The National Whistleblower Center recently filed an Amicus (friend of the court) brief in the case Universal Health Services v. U.S. ex rel. Escobar. The legal issue behind the case concerns the False Claims Act, America’s premier whistleblower law and its best defense against government contracting fraud. The question at hand asks whether a contractor can only be held liable for defrauding the government and the taxpayers if they violate the express terms of their contract, or if reasonable interpretations of the requirements can serve as the basis for enforcing against fraud as well.
The National Whistleblower Center went to search in the historical record in the National Archives to find the real intent behind the law. The False Claims Act was passed in 1863, in response to rampant contracting fraud in the Civil War. One particular instance among the many discussed in the NWC’s brief is quoted below,
“Of 411 horses sold to the government that arrived in St. Louis, a mere seventy-six (76) were found fit for service; five were dead upon arrival; and 330 were deemed “undersized, under and over aged, stifled, ringboned, blind, spavined or incurably unfit for any public service.”
Strictly speaking, the U.S. government hadn’t said they wanted horses that were alive, or capable of helping the army, but any common sense interpretation of their contract would have required that the horses were supposed to be delivered in good condition. The petitioners in the Escobar case, and their big corporate allies, argue that these common-sense interpretations of contracts should not be taken into account. If the Supreme Court takes their side they’d be letting major corporations off the hook for ripping off the government and endangering the taxpayers’ money.
Copies of the Select Committee on Government Contracts folder of contracts are available here: File 1, File 2, File 3 (National Archives File HR 37A-E21.1, 37th Cong. Select Committee on Government Contracts, File Folder 6, Contracts.)
Copies of the Select Committee on Government Contracts folder of vouchers are available here: File 1, File 2 (National Archives File HR 37A-E21.1, 37th Cong. Select Committee on Government Contracts, File Folder 7, Vouchers.)