Supreme court ruling limits whistleblower suits, but healthcare reform law will nullify ruling

Potential whistleblowers are barred from filing qui tam lawsuits that are based on information obtained through a state, federal or local report, but its impact will be short-lived. A False Claims Act amendment included in the new healthcare reform law will allow such suits to move forward as long as they're not based on information disclosed in a federal setting.

The high court's decision pertained to fraud allegations made by Karen Wilson, who accused her employer, North Carolina's Graham County Soil and Water Conservation District, of defrauding the federal government of disaster relief funds.

The court ruled 7-2 against Wilson, deeming her suit invalid because it hinged on state audit data. Noting that the False Claims Act prevents whistleblower lawsuits that are based data from a "congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation," the justices concluded that the term "administrative" includes data from a state audit or report.

Justice John Paul Stevens, writing for the majority, made note of the newly passed healthcare reform legislation, but said that because the new law makes "no mention of retroactivity," it does not apply to Wilson's case or any other current cases.

Justice Sonya Sotomayor, one of the two dissenting judges, said the ruling would eliminate suits stemming from "thousands of state and local government administrative reports produced each year." Such suits could include ones like the action brought against Maryland's St. Joseph Medical Center, in which hundreds of patients received unnecessary stents. Anyone who now tries to join in on the lawsuit could have trouble doing so, in light of the ruling. 

To learn more:
- read this SCOTUS Blog analysis
- here's the opinion
- read this USA Today article

Suggested Articles

The profit margins and management of Community Health Group raise questions about oversight of managed care insurers.

Financial experts are warning practices about the pitfalls of promoting medical credit cards to their patients.

A proposed rule issued by HHS on Tuesday would expand short-term coverage, a move Seema Verma said will have "virtually no impact" on ACA premiums.