Boeing appeal on fraud claim to be heard by high court

By Greg Stohr

Bloomberg News

The U.S. Supreme Court will use a case involving Boeing to clarify the rules governing lawsuits by whistle-blowers who say they have evidence of fraud against the federal government.

Separately, heeding calls from Safeco and another insurer, the high court agreed to decide whether a lower court went too far in broadening consumer rights under a federal credit-reporting law.

In the Boeing case, the company’s Rockwell unit wants to overturn a $4.2 million award won by James Stone, a retired engineer who accused Rockwell of making false statements about environmental, health and safety activities at its Rocky Flats nuclear-weapons facility outside Denver.

Boeing contends the Denver-based 10th U.S. Circuit Court of Appeals made it too easy to win suits under the U.S. False Claims Act, which lets whistle-blowers sue on behalf of the federal government and then share in any recovery.

The dispute centers on the requirement that whistle-blowers be the “original source” of information about wrongdoing. Boeing said in its appeal that Stone possessed only “background” information.

Also, in a case closely watched by insurers and others, the high court agreed to hear appeals from Seattle-based Safeco and Berkshire Hathaway’s Geico unit. The companies are fighting class-action suits by consumers who sought quotes, weren’t offered the lowest rates and now say they weren’t told the insurer was relying on their low credit scores.

The companies say the 9th U.S. Circuit Court of Appeals made it too easy for consumers to win damages in suits against insurers, mortgage lenders and other financial-services companies. The San Francisco-based appeals court also imposed new disclosure requirements on companies under the Fair Credit Reporting Act.

The consumers accuse the companies of violating a provision in the law that requires notification of people who are treated adversely on the basis of credit history. Companies contend that provision doesn’t apply simply because a consumer requests a quote or applies for insurance and doesn’t receive the lowest rate.

Copyright © 2006 The Seattle Times Company