to False Claims Act? - Employment Law - U.S. Fifth Circuit
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Texas Whistleblower Statute Not Analogous to False Claims Act?

The federal False Claims Act (FCA) creates a cause of action for any person retaliated against by his employer for attempting to prevent an FCA violation. The cause of action, however, was not accompanied by a statute of limitations, so federal courts have been stuck applying the most-closely analogous state statute of limitations.

Courts don't always pick the right statute.

The Fifth Circuit Court of Appeals ruled last week that a Texas district court erred in applying the Texas Whistleblower Act (TWA) statute of limitations to a FCA retaliation lawsuit.

Michael Riddle, formerly a senior employment manager for Dyncorp International, Inc., alleged that Dyncorp contracted to create a database for the United States government, but took no meaningful steps toward fulfilling its obligations. He claimed that when he protested Dyncorp’s inaction on the database project, he was marginalized at work and eventually terminated.

Riddle filed a FCA retaliation lawsuit 178 days after his termination. The district court, applying the TWA statute of limitations to Riddle’s claim, dismissed the complaint as time-barred because it was filed after the TWA 90-day time-limit had expired.

The Fifth Circuit Court of Appeals reversed the district court, finding that the TWA was inapplicable to Riddle.

The Texas Legislature has enacted numerous whistleblower statutes, which apply to a whistleblower’s specific status, or employment field. The TWA creates a cause of action for public employees who are retaliated against for reporting unlawful conduct by their employer or other public employees.

In the light of Texas’s status-based whistleblower regime, the Fifth Circuit Court of Appeals reasoned that it makes no more sense to borrow from the statute for public employees than it would to borrow from the statute for hospital employees, physicians, nursing home employees, agricultural laborers, or handlers of hazardous chemicals. (Each of these employment fields benefits from a different Texas whistleblower statute.)

Furthermore, the TWA retaliation provision requires public employees to pursue an administrative remedy before suing under the TWA. The limitations period for a TWA action is often longer than 90 days due to required administrative proceedings, and the running of the limitations period is suspended during the administrative proceedings. As Riddle is a private employee with no administrative remedy, his TWA time limit would be a strict 90 days.

The Fifth Circuit, instead, chose to apply Texas’ two-year personal injury statute of limitations to Riddle’s claim. The court reasoned that this statute would be more appropriate because of its association with a particular type of wrongful discharge cause of action under Texas law. Texas, like many states, recognizes a cause of action for wrongful discharge where a person is terminated for refusing to commit an illegal act.

Before you file a retaliation lawsuit in a Fifth Circuit Court of Appeals feeder court, match your client’s status with the appropriate Texas statute, and make sure the claim is not time-barred.

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