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.”

Continue Reading Groups spurn NWC and file petition against FCA

Today the Fourth Circuit U.S. Court of Appeals in Richmond, Virginia, issued a long-awaited decision upholding the seal provision of the False Claims Act (FCA), 31 U.S.C. § 3730(b)(2). The decision is a victory for whistleblowers who depend on the seal provisions to protect themselves from retaliation and to preserve evidence that might be destroyed if fraudsters learn of the impending government action against them. The decision lets stand a 2009 decision to dismiss a suit brought by the American Civil Liberties Union (ACLU), OMB Watch and the Government Accountability Project (GAP). Now is the time to urge these three organizations to accept this decision and stop this misguided litigation.

The FCA is the most powerful whistleblower protection law and America’s most successful tool against fraud. It allows whistleblowers to bring claims on behalf of the government to recover damages for fraud committed by government contractors and grant recipients. Last year alone, the U.S. government recovered over $3.1 billion as a result of FCA claims filed by whistleblowers under this law. Dep’t of Justice, False Claims Act Statistics (Nov. 23, 2010). Since 1986, the government has recovered more than $27 billion. Whistleblowers have filed 63% of FCA cases since 1987. While whistleblowers filed only 8% of FCA matters in 1987, they filed 80% of FCA matters in 2010.

The “seal” is a key provision of the FCA’s success. Whistleblowers must initially file their FCA claims “under seal,” as the law has required since 1986. This provision permits employees to confidentially file their claims, without having to expose their identities to their employer or other companies that may be hostile to hiring workers who blow the whistle while the government investigates their claim during the seal period. The FCA provides that the seal will prevent public disclosure of the suit for 60 days while the federal government decides whether to intervene in the case.  The government can request an extension of the time for this seal, or move to stay the case under 31 U.S.C. § 3730(c)(4). The courts determine if the extension or stay is in the public interest. These fraud schemes are often complex and usually require more than 60 days to investigate them. However, at the end of the seal period, the court must unseal the case and the case file becomes pubic when the seal expires.

Continue Reading 4th Circuit upholds the FCA’s seal, 2-1; Urge ACLU, OMB Watch and GAP to stop here

Last year alone, the U.S. government recovered over $3.1 billion as a result of FCA claims filed by whistleblowers under this law. At issue in the lawsuit is whether whistleblowers must initially file their FCA claims “under seal,” as the law has required since 1986.
Continue Reading Appeals Court to Rule Shortly on Constitutional Attack Challenging Key Whistleblower Provision of the False Claims Act

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In a victory for the right of whistleblowers to seal, temporarily, their claims of fraud against the government, U.S. District Court Judge Liam O’Grady late yesterday dismissed a case brought by the American Civil Liberties Union (ACLU), OMB Watch and the Government Accountability Project (GAP). The case, filed in Alexandria, Virginia, asked the court to declare that the “seal” required by the False Claims Act is unconstitutional. The case is known as ACLU v. Holder.  If successful, this suit would have required whistleblowers to disclose their identities and their claims to the whole world while the government investigates the claim to determine if criminal, civil or no charges should be pursued.  Such disclosure would tip off the crooks to the government’s investigation against them and could subject whistleblowers to retaliation.

This case divided whistleblower advocacy groups. Taxpayers Against Fraud (TAF) and the National Whistleblowers Center (NWC) opposed the suit. Despite concerted efforts to educate the ACLU, OMB Watch and GAP to the whistleblowers’ need for confidentiality, the groups decided to proceed with their suit.  They claim the public’s right to know about lawsuits as soon as they are filed should trump the government’s need to investigate, and the whistleblowers’ need for confidentiality. Lawyers Marc Vezina, Cleveland Lawrence, and Zach Kitts filed an amicus brief for TAF’s Education Fund. Judge O’Grady cited this amicus brief in his decision.

Continue Reading ACLU loses challenge to FCA seals