MJS and Associates, LLC Data Breach (2016)

A Texas appellate court recently affirmed a judgment against a healthcare consulting firm that claimed that its former employee had misappropriated its confidential information to use in a False Claims Act (“FCA”) lawsuit against the consulting firm’s largest client. The consulting firm, MJS and Associates, LLC (“MJS”), claimed that the employee’s conduct violated confidentiality agreements she had signed and caused MJS to lose business. The appellate court held that MJS failed to show its alleged harm proximately resulted from the employee’s taking of the confidential documents. This decision is significant because it suggests that the FCA might protect an employee from liability for breaching a confidentiality agreement when the employee uses the employer’s documents in a qui tam suit against one of the employer’s clients.