RIPPING OFF THE U.S. government has reached epidemic proportions. The Department of Justice estimates that fraud costs the Medicare system alone between $30-$60 billion annually. But instead of fines and jail time, fraudsters are frequently rewarded with more government business. And if the U.S. Chamber of Commerce and its allies have their way, these fraudsters will gain enhanced legal protection.
The U.S. Supreme Court recently heard oral arguments in a critical case testing the right of citizens to bring suit in the name of the United States in order to recover damages from corporations or individuals that have cheated the government. By taking up the case known as Schindler Elevator, the high court is looking into whether a private citizen can secure information from a Freedom of Information Act request and use that information to form the basis of a qui tam or False Claims Act whistleblower lawsuit. The chamber also wants the court to rule that ignoring government contract requirements that the contractor deems unimportant should not be considered cheating the government.
The whistleblower in Schindler brought his case under the False Claims Act, which has proven to be an enormous benefit to the U.S. government and taxpayers. It effectively deputizes the eyes and ears of private citizens. And it provides added incentive to individuals to police corporate malfeasance by requiring the government to pay bounties from proceeds recovered through False Claims Act litigation.
A slew of recent cases demonstrate the benefit of whistleblower litigation. Settlements of suits totaling hundreds of millions of dollars with Pfizer, GlaxoSmithKline, and Bristol- Myers were all cases initiated by whistleblowers.
From pharmaceutical fraud to defective military hardware, over $20 billion has been recovered since 1986 through cases started by whistleblowers under the False Claims Act. In each case the wrongdoer violated, or caused to be violated, a contract or regulation that conditioned on receipt of government funds. And lest anyone think the law can be gamed, Congress put in express limits on is usage: no whistleblower suit can be based on news media coverage, a congressional hearing or government audits or reports.
In the Schindler case, a Vietnam veteran, who alleged that his employer was not according proper affirmative action consideration to veterans, used information from such a FOIA request to confirm what he believed were violations of government contract requirements.
The Supreme Court is being asked by big businesses to expand the congressional limits so that whistleblower suits based on information secured through a Freedom of Information Act request would be barred by statute. This makes no sense and is contrary to the express terms of the law. If the whistleblower knows enough to request the information and has the ability to demonstrate how the government has been defrauded, there is no reason to preclude litigation which will expose fraud on the government and restore dollars to the Federal Treasury.
Moreover, the Chamber of Commerce, along with the American Hospital Association and the Pharmaceutical Manufacturers and Research Association, also are using the Schindler case to argue that whistleblower suits based on an implied certification theory – where the contractor upon receipt of government money impliedly certifies compliance with the contract terms – should not be allowed to proceed at all.
Curiously, the Chamber of Commerce – whose web site purports to favor promotion of American jobs – disagrees with an application of the False Claims Act which would allow for enhanced compliance with, for example, “Buy American” obligations that are written into government contracts. In its “friend of the Court” brief in Schindler, the triumvirate of big business protectors deemed such obligations that are conditions of receiving taxpayer dollars “legal technicalities.”
While many of their members undoubtedly subsist on hefty government paydays, they complain that “contractors . . . are required to submit certifications related to everything from how they dispose of hazardous materials to their affirmative action plans and they frequently enter into contracts requiring compliance with other statutory and regulatory provisions.” One example provided in their brief is a certification that Medicare providers abide by “Medicare laws and regulations.” Imagine that!
The Chamber and its friends do not dispute that these are indeed obligations; they merely question the audacity of a law that would cause them to honor their commitments. By their lights, it is okay to place what they perceive to be merely technical legal requirements into a government contract as long as taxpayers have no direct ability to enforce those obligations.
Doing business with the government is a privilege and not a right. Compliance with government contracts and regulations is part of the deal. Those who enjoy this privilege should live up to its terms whether it means using products made in America, maintaining safe working conditions for employees, paying workers a living wage, or complying with environmental laws and regulations. In simple terms, those enjoying the benefit of government funds must honor all of their commitments to the government.
It’s clear from the Chamber’s arguments in Schindler that big business interests are looking for loopholes in their obligations to the government as well as to taxpayers. That makes the importance of the False Claims Act and other whistleblower laws all the more important in supporting honest practices and compliance with government contracting laws.