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A Blow to Private Whistleblowers

By Steffen N. Johnson, William P. Ferranti and Andrew C. Nichols
April 30, 2007

In a substantial win for businesses, the U.S. Supreme Court recently issued a decision imposing strict requirements for lawsuits by private whistleblowers. Under the federal False Claims Act, once allegations of fraud are publicly disclosed, a relator (as citizen-plaintiffs are called) may bring suit on the government's behalf only if the relator is an 'original source.' In Rockwell International Corp. v. United States, 549 U.S. __, 2007 WL 895257, the Court rejected the notion that a relator need only have knowledge of background facts about alleged fraud, even if those facts preceded the fraud. Instead, the Court held that a relator must have direct and independent knowledge of the specific misconduct for which liability is actually imposed.

The Ruling Was Significant

The strong, divergent public reactions to the Court's decision in Rockwell confirm that it is a landmark ruling. The U.S. Chamber of Commerce, for example, immediately lauded the ruling as 'an important victory for every government contractor in the country because it prevents plaintiffs who are not true whistleblowers from digging into a company's coffers.' By contrast, the National Whistleblower Center, Washington, DC-based organization dedicated to helping whistleblowers, called it 'a disaster for the American public' that 'cut the legs off of America's most effective anti-fraud law.'

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