Whistleblower Case Before Supreme Court

Whistleblower litigation is an area in which the attorneys at Finch McCranie LLP specialize. These cases are generally brought under The False claims Act which Congress adopted during the Civil War to solicit the help of ordinary citizens in fighting contracting fraud. The law encourages citizens to bring suit on behalf of the U.S. government by ensuring that a portion of any damages or civil penalties will be shared with the person bringing the lawsuit.
Since Congress strengthened the law in 1986, whistleblower lawsuits have recovered almost 20 billion dollars, of which more than 2 billion dollars has gone to citizens.
In recent years these lawsuits have especially targeted Defense Department and health services fraud.
The Supreme Court heard arguments yesterday in a major case testing when whistleblowers who discover fraud in federal programs may sue in the name of the United States and collect some of the settlement. The case revolves around the issue of when whistleblower lawsuits might be kept out of court under a provision aimed at opportunistic lawsuits based simply on information publicly available.
The False Claims Act prohibits citizen lawsuits arising from public disclosures “in a congressional, administrative or (Government Accountability Office) report, hearing, audit or investigation.” The question Monday was whether that exemption relates only to federal reports or blocks a lawsuit bringing a claim based on information publicly available in a state or local report.
The case before the Supreme Court is a North Carolina case in which an employee of a state conservation district alleged fraud tied to the county’s participation in a federal disaster relief program. A federal trial judge rejected the lawsuit holding that a county audit had documented some of the problems. The U.S. Court of Appeals for the 4th Circuit reversed, saying only federal administrative reports, audits or investigations would have precluded a suit under the False Claims Act.
The United States Department of Justice has adopted the position that only federal reports would preclude a whistleblower lawsuit under the “prior disclosure” doctrine and argued this position at yesterday’s hearing.
Thirty states have joined the side of the North Carolina county urging the court to rule that the case should be thrown out.

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