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Supreme Court Hears Whistleblower Case

Posted by Frank Steinberg | Dec 07, 2006 | 0 Comments

The False Claims Act is commonly referred to as the federal whistleblower law.  Its purpose is to discourage fraud against the government.  When a citizen provides information that helps the government to successfully sue the company that has perpetrated a fraud, the citizen shares in the recovery.  Evidence of fraud is often provided by current or former employees of companies that contract with the government.  No surprise there: they are in a position to know when their employers are up to no good at the expense of the public.

The Supreme Court recently heard oral argument in Rockwell International Corp. v. Stone, a case which presents this question: how much information specific information must a plaintiff (the "relator" in False Claims Act terms) provide to be entitled to a cut of the winnings when the government obtains a judgment under the Act?

The case started when Stone complained that the Rockwell International was endangering the environment by the way it handled nuclear materials at the government's Rocky Flats facility.

"Stone's report touched off a wider federal investigation, and in 1992 the company pleaded guilty to environmental violations and agreed to pay $18.5 million of criminal fines."   Stone then filed his own action under the Act, was joined by the government, and obtained a judgment of $4.1 million.

Rockwell appealed, arguing that Stone was not the "original source" of the information that led to the judgment.  Translated into English, the issue was whether the information provided by Stone was specific enough to entitle him to share in the judgment.

According to a published report, Chief Justice Roberts and Justice Scalia seemed to side with Rockwell, while Justice Ginsburg seemed sympathetic to Stone's position.  (Imagine that!)

The Court's decision, when it comes, will help to define what quality of information a relator must provide in order to recover against a corporation that defrauds the government.  We'll keep you advised.

About the Author

Frank Steinberg

Frank is the founder and principal of Steinberg Law, LLC. A Jersey boy born and bred, he focuses on employment litigation and counseling, business litigation,  and aviation law. Following law school and a clerkship in the federal district court Frank spent his early career with large litigation ...

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