Nevada Supreme Court Clarifies Anti-Retaliation Provisions Of Nevada False Claims Act

Volume 7, Issue 4
April 3, 2008

Under the Nevada False Claims Act ("the Act"), companies who contract with the state or local government, or are a subcontractor to another private company that contracts with the government and uses government money to pay the subcontractor, are prohibited from submitting a request for payment that is false, uses a false record or document to obtain payment, or other similar contact aimed at obtaining money from the government under false pretenses. The penalties for violations of this Act are steep.

The Act also prohibits employers from (1) adopting rules or policies prohibiting employees from disclosing to the government information regarding a false claim or other prohibited activity, or (2) retaliating against an employee who has made a disclosure to the government, or who has given information in the course of a proceeding under the Act.

The Nevada Supreme Court recently addressed these anti-retaliation provisions to resolve an ambiguity. The Supreme Court determined that an employee can sue for retaliation under the following circumstances:

  • If the employee did not participate in the fraudulent activity, he may recover by proving that his employer retaliated against him for lawfully disclosing the false claim information to the government.
  • If the employee participated in the fraudulent activity, he can recover for the employer's retaliatory action only if the employer "harassed, threatened with termination or demotion, or otherwise coerced . . . [him] into any participation in fraudulent activity."

Any company that contracts with state or local government, directly or indirectly, is subject to the False Claims Act if government money pays the bills. The consequences of a company's violation of the anti-retaliation measures are "make-whole relief," such as reinstatement, double the lost compensation, special damages covering other losses of the employee, punitive damages, and attorneys' fees.

International Game Tech. v. Dist. Ct., 124 Nev. Adv. Op. No. 18 (S.Ct. March 27, 2008)

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.