Today the U.S. Supreme Court handed another victory to the Graham County Soil and Water Conservation District, dealing a setback to whistleblower Karen Wilson’s lawsuit. In the 7-2 decision, the high court agreed with the fraudsters that their own internal "audit report" and another report by a state agency counted as "public disclosures" which barred Karen Wilson from filing a qui tam lawsuit. The holding goes against the decision of the Fourth Circuit, and the recommendation of the U.S. Solicitor General. The Solicitor General’s brief had argued that the purpose of the "public disclosure" is to bar qui tam lawsuits when the federal government already knows about the fraud at issue. State and local governments should not be able to protect themselves by writing their own report about their local fraud, put it in the file cabinet, and never tell the federal government about it. Noting that the False Claims Act (FCA) says "administrative" and not "federal administrative," the Supreme Court majority disagreed. It is another example of Congress promoting whistleblower lawsuits, only to have the Supreme Court limit the advances as much as they can. In this round of cat and mouse, though, Congress has the last word. This blog reported last week on the whistleblower provisions of the newly signed Patient Protection and Affordable Care Act. The Senate included in this law, on pages 2082 and 2083, a correction to the FCA. Now the FCA recognizes a public disclosure only if it is from a "Federal criminal, civil or administrative hearing in which the Government or its agent is a party . . .." Also, if the federal government objects to dismissal, then no public disclosure would bar the qui tam lawsuit.
Poor Karen Wilson. First the Supreme Court took away her retaliation claim by denying her the benefit of the FCA’s six-hear statute of limitations. Graham County Soil & Water Conservation Dist. v. United States ex rel. Wilson, 545 U. S. 409 (2005). By looking to the FCA too literally, and ignoring the law’s purpose and effect, the Supreme Court has today allowed fraud-committing local officials to insulate themselves with their own self-serving "audits." Karen Wilson has suffered too much, and our legal system has failed her and the cause of public accountability. On remand, the lower court will now have to decide if Karen Wilson qualifies as an "original source."
Now, I must blow the whistle on myself. Last year when the Supreme Court accepted this case, I predicted here that Graham County did not have the same grounds for optimism as it did in its first trip up. I was wrong. I failed to appreciate the Supreme Court’s enduring hostility to the FCA, even in the face of the official U.S. government request to appreciate the need for citizen lawsuits against fraud. Thankfully, whistleblower supporters in the U.S. Senate saw the handwriting on the wall and fixed this law even before the Supreme Court announced today’s decision.