Rebuffing an open letter from the National Whistleblowers Center (NWC) asking for a face-to-face meeting, and brushing aside the potential consequences for the best whistleblower law ever enacted, three organizations filed a petition yesterday challenging the False Claims Act (FCA). The American Civil Liberties Union (ACLU), OMB Watch and the Government Accountability Project (GAP) filed the petition in the U.S. Court of Appeals for the Fourth Circuit in Richmond, Virginia. The case is ACLU v. Holder, Case No. 09-2086.

On March 28, 2011, the three-judge panel of the Fourth Circuit rejected the ACLU, OMB Watch and GAP challenge to the “seal” provision of the FCA. The FCA provides a reward program for whistleblowers who help the government recover money that companies obtain by fraud. The FCA provides for a temporary “seal” that shields the case from public disclosure while the government investigates the case to decide if it will intervene. The seal serves the government by preventing the fraudsters from getting wind of the government investigation. If companies knew the government was trying to prove they engaged in fraud, they might start destroying evidence that the government could later use to prove that fraud. The seal also protects the whistleblower from retaliation while the seal is in force. All FCA seals are temporary and will eventually be lifted so the public can see the claims made and the government’s decision on whether to intervene. If a seal last for longer than sixty (60) days, it must be approved by the Court which considers whether it is in the public interest.

After the March 28 panel decision, the NWC issued an open letter to the ACLU, OMB Watch and GAP. The open letter asked for a face-to-face meeting with the the decision makers from these groups to discuss whether proceeding with this case was really in the public interest. The NWC letter warned that the challenge to the FCA threatened the right of whistleblowers to file claims confidentially and could  undermine America’s “most effective whistleblower law.”

The letter further states:

The FCA seal can act as a bulwark of a whistleblower’s First Amendment protection to speak up about misconduct of his or her employer while minimizing the chilling effect of retaliation.  Without the added protection of the seal, individuals who might otherwise come forward with information will remain silent.  If you proceed with your claims in ACLU v. Holder, you could dry up an important safe harbor for many whistleblowers.

The NWC letter made this request:

The intent of our letter is to open a dialogue about issues dear to us all. To this end we ask that you share this letter with the Boards of the organizations you represent and express our willingness to meet in person in order to fully explore the wisdom in seeking further judicial review of the ACLU v. Holder case. Accordingly, we ask each of your three client organizations to have their decision makers (their board or legal committee) meet with us. Such meetings would further a deeper understanding of the public interests at stake and why we view the issue so differently. ***
Please ask the decision makers for each of your three clients whether they would be willing to meet with us. A face-to-face meeting with the decision makers will be the most effective way to exchange the views and information that can make a difference. Your client’s decision makers would benefit from the unfiltered background and perspective we can offer. We ask to meet before any client pursues further review of ACLU v. Holder. We await your prompt reply.

The three groups, ACLU, OMB Watch and GAP, failed to respond to this request. They made no response at all. They filed their petition for rehearing without any dialogue at all with NWC.

Yesterday’s petition for rehearing uses a red herring. The petition asserts that, “the majority nowhere explained how a government investigation would be impaired by a relator’s disclosure that he had filed an FCA complaint (which the statute prohibits), but would not be impaired by a relator’s disclosure of the underlying fraud allegations (which the statute permits).” In fact, whistleblowing “relators” rarely make public disclosures of the underlying fraud allegations while a case in under seal. One of the ingenious effects of the FCA is that it aligns the whistleblower’s interest with the government’s interest. The whistleblower wants the government investigation to succeed in finding evidence of fraud so that the whistleblower’s share of the recover will be bigger. Since the whistleblower wants the government to find all available evidence of the fraud, the whistleblower will have an incentive to stay quiet about the fraud allegations until the government has finished its investigation and collected the available evidence, before the fraudsters can be tipped opp to start destroying that evidence. Indeed, the ACLU had to file and pursue this case without the support of even a single whistleblower who might complain about the “gag” effect of the seal. No whistleblower complains about that temporary provision of the FCA.

The blog of LegalTimes quoted from the NWC’s open letter in a story about the ACLU petition.

The following documents about ACLU v. Holder are available here:

April 5, 2011 Letter from the NWC Re: ACLU v. Holder

ACLU  v. Holder, decision of U.S. Court of Appeals for the 4th Circuit