High Court Limits Whistleblowers
11 Jun 2008, GM
On June 9, 2008, the U.S. Supreme Court voted unanimously in favor of restricting the whistleblower provisions of the U.S. False Claims Act. Now, the Court ruled, a whistleblower needs to prove that there was more than just a false statement involved in any sort of government fund or contract. Instead, an employee must prove that the company “intended that the false statement is ‘material’.”
The ruling stems from a case involving Navy contractors building destroyers. The Navy contracted with two different shipyards, which required generators. The shipyards subcontracted with Allison Engine Company to build the generators with bases and enclosures. Allison subcontracted with General Tool Co. (GTC) to assemble the generators, and GTC in turn outsourced the work of building the generators' bases and enclosures to yet another firm, SOFCO. All of the subcontracts reportedly included clauses that required products to have a “certificate of performance,” guaranteeing they met Navy standards. Under the qui tam provisions of the False Claims Act, two GTC employees blew the whistle on Allison and the subcontractor that built the bases and enclosures, for allegedly issuing certificates of performance under false pretenses.
A federal appeals court sided with the two employees, but the Supreme Court overturned that decision sending it back to the lower courts.
The official syllabus follows and the full opinion is available at http://www.law.cornell.edu/supct/html/07-214.ZO.html
The ruling stems from a case involving Navy contractors building destroyers. The Navy contracted with two different shipyards, which required generators. The shipyards subcontracted with Allison Engine Company to build the generators with bases and enclosures. Allison subcontracted with General Tool Co. (GTC) to assemble the generators, and GTC in turn outsourced the work of building the generators' bases and enclosures to yet another firm, SOFCO. All of the subcontracts reportedly included clauses that required products to have a “certificate of performance,” guaranteeing they met Navy standards. Under the qui tam provisions of the False Claims Act, two GTC employees blew the whistle on Allison and the subcontractor that built the bases and enclosures, for allegedly issuing certificates of performance under false pretenses.
A federal appeals court sided with the two employees, but the Supreme Court overturned that decision sending it back to the lower courts.
The official syllabus follows and the full opinion is available at http://www.law.cornell.edu/supct/html/07-214.ZO.html