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Monday, July 22, 2024 | Back issues
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Supreme Court Restricts Whistleblower Lawsuits

(CN) - Whistleblowers cannot file federal false claim lawsuits based on allegations that have already been published in federal, state and local administrative reports or government audits, the Supreme Court ruled.

The court reversed a 4th Circuit finding that the Federal Civil False Claims Act barred qui tam lawsuits based on publicly disclosed allegations only if those allegations had been published in federal reports.

The Act disallows whistleblower lawsuits brought on behalf of the U.S. government if the information has already entered the public sphere through one of three avenues.

In the language of the statute, those are: "a criminal, civil, or administrative hearing; a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation; or from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information."

In 2001, North Carolina government employee Karen Wilson sued the Graham County and Cherokee County Soil and Water Conservation Districts and a number of local and federal officials for submitting false claims during a flood remediation project.

Both the county and state released reports on the allegations, and a district court found that Wilson's claim was barred as a result. The 4th Circuit reversed, arguing that the claim would be barred only if the reports had been federal.

Writing for the high court, Justice John Paul Stevens found that the appellate panel had based its reading of the statute on a misuse of the "interpretive maxim noscitur a sociis (a word may be known by the company it keeps).

"Given that 'administrative' is not itself modified by 'federal,' there is no immediately apparent textual basis for excluding the activities of state and local agencies (or their contractors) from its ambit."

Stevens added that there is nothing in the statute's language, nor is there conclusive evidence in the Act's legislative history, to suggest that only federal sources apply.

"The legislative record does not support an exclusively federal interpretation of 'administrative,'" Stevens wrote. " The current [statute] was enacted to strike a balance between encouraging private persons to root out fraud and stifling parasitic lawsuits."

However, Stevens warned in a footnote that the new Patient Protection and Affordable Care Act replaces the public disclosure statute with "new language."

"The legislation makes no mention of retroactivity, which would be necessary for its application to pending cases given that it eliminates the petitioners' claimed defense to a qui tam suit," he wrote.

The court voted 7-2 to reverse. Justice Antonin Scalia joined with one exception, and Justices Sonia Sotomayor and Stephen Breyer dissented.

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