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Supreme Court Expands Whistleblower Protections

Supreme Court Rules That Contractors Are Protected by Whistleblower Laws

whistleblowerThe US Supreme Court ruled on Tuesday, March 4th, that employees who work at private firms that contract with publically traded companies are subject to whistleblower protections, just like other employees.

The justices voted 6-3 in favor of the ruling, along non-ideological lines. Justice Ruth Bader Ginsberg wrote in the majority opinion, “Based on the statutory text, and the mischief to which Congress was responding, we hold that (the law) shelters employees of private contractors that serve public companies.”

“Congress … understood that outside professionals are responsible for reporting fraud by the public companies they serve,” Ginsburg said. “Congress further learned that fear of retaliation was the primary reason why the employees of Enron’s contractors kept quiet about the fraudulent practices they witnessed.”

The court was interpreting the 2002 Sarbanes-Oxley Act regarding two whistleblowers who faced employer retaliation after raising some concerns regarding how their employer, Fidelity Investments’ parent company FMR LLC handled mutual funds. Although the mutual funds were publically-traded, management services were provided by private companies. One of the whistleblowers resigned her position with Fidelity after experiencing harassment and being passed over for a promotion due to her whistleblowing activities, while the other whistleblower was fired for his reporting.

Justice Sonia Sotomayor wrote the dissenting opinion, joined by Justice Anthony Kennedy and Justice Samuel Alito. The three agreed that the ruling gave the law “a stunning reach” that could extend protections to, for example, household employees of public company workers. Justice Sotomayor hailed the “laudatory purpose” of extending these protections to contract whistleblowers, such as “the outside lawyers and accountants who could have helped prevent the Enron fraud … that is not the statute Congress wrote.”

Do You Need a Lawyer to Bring a Whistleblower Suit?

Technically, no. As a practical matter, absolutely.

In order for a qui tam lawsuit, or whistleblower lawsuit, to succeed, a lawsuit must be filed with the federal government. While a person could file a qui tam case without a lawyer, such a case is unlikely to be as successful as it would be if an attorney is involved. Due to the volume of qui tam cases filed with the U.S. Justice Department (over 300 cases per year since 1996), and the limited number of Justice Department lawyers working on them, only those cases that are well presented with strong evidence are likely to be joined by the federal government. Your attorney’s primary responsibility is to help you shape the case and present it to the Justice Department.

While the U.S. Justice Department only joins about 25% of qui tam cases, the cases it does participate in are settled or won over 85 percent of the time. If the Justice Department declines to join your qui tam case, the odds of success drop to 20 percent. While this does not make the suit impossible, it does emphasize the importance of using an attorney from the beginning to present the government with the strongest case possible.

The Strom Law Firm Can Help Protect Whistleblowers with the False Claims Act

The False Claims Act, also known as the Whistleblower Act or a qui tam lawsuit, is intended to encourage people to come forward with information and assist the government in stopping the waste of Government funds.

Common whistle blower actions include:

  • Medicare fraud,
  • defense contractor fraud, and
  • other kinds of fraud.

If you are personally aware of a fraud that has been committed by your current or former employer, a competitor or otherwise, contact the Qui Tam attorneys at the Strom Law Firm today for a no cost consultation to discuss the facts of your case and whether filing a whistleblower lawsuit may be appropriate. We understand the complexity of the False Claims Act, and can help you with your case. We offer free, confidential consultations so contact us for help today. 803.252.4800.



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