SCOTUS Restricts Whistleblower Suits

The Supreme Court ruled 7-2 Tuesday to limit the grounds for some lawsuits brought by whistle-blowers claiming fraud in US health care, defense and other programs. USA Today notes that the "overall effect of the decision is likely to be narrow because Congress amended the disputed provision as part of the health care overhaul that became law March 23." At issue, according to USA, "was the scope of the False Claims Act, first enacted during the Civil War to elicit help from ordinary citizens against contracting fraud. The new case and the recently passed legislation put a spotlight on whistle-blowers who uncover fraud through the help of state or local audits that normally would not come to the federal government's attention."

The National Law Journal (3/31, Coyle) reports, "In Graham County Soil and Water Conservation District v. US ex rel. Wilson, Justice John Paul Stevens, writing for a 7-2 majority, held that whistleblowers whose allegations are based on publicly disclosed information in state or local reports and investigations are barred from filing so-called qui tam lawsuits. The Court's decision -- which also drew the first dissenting opinion by Justice Sonia Sotomayor -- said the act's public disclosure bar was not limited to federal sources of information" but "as Stevens noted, both in his opinion and his summary on the bench, the Patient Protection and Affordable Care Act, signed by President Barack Obama on March 23, limits the public disclosure bar to federal sources of information. The new act, however, is not retroactive, so the Court's decision will apply to claims filed before its effective date."

Bloomberg News (3/30, Stohr) reported, "Business trade groups had urged the Supreme Court not to expand the False Claims Act, saying the upshot would be new burdens on companies. Lawsuits under the False Claims Act have recovered more than $24 billion since Congress strengthened the law in 1986." The AP (3/30) also covered the story.