Whistle-blower law withstands challenge

February 23, 1994|By Lyle Denniston | Lyle Denniston,Washington Bureau of The Sun

WASHINGTON -- A controversial, 131-year-old law that has let citizen whistle-blowers get rich and poured about $400 million into the U.S. Treasury in recent years withstood its first constitutional challenge in the Supreme Court.

In a brief order, the court refused yesterday to disturb a federal appeals court ruling that upheld a federal law allowing private citizens to act as whistle-blowers to help the government recover money it lost to fraud by contractors.

The old law at issue in an appeal filed by Boeing Co., a major defense contractor, is an American version of the citizen lawsuit that dates to 13th-century England. The U.S. law has been used much more actively since Congress in 1986 increased the financial incentive for citizens to pursue contractor fraud.

The U.S. government relies heavily on the False Claims Act when it wants to act against contractor fraud. That power was not at stake in the Supreme Court action.

A section of that law allows citizens who have evidence of contractor misdeeds to sue on behalf of the government and to collect a share of the winnings. That part of the law has returned more than $400 million to the Treasury.

The Bush administration believed that this approach to government recovery in fraud cases was unconstitutional, but the Clinton administration supports it.

Companies supported the Boeing appeal to the Supreme Court, saying that they are facing increased costs in trying to fight citizen lawsuits that claim fraud in situations where the government has found none.

Boeing took the issue to the Supreme Court to try to head off a bounty claim by a former Boeing employee, Kevin G. Kelly, who alleged that Boeing improperly charged the government for lease costs when it worked as a subcontractor on the B-2 bomber and on advanced tactical fighter aircraft.

The government investigated Mr. Kelly's claims for more than three years and decided not to take over his lawsuit, as it had the authority to do. Boeing then sought to have the case dismissed, arguing that all such citizen lawsuits are invalid.

As usual, the Supreme Court offered no explanation for declining to hear the appeal.

The court issued a number of orders after returning from a four-week recess:

* It rebuffed all 50 states and several thousand Vietnam veterans by rejecting appeals by veterans or their families seeking to sue the seven companies who made the "Agent Orange" chemical '' used to clear jungles during the Vietnam War.

The veterans claimed that their legal rights had been scuttled years ago, before they knew they would develop diseases that they claim were the result of exposure to the chemical. Other veterans who already suffered illnesses had given away the rights of all veterans to sue by accepting a $240 million settlement in return for ending a series of lawsuits.

When other veterans later developed medical problems they attributed to Agent Orange, their attempts to sue in state court were thrown out by the federal judge who has been supervising the settlement of the earlier cases. All 50 states, claiming a threat to the powers of their courts, supported the veterans' new appeals, but the justices declined to review without comment.

* In an Ohio case, the court agreed to decide the constitutionality of state laws -- now in effect in 27 states, including Maryland -- that ban anonymous political leaflets. The Ohio Supreme Court upheld that state's law in a case involving a woman who was fined $100 for passing out anonymous handbills protesting a proposed school tax in Westerville, Ohio.

* The court turned aside an appeal by a Detroit newspaper editor who wanted access to secret files on the FBI investigation of the disappearance 18 1/2 years ago of Teamsters Union President James R. Hoffa. The FBI contended that its investigation was still active, so it could not open up those files.

* The court agreed to spell out the power of federal courts, applying maritime law, to decide cases involving accidents that occur on land. The case arises out of an incident in which a pile driver in the Chicago River punched a hole in the ceiling of a tunnel used to move freight underground in the city's business Loop.

The rupture flooded stores' basements, causing extensive damage. The company that operates the pile driver wants the stores' lawsuits handled under maritime law, to limit any potential damages.

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