Supreme Court to Rule on Whistle-blowing
By Mark Sherman, Associated Press Writer
Yahoo! News - January 6, 2007

A court ordered Rockwell International, now part of aerospace giant Boeing Co., to pay the government nearly $4.2 million for fraud connected with environmental cleanup at the Rocky Flats plant northwest of Denver. Stone, a former employee at the facility, could be entitled to as much as one-quarter of the payment under the federal False Claims Act.

The 81-year-old retired engineer filed his whistle-blower lawsuit in 1989, the year Rocky Flats shut its operations after nearly 40 years of production. He has survived legal challenges by Rockwell to dismiss the claim or deprive him of his share. The government joined the suit as Stone's partner 10 years ago.

The Supreme Court now has the case. The ruling could affect an anticipated crush of fraud suits if the high court makes it harder for whistle-blowers to share in the proceeds.

If Rockwell wins, "it's going to be much more difficult for whistle-blowers and there are going to be fewer cases," said James Moorman, president of the Taxpayers Against Fraud Education Fund, an advocacy group.

Rockwell must pay the entire penalty no matter how the Supreme Court rules, although it would not have to pay Stone's attorney fees. The only question before the court is whether Stone will get his cut.

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

The Bush administration is on Stone's side even though the government collects more money if Rockwell wins.

"It might be natural for the court to wonder why would it be in the government's interest to advocate that a share of the money damages in this case should be given to a private party," Justice Department lawyer Malcolm Stewart told the justices during the oral argument in early December. "In our view, Stone is precisely the type of relator that Congress intended to encourage." A relator is an individual who sues under the False Claims Act.

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.

During World War II, Congress amended the Civil War-era law to make whistle-blower suits more difficult. Since Congress changed the law again in 1986, such suits have returned $11 billion to the government. Recent high-profile cases include settlements with leading pharmaceutical manufacturers.

Sen. Charles Grassley (news, bio, voting record), who led the fight to reinvigorate the False Claims Act in 1986, urged the court to rule in Stone's favor.

Grassley, R-Iowa, said provisions in the law that authorize whistle-blower suits are "essential to the government today to confront fraud in government programs from reconstruction in Iraq to aid for victims of Hurricane Katrina."

The issues before the justices are:

_How much independent knowledge of wrongdoing must someone have to file a False Claims Act suit?

_Does that information have to be part of the case that eventually convinces a jury that a government contractor committed fraud?

Once alleged improprieties are disclosed publicly, often by the media, 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. That is what Stone claims; several courts have agreed.

Stone did not file suit until after problems at Rocky Flats became public. He did, however, approach federal investigators with information about environmental issues before news accounts were published.

At trial, the jury found Rockwell submitted false claims in 1987 and 1988 saying it was meeting goals of treating low-level radioactive wastes at the former atomic weapons plant. Rockwell laid off Stone in 1986.

Maureen Mahoney, representing the company, told the justices it is implausible for Stone to claim he had independent knowledge of any fraud. "His claim by his own admission starts in 1987, after he was gone," Mahoney said.

Yet both the trial and appeals courts, as well as the government, say Stone has shown he provided information on which the allegations of fraud were based.

A ruling by the Supreme Court is expected before July.

Rocky Flats is designated by the Environmental Protection Agency as a Superfund cleanup site. It is an Energy Department-owned cleanup and closure site.

In nearly four decades, some 70,000 plutonium triggers for nuclear bombs were made at Rocky Flats. Production was halted in 1989 because of chronic safety problems, prompting a raid by FBI agents. The Cold War ended before production could resume. In 1993, the Energy Department announced that the facility's mission was over.

State and federal regulators signed an agreement in 1996 on the cleanup, including demolition of what was termed "the most dangerous building in America" because of leaks, spills and a fire that drove radiation levels off the charts.

The case is Rockwell International v. U.S., ex rel Stone, 05-1272.