A federal judge has allowed the former general counsel of the Houston Housing Authority to pursue a whistleblower claim against the authority alleging that she was terminated from her position after uncovering systemic fraud within a veteran's housing program.

Karen Miniex served as HHA's general counsel and vice president for four years until she was terminated in 2016. In a 2017 federal complaint she filed against HHA, Miniex alleged she consistently received outstanding job performance reviews until she discovered that HHA employees were selling vouchers to a veteran's housing program.

According to her complaint, Miniex met with Tory Gunsolley, HHA's CEO and president, to discuss the results of her investigation into fraud in the veteran's housing program, which he allegedly dismissed by telling Miniex, “Well, it is not like we don't have more vouchers than veterans anyway.”

Miniex later went outside of the chain of command and reported her fraud suspicions directly to HHA's board of commissioners. Miniex alleged she was later terminated by Gunsolley because of purported attendance issues and for having a “bad attitude,” according to her complaint.

Miniex later sued HHA in a Houston federal court for firing her in a stigmatizing matter without affording her notice and an opportunity to be heard, interfering with her rights under the Family and Medical Leave Act, and retaliating against her for engaging in activity protected by the False Claims Act.

In October, U.S. Magistrate Judge Dena Palermo granted HHA's motion for summary judgment, dismissing all of Miniex's counts for failure to state a claim, including the retaliation claim she filed under the FCA. Specifically, Palermo ruled that Miniex's alleged protected activities—her fraud investigation and fraud reporting to the HHA board—were within the scope of her ordinary job responsibilities, and thus weren't actionable.

Miniex appealed Palermo's findings to Senior U.S. District Judge Nancy Atlas. In a recent decision, Atlas affirmed most of Palermo's decisions dismissing Miniex's claims, except for her retaliation claim.

“In particular, the court's review of the summary judgment record reveals a genuine dispute over whether Miniex's supervisor, Tory Gunsolley, terminated Miniex's employment because she presented to the board as a whole and to a member of the board, contrary to Gunsolley's instructions, a report of systemic fraud in the Veterans' Affairs Supportive Houston 'VASH' Program and a recommendation for a broader fraud investigation into the VASH Program,” Atlas wrote.

“The court concludes that Miniex has met her summary judgment burden on the issue of prima facie causation, and on the ultimate issues of Gunsolley's intent and whether his explanations were pretext for Miniex's employment termination,” Atlas wrote.

Zenobia Harris Bivens, a partner in Houston's Berg & Androphy who represents Miniex, is pleased with the decision, noting that it's rare for in-house counsel to be allowed to pursue a retaliation claim against his or her employer under the FCA.

“It's difficult because you have to have evidence that you went above and beyond your job responsibilities. That's the standard in the Fifth Circuit, and I think a lot of lawyers probably don't want to tell on their client or report their client for committing fraud,'' Bivens said.

Palermo's decision concluded that Miniex reporting the alleged fraud to the CEO and the board “was her just doing her job,” Bivens said. “But it wasn't her job. She is not counsel to the board.”

Brian Begle, managing partner of Houston's Olson & Olson who represents HHA, did not return a call for comment.