SCOTUS decision on whistleblowers terrible for taxpayers, employees

The United States Supreme Court’s  recent decision in Schindler Eleavator Corp. v. United States ex rel Kirk is a terrible decision for taxpayers and employees.

A majority of Justices comprising Justices Samual Alito, Justice Anthony Kennedy, Chief Justice John Roberts, Justice Antonin Scalia and Justice Clarence Thomas ruled that employees could not solely rely on information obtained in Freedom of Information Act  (FOIA) requests as a basis for whistleblower claims under the False Claims Act.

The whistleblower provision of the False Claims Act (FCA) allows private citizens with evidence of fraud against federal programs or contracts to sue on behalf of the government and collect a percentage of what the government recovers.  The policy behind the act is that the government doesn’t have the resources to completely root out fraud,  so it should rely on private citizens to prevent misuse of tax dollars. The majority in Schindler ruled that results of  Freedom of Information Act requests were similar to public reports such as congressional investigations and hence employees and private citizens were barred from solely relying on such information in a lawsuit.

The three judge minority comprising Justices Stephen Breyer,  Justice Ruth Bader Ginsburg and Justice Sonia Sotomayor rightly pointed out in their dissent that not allowing plaintiffs  to rely on FOIA requests left plaintiffs without a way to corroborate their allegations and made suits more vulnerable to motions to dismiss based on the pleadings.  Whistleblowers are also subject to retaliation and ostracism by their employers for making complaints. Before an employee subjects them self from such negative consequences, the employee should have an idea of whether a whistleblower lawsuit stands a reasonable chance of success before they file.  FOIA requests are an effective way for employees to substantiate allegations of wrongdoing by their employers.

Fraud and abuse against government contracts is a major problem. Lincoln, NE-based student loan company Nelnet recently settled an whistleblower suit for$47 million. Medicare fraud contributes to the spiraling cost of health care.  An investigation by Senator Bernie Sanders (I-VT) revealed that $285 billion dollars in Pentagon contracts over a three year period were awarded to contractors who were convicted or who had settled fraud charges. Money that enriches fraudulent defense  contractors is money that is taken away from our troops in Iraq and Afghanistan.

Often times advocates from employee-rights issues are social and/or economic liberals. However preventing fraudulent use of taxpayers dollars should concern conservatives concerned about the use of taxpayers dollars and national defense. Hopefully such bi-partisan concern about fraud and abuse against government programs will lead Congress to pass legislation remedying the effects of the Schindler decision.


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