Whistleblower Compensation Law Reviewed by Supreme Court

The U.S. Supreme Court heard arguments on Monday about whether citizens can be compensated for bringing whistleblower lawsuits using information that was already publicly available.

The case involves questions about whether provisions in the False Claims Act that bar whistleblowers from obtaining compensation for public information available from federal sources, also extends to information made public at the state and local level. The False Claims Act contains a whistleblower law that allows citizens to receive a portion of damages recovered when they help reveal fraudulent activity that misuses federal funds.

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.

Currently, the law forbids whistleblowers from any recovery if their claim is based on information that is publicly available from congressional, administrative or Government Accounting Office reports, audits or hearings. It also bars them from using information that has been made public by the media.

Compensation for whistleblowers may also be available under a variety of whistleblower protection laws if they are retaliated against by their former employers or related organizations.

At issue in the Supreme Court case is whether the term “administrative” means that the exclusionary provision applies to records available at the state and local level. The federal government and the original plaintiff are arguing that the provision should be limited to federal reports, saying that if it extended to all information made public down to the local level that it would effectively gut the whistleblower law. Experts say the court is likely to issue a decision sometime this summer.

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 her whistleblower lawsuit out because a Graham County audit had 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.

Assistant U.S. Solicitor General Douglas Hallward-Driemeier argued that Congress only intended the provision barring the use of publicly disclosed records to apply to information available on the federal level. Hallward-Driemeier said that the federal government does not have the capacity to dig through every public audit or report performed by every community in the country, and that it would effectively destroy the whistleblower law if such documents are used to block whistleblowers from monetary awards for bringing fraud cases to the government’s attention.

The attorney for Graham County, Christopher Browning, argued that applying the provision to only federal information that has been made public would leave states and local governments exposed to a flood of frivolous whistleblower lawsuits over problems and errors that are already known.