Whistleblower Lawyer & Attorney : National Whistleblower Legal Defense and Education Fund : Whistlebower Protection, Fraud Claims : Washington DC

Back in May I blogged about the disgrace that has become the Office of Special Counsel. At that time the head of the OSC, Scott Bloch, had his home and office raided by FBI agents in an obstruction of justice probe.

Now, more trouble is brewing at OSC. On Saturday, Bloch's Deputy Special Counsel Jim Byrne resigned, and in his resignation letter skewered Bloch, saying:

"Upon my departure, I am obligated to note that the mission, independence, and very existence of the Office of Special Counsel are--and shall remain--at risk unless and until this agency is afforded a presidentially appointed, senate confirmed leader who is capable of putting OSC's mission and OSC's people ahead of political agendas and personal vendettas."

The Washington Times and POGO's blog carried reports on this issue last week.

NPR also has a related story, reporting that President Bush has so far refused fire Bloch, although he has been counseled to do so by senior advisers.

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Yesterday the House Judiciary Committee approved legislation to amend the False Claims Act, sending the measure along to be voted on by the full House of Representatives. Companion legislation (S.2041) was passed by the Senate Judiciary Committee in April.

The False Claims Act Corrections Act will help undo some of the damage that has been done to the FCA in recent years by poor judiciary decisions, such as Allison Engine v. US.

I will post the full text of the approved language as soon as it becomes available.

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Today, the National Whistleblower Center issued an urgent action alert, requesting that all whistleblower supporters email and/or call their Senators and Representatives, urging them to support whistleblower protections in the Consumer Product Safety Commission reform legislation.

The CPSC reform is now in conference committee, and the conferees are scheduled to vote on the bill tomorrow. The Senate version of the bill contains whistleblower protection for manufacturer employees, as well as government inspectors, while the House version contains no whistleblower protections whatsoever.

The National Association of Manufacturers, and other big business groups have made killing whistleblower protections their #1 priority for this bill. We need all the support we can get to make sure that corporate greed does not interfere with product safety reforms! Whistleblowers are the eyes and ears, but we must give them the freedom to speak.

I certainly urge everyone to take a look at the action alert and pass it along to anybody who is interested in protecting honest employees. Here is the link.

http://capwiz.com/whistleblowers/issues/alert/?alertid=11636096&type=CO

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If you do the math on a Washington Post story yesterday it turns out the paper reported on what amounts to 225 scandals.

The Justice Department told the Post there is a backlog of approximately 900 False Claims Act cases, and that the backlog could take years to unclog. Obviously the time involved can damage the ability to pursue even the most meritorious cases. Justice also told the Post that they reject about 75% of all filed FCA cases, and most of those have little merit. I would bet that quite a few of the cases rejected have some merit but why quibble over that? If there are 900 cases in the system and a quarter represent cases that should be pursued, that means there are 225 good cases of fraud stuck in a black hole.

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We just found this --

back on May 22, Keith Olbermann covered FBI Whistleblower Bassem Youssef's congressional testimony. The Youssef story starts at 1:30 of the video, which is found on the MSNBC site here

For more information on Agent Youssef and his courageous testimony, see our previous blog posts.

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On June 12, 2008, the Supreme Court unanimously ruled in favor of a FOIA requester in Taylor v. Sturgell (No. 07-371), reversing the D.C. Circuit’s decision denying a FOIA requester access to documents on the grounds of issue preclusion. The Supreme Court reinstated Mr. Taylor’s FOIA case that had been dismissed on res judicata grounds because a prior FOIA requester was a "close associate" of Mr. Taylor's, and had allegedly been his "virtual representative" in a prior FOIA case that was brought unsuccessfully seeking the same documents.

In reversing, the Supreme Court unanimously rejected the “virtual representation” doctrine that the D.C. Circuit had relied upon to preclude Mr. Taylor from litigating the denial of his FOIA request in federal court. Public Citizen Litigation Group successfully represented Mr. Taylor before the Supreme Court.

Additionally, the Supreme Court cited to an amicus brief filed by the National Security Archives, Reporters Committee for Freedom of the Press, Electronic Frontier Foundation and the National Whistleblower Center.

See, Whistleblower Protection Blog (Feb. 27, 2008) for more information on the amicus brief.

• A copy of the Supreme Court’s decision is available here.
• An Associated Press article covering the Supreme Court’s decision is available here.

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In Allison Engine Co., Inc. v. United States, ex rel. Sanders, the plaintiff was a whistleblower, or relator, who filed a qui tam lawsuit on behalf of the U.S. government under the False Claims Act seeking the recovery of hundreds of millions of dollars of taxpayer money resulting from alleged false statements about work performed by a subcontractor to a huge multi-billion dollar Navy contract. The Supreme Court faulted the plaintiff for not proving that the subcontractor's invoices or false statements to the contractor, in this case a huge shipyard, were actually submitted to the government to get the claim paid. 

Although the plaintiff-relators in Allison Engine Co. assert in the aftermath of today’s Supreme Court decision that the proof in their case satisfies this heightened standard, today’s decision now creates a huge loop-hole in the False Claims Act and severely undercuts the ability of the government and whistleblowers to hold subcontractors accountable for fraud on the taxpayers that is committed by subcontractors.

Often the U.S. government is not billed directly for the work of subcontractors, and the subcontractors’ invoices are not submitted directly to the government.  Rather the subcontractors bill the contractor and get paid from funds that were paid by the government to the contractor.  For example, when the U.S. government hires a contractor to deliver a ship, a plane, or a weapons system, the government does not review and approve every invoice for work performed by subcontractors.

However, the Supreme Court has now held in Allison Engine Co., that without an invoice from the subcontractor submitted to the government, or other proof that the government relied on the false statements or fraud of the subcontractor to pay the claim of the contractor, then there is no recovery for the U.S..  In other words, it is not enough to prove that the subcontractor cheated to get paid on a government contract.

This decision is a green light for subcontractors to steal.  The real losers here are, once again, the US taxpayers.

It is now up to Congress change the law to stop subcontractors from robbing the taxpayers on huge government contracts, and to hold subcontractors fully responsible for their fraud.

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Today the Supreme Court handed down its decision in Allision Engine Co., Inc., Et Al. v. United States Ex Rel. Sanders Et Al.  After a quick read of this decision, it is evident that Congress should pass the False Claims Act Correction Act immediately. (more on FCACA here)

More to follow...

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Whistleblower advocates are still fighting for amendments to the Whistleblower Protection Act. Today's Washington Post contains a writeup of the groups' latest efforts to move the legislation, which has, for months, been stalled in conference committee.

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