Blowing the Whistle Louder

Amid the continuing national debate over deficit reduction, a case before the U.S. Supreme Court has multibillion-dollar ramifications in fraud recoveries for the federal government. At issue in Hughes Aircraft Co. v. United States ex rel. Schumer, No. 95-1340, is the reach of the U.S. False Claims Act, 31 U.S.C. § 3729, et seq., which permits private parties to bring whistleblower lawsuits - also called qui tam actions - against companies that allegedly are defrauding the government. But they can only bring such actions if the information they present about alleged fraud has not already been publicly disclosed. The lower federal courts are unclear, however, on just what public disclosure means for purposes of this limitation, and the U.S. Supreme Court could resolve the confusion in Hughes. The case was argued Feb. 25. The stakes in the outcome are high. Government estimates put the cost of fraud in defense contracting, construction, health care reimbursements, and other government procurement and contracting at well over $10 billion annually