Ninth Circuit Allows $1 Billion Whistleblower Lawsuit to Proceed

A 2005 GAO report concerning problems in the Raytheon contract to develop an environmental satellite system did not bar a later False Claims Act lawsuit filed by a whistleblower under the public disclosure provision, according to the Ninth Circuit. Reuters put the value of the potential lawsuit at $1 billion in a recent headline about the case.

In the FCA, Congress barred opportunistic and parasitic individuals from pursuing rewards where the fraud had already been publicly disclosed and the individual was not an original source of the information. The Ninth Circuit in this case concluded that the complaint was not based upon the prior disclosure because the government information was not sufficient to warrant a conclusion of fraud as opposed to breach of contract and the specific information of the relator went far beyond the general information publicly released.

If the lawsuit is ultimately successful, the whistleblower may be eligible for a reward of between 25 and 30 percent of the amount recovered. This higher percentage is available to individuals when the government declines to run the case itself. The qui tam lawsuit is one of many that is now being prosecuted by False Claims Act attorneys on behalf of the federal government. The Department of Justice declined to intervene in the case several years ago.

It has already had a long history and will probably take several more years. The lawsuit was filed in 2006 so it received a long government investigation before going to the appeals court.

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