Supreme Court Whistleblower Lawsuit Ruling Limits Use of Public Records

The U.S. Supreme Court has issued a ruling that limits the way whistleblower lawsuits can be filed on behalf of the government. 

The court issued a 7-2 decision on Tuesday in Graham County Soil and Water Conservation District et al. v. United States ex rel. Wilson (pdf), determining that whistleblowers cannot file lawsuits based off of information that is already publicly available in state or local documents.

The U.S. government and attorneys for the whistleblower, a former secretary for Graham County in North Carolina, had argued that the restrictions only applied to federal audits and administrative reports made public, since the government could not possibly monitor all state and local public documents for signs of wrongdoing.

The question arose in a whistleblower lawsuit filed by Karen Wilson, an employee of the Graham County Soil and Water Conservation District, who charged the county with fraud in its handling of federal relief funds after a 1995 storm. A federal judge initially threw out her whistleblower suit because a Graham County audit had already revealed some of the problems. However, the U.S. Court of Appeals for the 4th Circuit reversed the decision, saying that the provisions only applied to federal reports that had been made public.

At issue in the case was whether the term “administrative” means that the exclusionary provision under the U.S. False Claims Act applies to records available at the state and local level. The federal government and the original plaintiff argued that the provision should be limited to federal reports, saying that if it extended to all information made public down to the local level, it would effectively gut the whistleblower law.

Whistleblowers who report a false claim against the government may be entitled to 15% to 25% of any money that the government recovers from the offenders under the qui tam provision of the False Claims Act. In return, the whistleblower must be the first to bring the case to the government’s attention, and must not publicize the claim until the DOJ decides to prosecute the claim.

The high court determined that the False Claims Act does not support an interpretation that the law limited what should be considered public disclosure to only federal records. Justice John Paul Stevens, writing for the majority, pointed out that quite often the Department of Justice (DOJ) can not monitor all of the federal reports made public for signs of wrongdoing, but those reports would still be exempt from use by a whistleblower to bring a lawsuit on behalf of the government.

 “Just how accessible to the Attorney General a typical state or local source will be, as compared to a federal source, is an open question,” Justice Stevens wrote. “And it is not even the right question. The statutory touchstone, once again, is whether the allegations of fraud have been ‘publicly disclosed,’ not whether they have landed on the desk of a DOJ lawyer.”

 Justices Stephen Breyer and Sonia Sotomayor dissented. Sotomayor said that the wording of the False Claims Act should be limited to federal application, and that if Congress had intended for public disclosure to apply to state and local sources, the act should have said so specifically.

The ruling’s effect will be limited on whistleblower lawsuits brought regarding Medicare and Medicaid fraud, due to language in the recently passed health care reform package that specifies state and local records are not considered public disclosures for the sake of the False Claims Act. Justice Stevens said that the new language will only apply to future cases, however, and not lawsuits that have already been filed.