- The Washington Times - Tuesday, March 27, 2007

ASSOCIATED PRESS

The Supreme Court made it harder yesterday for whistleblowers to share in the proceeds from fraud lawsuits against government contractors.

The court ruled 6-2 that James Stone, an 81-year-old retired engineer, may not collect anything for his role in exposing fraud at the now-closed Rocky Flats nuclear weapons plant northwest of Denver.

Writing for the court, Justice Antonin Scalia said Mr. Stone was not an original source of the information that resulted in Rockwell International, now part of aerospace giant Boeing, being ordered to pay the government nearly $4.2 million for fraud connected with environmental cleanup at the Rocky Flats plant.

Rockwell must pay the entire penalty anyway. The only question before the court was whether Mr. Stone would get a cut.

The company, backed by defense, energy and pharmaceutical interests, wanted the justices to restrict when an individual can collect for suing on the government’s behalf.

The Bush administration sided with Mr. Stone, arguing that it was in the government’s interest to encourage whistleblowers, even though the government keeps more money now that Mr. Stone has lost.

The False Claims Act allows individuals, acting on the government’s behalf, to file fraud suits against companies that do business with the government. If they prevail, they receive a portion of what the contractor must pay the government. Lower federal courts ruled in Mr. Stone’s favor.

The case turned on whether Mr. Stone provided information that a jury eventually used to find fraudulent claims.

Once accusations are disclosed publicly, often by the press, individuals face a higher hurdle in bringing fraud suits on the government’s behalf. Otherwise, people could read a newspaper account or an indictment and then rush to the courthouse to file suit.

The major exception to this rule is if an individual is an original source of the information, which Mr. Stone said applied to him. The company said his assertion was implausible because Mr. Stone was laid off the year before Rockwell began submitting false claims saying it was meeting goals of treating low-level radioactive wastes at the former atomic weapons plant.

Justice Scalia agreed, saying, “Stone did not have direct and independent knowledge of the information upon which his allegations were based.”

Justice John Paul Stevens, in a dissent joined by Justice Ruth Bader Ginsburg, said whistleblowers should have to show only that their information led the government to the fraud, not that the assertions ultimately proved to a jury must also have come from them. Justice Stephen G. Breyer did not take part in the case.

The lower courts said Mr. Stone demonstrated that he provided information on which the accusations of fraud were based.

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