WASHINGTON (CN) – The Supreme Court heard arguments Monday in the case of a secretary who claimed that North Carolina offiicals were getting kickbacks on a storm cleanup contract. The question was whether she is required to have original knowledge of the scheme in order to file a case under the False Claims Act and share in any resulting award.
Under the False Claims Act, citizens can sue on behalf of the federal government if they perceive fraud involving federal money.
If the whistleblower reveals the same data as a congressional, administrative, or Government Accounting Office report, hearing, audit or investigation or relies on information published by the news media, then the whistleblower does not have a claim to a share of any recovery in a False Claims Act case.
But the debate turned on whether the information had to be new to all forms of government or just the federal government, with different parties arguing that “administrative” referred either to all forms of government or, on the other hand, to the federal government alone.
North Carolina Solicitor General Christopher Browning Jr., argued on behalf of the Graham County Soil and Water Conservation District and those accused of fraud. He said prior results of local fraud investigations revealed the same information as the whistleblower, arguing that she was not an original source, and that the case is therefore out of the court’s jurisdiction.
Browning said that treasure hunters could otherwise abuse the system and disrupt state investigations simply by reading state and local information on fraud, and then filing a complaint on behalf of the federal government.
Lawyer Mark Hurt argued for whistleblower Karen Wilson and Assistant Solicitor General Douglas Hallward-Driemeier argued on behalf of the government.
They both said that the courts can decide the case by finding that “administration” refers to just the federal government. They said that if important information concerning fraud is known elsewhere, then the federal government needs people to bring that information to its attention.
Justice Stephen Breyer acknowledged that each side had good arguments but said that the federal government is the one that suffers if too many people get unjustified rewards, and it suffers if too few people tell it of fraud. “Should I not pay special attention to their views as to how the balance works out?” he asked of North Carolina’s solicitor general.
Justice Sonia Sotomayor had a different question. “If Congress’s intent was the one that you are announcing then it should have just permitted original sources to sue,” she said. “But that’s not the choice it made. It broadened the scope to include more sources or more reward for individuals who don’t have original information.”
Justice Antonin Scalia also appeared skeptical of North Carolina’s argument. “Under your proposal a state that itself is guilty of fraud can, in effect, immunize itself, at least render the information unusable by conducting a hearing,” he said.
But when Hurt stepped to the lectern to make his case for the whistleblower, he also ran into resistance to his position from Scalia. “‘Administrative’ obviously means state administrative,” Scalia said, apparently suggesting that local information could not be used by a whistleblower.
Chief Justice John Roberts challenged Hurt’s argument that the context of “administration,” where it is sandwiched between “congressional” and “Government Accounting Office,” means the act refers only to the federal government. “Are you sure ‘congressional’ is limited to Federal Congress?” Roberts asked. “The first definition in Black’s Dictionary is ‘a formal meeting of delegates.'”
In the case before the Court, Wilson filed the lawsuit after the government paid several North Carolina counties to cleanup after a destructive 1995 storm. She said that Richard Greene, who oversaw the spending for the project on behalf of the government, suggested that the counties forego bidding in awarding the contracts and alleged that Billy Brown, one of Green’s friends, was selected for the cleanup job.
Wilson claimed that Brown then shared the proceeds with Green and some other federal and district employees.
Working as a secretary for the Graham District, Wilson reported her concerns to local and federal officials, but Graham County and North Carolina officials began investigations before Wilson’s lawsuit, both noting concerns about drain on public money and the failure of the counties to seek bids.
A district court judge ruled that the investigations qualified as public disclosures and that he therefore had no jurisdiction over the case, but upon appeal, the 4th Circuit agreed with Wilson that the local reports were not public disclosures, and that the courts could hear the case.
Wilson said coworkers and district officials harassed her afterwards with threats to kill her husband and attack her, and someone left a gun cylinder on her desk.
Breyer seemed to admit he is torn. “The arguments in this case are more balanced than any I can remember,” he said. “For each one, there is a counterargument and I’m somewhat left up in the air.”