The new, landmark health care reform law made its first appearance in a Supreme Court decision Tuesday involving whistleblower claims under the federal False Claims Act.
In Graham County Soil and Water Conservation District v. U.S. ex rel. Wilson, Justice John Paul Stevens, writing for a 7-2 majority, held that whistleblowers whose allegations are based on publicly disclosed information in state or local reports and investigations are barred from filing so-called qui tam lawsuits.
The Court’s decision—which also drew the first dissenting opinion by Justice Sonia Sotomayor-- said the act’s public disclosure bar was not limited to federal sources of information.
But as Justice Stevens noted, both in his opinion and his summary on the bench, the Patient Protection and Affordable Care Act, signed by President Obama on March 23, limits the public disclosure bar to federal sources of information. The new act, however, is not retroactive, so the Court’s decision will apply to claims filed before its effective date.
The False Claims Act authorizes both the attorney general and private qui tam “relators” to recover from anyone who makes false or fraudulent claims for payment to the United States. Karen Wilson, a Graham County employee, had alleged that the conservation district and a number of local and federal officials had violated the act by knowingly submitting false claims for payments for flood repair work authorized in 1995 contracts with the federal government. Wilson’s suit was based, in part, on a state audit report.
The Supreme Court case focused on the meaning of the word “administrative” in the act’s provision which bars qui tam actions based on public disclosure of allegations or transactions in “a congressional, administrative, or Government Accounting Office [GAO] report, hearing, audit, or investigation.” After examining the text, history and public policy behind the act, the majority concluded that the word encompassed disclosures made in state and local sources.
Justice Sotomayor, joined by Justice Stephen G. Breyer, dissented, saying the act’s plain text and Congress’ intent to expand qui tam actions suggested a more reasonable reading of the provision was to limit the public disclosure bar to federal sources of information.
John Boese, partner in the Washington office of Fried, Frank, Harris, Shriver & Jacobson, who filed a brief supporting the county on behalf of the Washington Legal Foundation, said the majority had the correct interpretation. “To say that a qui tam relator can take what’s in a public state agency report, file a claim and get 30 percent of what the government recovers doesn’t make sense from a public policy perspective,” he said. The new health care reform act takes effect May 23, he added, so claims submitted prior to that date will be affected by the Court’s decision.