Washington, D.C. December 6, 2016. An attempt by large government contractors and the U.S. Chamber of Commerce to undermine the False Claims Act (FCA) was beaten back by whistleblower advocates. The U.S. Supreme Court issued a unanimous decision today in the case of State Farm Fire and Casualty Company v. U.S. ex rel. Rigsby ruling that breaches to the confidentiality (or seal) provision of a case brought under the FCA will not result in an automatic dismissal of the case.
The Chamber and its allies tried to create a mechanism where government contractors found guilty of fraud could escape punishment. They argued that the court was required to impose the harshest sanction available, dismissal of a case, if a party violates the seal provision of the FCA. They argued that regardless of the intent of the party committing the infraction, harm caused to other parties, interest of the Government the case would have to be dismissed and the ability for the taxpayers to collect from the fraudsters would be extinguished.
Whistleblower advocates argued against such an inflexible rule that would cause a chilling effect on otherwise protected speech. The National Whistleblower Center filed an amicus brief in Rigsby, arguing that the FCA’s seal provision was designed for the exclusive benefit of the Government, and mandatory dismissal for seal violations would undermine the FCA and hurt taxpayers—the intended beneficiaries of the False Claims Act.
“The Supreme Court has sent a clear message with this 8-0 decision. If the Court had ruled against the whistleblowers, it would have created a chilling effect discouraging employees to lawfully report fraud to various government agencies and the press,” said Stephen M. Kohn, of the Washington, D.C. based whistleblower advocacy law firm who wrote the Amicus Curiae brief on behalf of the National Whistleblower Center. Kohn continued, “Today the Chamber of Commerce’s attack on America’s most important fraud law was defeated. We fear that they are gearing up for more attacks and urge all Americans to contact their respective members of Congress and ask them to protect the False Claims Act.”