The first person or group who drills and hits the truth in the Gulf of Mexico can win a huge payoff IF they use the False Claims Act.
We want everyone who can to use this law and drill for the truth in the Gulf, not only to find out about the current disaster, but also to prevent future catastrophes.
The False Claims Act can be used to hold companies liable for the oil disaster in the Gulf. Most likely, liability for fraud against the government was established long before a drop of oil escaped a pipe. The minute anybody made a misrepresentation to the Department of the Interior and its Mineral Management Service to procure a lease to drill for oil they became liable for resulting damages. See, Section 3729(a)(1)(B) of the Act on creating a false record or statement material to a false claim.
The oil, you see, belongs to you and me. To get the oil, BP needed a lease from the government. If they made a misrepresentation about the safety of their procedures to get that lease, they are liable under the Act. If it was BP and a bunch of friends, for example the owner of the rig or subcontractors, they could be jointly and severally liable for conspiracy under Section 3729(c).
Yes, conspiracy. Young lawyers and prosecutors hear the word and dream of their own episode of Law and Order. They see tough cops questioning BP executives over stale coffee and donuts and then questioning a subcontractor in the next room.
Who will crack first? There are, after all, plenty of companies who may be liable for the current disaster. These companies should think about who could talk first and point the finger at the other guy. Maybe if they work with the government now they won’t have to pay as much later.
Surely the General counsel for such a company has seen how this can work.
Under the Act, the $75 million cap on damages extended to oil rigs by statute could be blown to bits like a cement pipe under 5000 feet of water. The cap can’t hold fraud. So the companies may want to think about being the first to confess and letting the next guy pay more.
Moreover, any lease to drill for oil issued by the government could become the subject of a lawsuit. We know this is not the only lease out there. The False Claims Act allows for awards of three times the damages to the U.S. government. If companies lied to get a lease they may be liable even if there has been no leak of oil yet. After all, the company would have lied to get a lease (a government benefit) to drill for our oil by misrepresentation. Would they have to give back the lease? Would they have to return money earned from the lease obtained through fraud? They might. And they could be subject to a civil fine for each misrepresentation as well. See Section 3729(a)(1). That is liability even before the pipes break. Once a pipe breaks, of course, the damages grow. The investigations involved in such cases would bring real power to enforce safety regulations on other oil rigs.
We suppose BP or another guilty party could argue about which damages resulted from the misrepresentation, or they could make a technical argument about whether a lease is a claim against the government. We could respond with case law, but for today let’s just say we would not want to try that with a jury in Federal Court in Louisiana, Florida, or Mississippi.
BP is the group with the most to lose now, but they could also be the first to drill for the truth to avoid some losses. Under the FCA, if BP or any other involved party discloses any and all misrepresentations made to get oil leases first, they can significantly limit damages.
Alas, for BP it may be too late. The law says BP or any potential defendant had to disclose within 30 days after the date it first obtained the information, and there is not a case filed under the False Claims Act and there is no FCA investigation launched which BP knows about. See Sections 3729(a)(2)A-C.
We have no experience advising potential defendants in these matters. So they probably won’t listen to us. We doubt they will be sufficiently enthused by the idea that their damages could be limited to double polluting the entire Gulf of Mexico rather than triple if they do the right thing and tell the Government what really happened in the Gulf. Only lawyers could even ask what is the value in monetary terms of one Gulf of Mexico? However, that is what is at stake here.
So we still need someone who can drill for the truth.
How about the U.S. Department of Justice?
Attorney General Eric Holder does not have to wait for orders. He can issue them. Under the False Claims Act the Department of Justice could move today to investigate the BP lease. The Attorney General has the power to sue with or with out anyone else under the Act Section 3730(a). Maybe Mr. Holder can’t close Gitmo by himself, but if he wants to fight environmental disasters now and for all time this he can do.
The minute the Attorney General sues under the Act the Department does not have to share any of the money with those pesky relators who want a share of the reward. So the Attorney General has an incentive to act now.
See Section 3730(e)(3):
In no event may a person bring an action under subsection (b) which is based upon allegations or transactions which are the subject of a civil suit or an administrative civil money penalty proceeding in which the Government is already a party.
What the United States does with the money is hard to control, but Mr. Holder could make some suggestions to Congress about increasing his budget to fight fraud. He would be in a pretty strong position if he acts quickly to secure the American public’s interest in retaining money from the industry.
We do not know if the Attorney General will move quickly. He’s busy to be sure and there are other government investigations being run by Congress, for example. So the Justice Department may want to leave it to others. Those other investigations may get some information or they may not. They may do something about legislation or not, but can they sue for three times the Gulf of Mexico? We hope the Attorney General will drill for the truth now.
If he does not we have to make a painful mixture of metaphors and ask for help from the one group of people that always drills for the truth.
Whistleblowers. We are blowing our whistle as loudly as we can for you. Brave individuals can act and become plaintiffs under the False Claims Act.
In this case a plaintiff will need to be a real insider, someone who knows what really happened. They have to know something we do not know. Workers who know about the safety procedures required, but not followed. Workers who know about misrepresentations made to the government.
To file a case with this much known in public the so called qui tam plaintiff really has to know something specific not yet known. They will most likely have to be an “Original Source” of the information. See Section 3730(e)(4)(B).
We know that there are people out there who have this inside information. The False Claims Act gives them real power to be qui tam plaintiffs who can file cases and possibly obtain a share of the money recovered if they act fast.
The first to file establishes a claim over the allegations in a complaint. The second may be too late. If the Attorney General Acts to sue before a whitleblower, the individual would get nothing. The race has already begun.
We hope the Attorney General Acts, but we are betting on whistleblowers. We hope they file a case under the qui tam provisions of the False Claims Act. See Section 3730(b)
We know they are out there and we have only one message for them.
Drill, baby drill, for the truth.
