Monday, June 9, 2008

US Supreme Court rules this week that Whistle Blower lawsuit may continue

Court sets limits in government fraud suits

WASHINGTON (AP) — The Supreme Court ruled unanimously Monday that a whistleblower law intended to expose fraud can be applied to subcontractors and other indirect recipients of federal funds.

The case before the court involved alleged contract fraud by a former unit of General Motors Corp. At issue was whether the False Claims Act covers any fraudulent claim paid for by government funds, or only fraudulent claims directly submitted to a government official.

Justice Samuel Alito charted a middle path, saying the law can be used if fraudulent statements are ultimately intended to get the government to pay claims.

The whistleblower law does not apply in situations in which a subcontractor does not intend the government to rely on a fraudulent claim as a condition of payment.

A lower appeals court had ruled that the whistleblower suits could proceed, because the False Claims Act covers claims made to other parties, "so long as the claim will be paid with government funds."

The court sent the case back to the 6th U.S. Circuit Court of Appeals in Cincinnati to apply the standard it laid out Monday.

The case is Allison Engine v. United States, 07-214.

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