Wednesday, November 01, 2006

A Relator Who Read the Newspaper?

For the first time, the Supreme Court granted review on the "original source" requirement of the federal False Claims Act (FCA) qui tam provision. The FCA authorizes a private whistleblower, or "relator," to bring an enforcement action and collect a percentage of any civil monetary penalties awarded to the government. The government has the option of intervening in the relator's suit and taking control of the action. But if the government opts not to pursue the case, the private relator can proceed on his or her own, recovering a percentage of any civil monetary penalties imposed and attorney fees and costs, if he succeeds.

S. Ct. thumbnailOn September 26, 2006, the Supreme Court agreed to hear a Tenth Circuit decision, Rockwell International Corp. v. United States ex rel. Stone, on the original source requirement. As one limit on qui tam actions, the FCA requires the relator to have independent knowledge of the information on which the allegations are based. The information cannot come from public sources, such as news media, public records, audits, investigations, or public hearings. In Rockwell, the relator's allegations regarding his former employer's non-compliance with environmental laws were based on studies he performed while employed but conduct that occurred after he left the position.

The FCA and qui tam provisions are key weapons in the government's campaign against health care fraud and abuse. More than 80 percent of FCA qui tam actions are health care-related, according to the BNA. In 2005, the government collected approximately $1.47 million in health care fraud and abuse judgments and settlements. Rockwell provides an opportunity for the Court to clarify an important limit on who can act as a qui tam relator in citizen-policing government procurement fraud.

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