Qui Tam/Whistleblower Suits News Update

The Supreme Court limited the reach of a U.S. whistleblower law in a decision that will block some suits against drugmakers and hospitals for alleged fraud against the federal government.

The justices, voting 7-2, ruled that pending law suits under the U.S. False Claims Act can’t go forward if the central allegations had previously been made public in state or local documents.

The impact of the ruling will be limited because the new U.S. health-care law allows such suits in the future. In his decision for the high court, Justice John Paul Stevens said the new law won’t apply to pending cases.

Business trade groups had urged the Supreme Court not to expand the False Claims Act, saying the upshot would be new burdens on companies. Lawsuits under the False Claims Act have recovered more than $24 billion since Congress strengthened the law in 1986.

The False Claim Act lets whistleblowers press fraud claims on behalf of the federal government and then share in any recovery. The law bars suits when allegations have been publicized by the federal government. The measures hadn’t been clear about the effect of disclosure by state governments.

The 4th U.S. Circuit Court of Appeals said the so-called public disclosure bar applied only to federal documents and hearing. Lower courts disagreed.

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