Supreme Court Restricts Right To Appeal Under The False Claims Act

Washington, D.C. June 8, 2009. Today the U.S. Supreme Court issued a decision which “chipped away” at the rights of whistleblowers to use the most important anti-fraud law in the United States, the False Claims Act.   The False Claims Act permits whistleblowers to file claims on behalf of the United States, and force corrupt government contractors to pay back to the government monies improperly obtained from taxpayers.  

The ruling was written by Justice Clarence Thomas in the case of U.S. ex rel. Eisenstein v. City of New York.  The Court applied a 30 day limitations for an appeal of a False Claims Act ruling when the Government declined to intervene in the case.   Generally a 60 day limitations period applies to cases in which the United States is a party, but Justice Thomas decided that if the Government does not formally intervene in the case it should be treated essentially like any other private party claim.  

The Eisenstein appeal was filed within 54 days of the lower court ruling and the harsh result of Justice Thomas’ holding is to dismiss the anti-fraud claim as being untimely.  
 The following statement was issued by Stephen Kohn, the President of the
 National Whistleblowers Center:
 “The Supreme Court in Eisenstein has once again chipped away at the ability of whistleblowers to challenge corrupt contracting practices under the False Claims Act.  The ruling demonstrates a fundamental misconception of the purposes behind the False Claims Act, the most important anti-fraud law in the United States.  The Court ruled that FCA cases pursued by whistleblowers are similar to private lawsuits.  This is wrong.  Whistleblowers under the FCA have a powerful right to file cases on behalf of the United States, and the vast majority of any recovery in these cases is paid to the U.S. Treasury — not the whistleblower.  Taxpayers are the main beneficiaries of these cases — the rules concerning filing deadlines should reflect the intent of the law, and should also reflect the fact that the United States, recovers no less then 70% of all monies obtained in an FCA case.  In today’s environment, the Supreme Court should be strengthening anti-fraud laws, not continuously chipping away at the ability of whistleblowers to present their cases.”