Supreme Court Limits Whistleblower Recovery Under False Claims Act, But Health Care Reform Law Changes That

Since its enactment during the Civil War, the False Claims Act has authorized both the federal government, through the Attorney General, and private whistleblowers (formally known as “qui tam relators”) to recover from those who make false or fraudulent claims for payment to the United States. A provision bars FCA actions based on the public disclosure of allegations or transactions in certain specified sources. Yesterday, the U.S. Supreme Court issued a decision that answered the question of whether the reference to administrative reports, audits, and investigations in that provision encompassed disclosures made in state and local sources as well as in federal sources. The Court, in a decision by Justice Stevens, held that it did. 

The effect of the Court’s ruling is likely to be somewhat limited, however, as the new health care reform law recently passed by Congress and signed by President Obama revises the FCA provision interpreted by the Court, and changes the result – at least for new cases.
 
One can expect, therefore, that more FCA cases – probably many more – will be filed as a result of the change in the statute.
 
The Supreme Court case is Graham County Soil and Water Conservation District v. U.S. ex rel. Wilson.