We have been approached on several occasions by employees of the federal government and asked if they can obtain compensation as whistleblowers under the False Claims Act. Several courts have ruled that they can, but it can depend upon the underlying circumstances. The key provision of the False Claims Act addressing this issue states:
A person may bring a civil action for a violation [under the False Claims Act] for the person and for the United States Government. The action shall be brought in the name of the Government. 31 U.S.C. Sect. 3730(b)(1)
Who is a “Person” under the False Claims Act
Note that the statute states that any “person” may bring the action. There are other provisions within the False Claims Act that limit specific government employees from filing qui tam actions under certain circumstances. Specifically, Section 3730(e) provides that the courts will not entertain an action brought by a former or present member of the armed forces of the United States against another member of the armed forces arising out of such person’s service. In addition, this section further provides that the courts will not hear an action against a member of Congress, a member of the judiciary, or a senior executive branch official if the action is based on evidence or information known to the Government when the action was brought.
Some courts have noted that these fairly narrow limitations support the proposition that government employees falling outside of these defined excluded categories are permitted to be whistleblowers; otherwise, the exclusions would have been drafted more broadly.
The United States Court of Appeals for the Fifth Circuit considered these arguments in the case of Little v. Shell Exploration and Development Co., No. 11-20320 where the two relators were auditors with the Minerals Management Services, which is a department under the Department of Interior. The relators asserted that Shell had deprived the United States of royalties by taking unauthorized deductions. It was not disputed that the relators learned of the conduct in the course of their job duties. The relators reported the conduct to their supervisor, but it appears that no federal agency acted upon the information. Subsequent to reporting the fraud to their supervisor, the relators filed the qui tam action.
The Fifth Circuit determined that they were “persons” permitted to file the action. Shell and the government also argued, however, that the relators were ethically not permitted to collect a reward due to a conflict of interest and ethical rules. The court carefully considered the arguments, but declined to dismiss the case on this basis. There are additional considerations, however, that may bar recovery.
Public Disclosure Bar
Section 3730(e)(4) provides that a court is required to dismiss a claim (unless opposed by the government) if the same allegations in the complaint were publicly disclosed:
(i) in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party;
(ii) in a congressional, Government Accountability Office, or other Federal report, hearing, audit, or investigation; or
(iii) from the news media,
unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.
In cases dealing with of government employees as whistleblowers, consideration particularly needs to be given to section (ii) above. If there have been publicly disclosed federal reports, audits or investigations that detail the same information contained in the whistleblower complaint, there may be a bar to recovery unless the relator is the original source of the material. This can sometimes be problematic in the context of a government employee. However, the government simply having this information in their internal files should not constitute a public disclosure. Hence, most courts have found that there is no public disclosure by a relator simply providing this information to a government representative. Instead, the information generally needs to be released to public.
If the public disclosure bar is at issue, then it becomes important to determine if a relator was the original source of the information. Under Section 3730(e)(4), the “original source” means an individual who either:
(1) prior to a public disclosure under subsection (e)(4)(a), has voluntarily disclosed to the Government the information on which allegations or transactions in a claim are based, or (emphasis added)
(2) who has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and who has voluntarily provided the information to the Government before filing an action under this section. (emphasis added)
It is significant that both standards require a voluntary disclosure. This can be a difficult burden to meet for a government employee who is specifically employed to uncover and disclose fraud. Some courts have acknowledged merit to the argument that a disclosure is not voluntary if the employee’s job description requires them to disclose fraud. Consequently, a government “investigator” may have difficulty with this standard if the information was learned in the course of their employment. But see e.g. U.S. v. ex. rel. Griffith v. Conn., 117 F.Supp.3d 961, (E.D. Ky. 2015) wherein the court found that reports were voluntarily made as the relator had left her employment and was no longer bound by her job requirements to report the fraud.
There are many complexities in determining the circumstances when a government employee may file a whistleblower action under the False Claims Act. A detailed and fact specific analysis will almost always be required and competent legal counsel should be consulted. To schedule a free consultation with our whistleblower lawyers, please contact the AntiFraud Law Group today. We accept cases from whistleblowers living in all parts of the country.