Potts v. Center for Excellence in Higher Education, Inc., 244 F. Supp. 3d 1138

Debbi Potts resigned from CollegeAmerica (predecessor to the Center for Excellence in Higher Education) on July 16, 2012, then received $7,000 under a separation agreement that included promises not to contact government agencies about complaints, to route complaints to the Center hotline, and not to disparage the Center.
On February 27, 2013 Potts filed a complaint with the Center’s accrediting agency alleging False Claims Act (FCA) violations; the Center then amended a pending state-court suit to allege Potts breached the separation agreement by reporting the Center.
Potts sued in federal court (July 12, 2016), alleging the Center’s amended state-court complaint constituted unlawful retaliation in violation of the FCA’s anti-retaliation provision, 31 U.S.C. § 3730(h)(1).
The Center moved to dismiss, arguing (1) the FCA’s anti-retaliation provision does not cover post-employment retaliation, (2) statute of limitations, (3) waiver, and (4) lack of knowledge that Potts acted in furtherance of the FCA; the court found (1) dispositive.
The district court analyzed the statutory text, context, remedies, and precedent and concluded § 3730(h)(1) protects only current employees (and contractors/agents who have an employer-type relationship), not former employees subjected to post-employment retaliation.
The court dismissed Potts’ complaint for failure to state a claim under Rule 12(b)(6).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether § 3730(h)(1) covers post-employment retaliation	Potts: legislative history and policy show protection extends to former employees; alternatively she is a contractor	Center: statute protects only current employees/worker-relationships; post-employment retaliation outside § 3730(h)(1)	Held: § 3730(h)(1) does not cover post-employment retaliation; claim dismissed
Whether Potts is a “contractor” under § 3730(h)(1)	Potts: her separation agreement made her a lifelong contractor required to route complaints to the hotline	Center: agreement was a non-reporting/non-disparagement payment, not a contract to perform work for the Center	Held: Potts was not a contractor in the statutory sense; the agreement paid silence, not ongoing work
Whether statutory remedies suggest coverage of former employees	Potts: relief provisions can be interpreted broadly to include former employees	Center: remedies (reinstatement, back pay) presuppose current-employee status	Held: remedies (reinstatement, back pay) support reading that protection is for current employees only
Whether Robinson v. Shell Oil (Title VII) controls statutory interpretation here	Potts: Supreme Court’s Title VII analysis supports reading “employees” to include former employees	Center: textual differences between Title VII and § 3730(h)(1) make Robinson inapposite	Held: Robinson is distinguishable; textual context of § 3730(h)(1) controls and favors current-employee reading

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility pleading standard for Rule 12(b)(6))
Ashcroft v. Iqbal, 556 U.S. 662 (conclusory allegations not presumed true)
Robinson v. Shell Oil Co., 519 U.S. 337 (Title VII interpretation of “employees”)
Dole v. United Steelworkers of Am., 494 U.S. 26 (noscitur a sociis canon)
Vander Boegh v. EnergySolutions, Inc., 772 F.3d 1056 (Congress intended to protect non-employee workers who have employer-type relationships)
U.S. ex rel. Head v. Kane Co., 798 F.Supp.2d 186 (section 3730(h) applies only in employment context)