Will Still Have To Pay, But Only The Feds Will Collect
It's a big court win for the government... and a significant
loss for those who may go public with reports of corporate fraud.
On Tuesday, the US Supreme Court issued its decision regarding the
ability for 'whistleblowers' to collect damages in lawsuits in
which the federal government is a plaintiff.
Bloomberg News reports in a 6-2 vote, the Supreme Court ruled
retired engineer James Stone is not entitled to a share of the $4.2
million award that he -- and the US government -- won in a 2004
lawsuit against Boeing's Rockwell unit. The ruling reversed a lower
court ruling... and may even keep Stone from collecting legal
Stone had filed suit under the US False Claims Act, which allows
whistleblowers to sue on behalf of the government when fraud is
suspected -- and, to share in any damages recouped. In Stone's
case, he accused Rockwell of making false statements about various
health and safety activities at the Rocky Flats nuclear weapons
facility outside Denver, CO. The government joined the suit after
Stone had already filed, reports Bloomberg.
While it may have been Stone who tipped the Feds off to wrongful
acts at Rocky Flats, the high court ruled information he provided
was not the required "original source" of information concerning
the wrongdoing. While Stone may have attracted attention to the
problems... those issues weren't what the government ultimately
went after Rockwell for, and Stone didn't have access to
information on those concerns.
"Stone did not have direct and independent knowledge of the
information upon which his allegations were based," Justice Antonin
Scalia wrote for the majority, which also included Chief Justice
John Roberts and Justices Anthony Kennedy, David Souter, Clarence
Thomas and Samuel Alito.
Justices John Paul Stevens and Ruth Bader Ginsburg represented
the minority opinion, stating the other justices misinterpreted the
False Claims Act. Justice Stephen Breyer did not vote in the
Boeing will still have to pay the $4.2 million... but it isn't
difficult to see the implications of the ruling, which was sought
by business interests looking to quell whistleblower false-claims
lawsuits. The logic goes, if there isn't a potential financial
incentive to their claim... many whistleblowers will likely opt to
steer clear of the ensuing hassle.
The Senior vice president of the US Chamber of Commerce National
Chamber Litigation Center, Robin Conrad, called the decision "a
very important victory for every government contractor."
"The principal thing the court did is essentially try to
preclude [whistle-blowers] from engaging in fishing expeditions,"
said false claims expert Peter B. Hutt II.
On the other side of the argument, Iowa Senator Charles
Grassley, a supporter of whistleblower claims, said the Supreme
Court decision should encourage changes to the False Claims Act --
to make sure those who go against their employer with rightful
claims receive some compensation.
"The Supreme Court has made it even more difficult to get to the
bottom of waste, fraud and abuse of taxpayer money," Grassley