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Supreme Court limits government whistle-blower lawsuits

[JURIST] The US Supreme Court [official website; JURIST news archive] on Tuesday ruled [opinion, PDF] 7-2 in Graham County Soil & Water Conservation Dist. v. United States ex rel. Wilson [Cornell LII backgrounder; JURIST report] that whistle-blowers cannot bring suit under the False Claims Act [text] to recover misspent government funds if the information used in the lawsuits came from state or local agencies' reports or audits. The suit arose out of public record documents that detailed a failure to obtain bids for the clean-up and reconstruction of storm-damaged portions of North Carolina. The petitioners claimed that the US Court of Appeals for the Fourth Circuit erred in concluding [opinion, PDF] that a state audit does not constitute an administrative report, audit, or investigation under the Act. In reversing the decision below, Justice John Paul Stevens wrote:

Since its enactment during the Civil War, the False Claims Act has authorized both the Attorney General and private qui tam relators to recover from persons who make false or fraudulent claims for payment to the United States. The Act now contains a provision barring qui tam actions based upon the public disclosure of allegations or transactions in certain specified sources. The question before us is whether the reference to "administrative" reports, audits, and investigations in that provision encompasses disclosures made in state and local sources as well as federal sources. We hold that it does.

Justice Antonin Scalia filed an opinion concurring in part and concurring in the judgment. Justice Sonia Sotomayor filed a dissenting opinion, joined by Justice Stephen Breyer.

The ruling could potentially bar thousands of lawsuits by whistle-blowers. However, Congress recently changed the language of the statute [SCOTUSblog report] as part of the health care reform bill [text] signed into law [JURIST report] last week. It is unclear whether the new wording will affect the case on remand.

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