Monday, April 13, 2009
Tue, 05 Feb 2008
In a current whistleblower fraud case before the U.S. Supreme Court, Professor Joel D. Hesch of Liberty University School of Law filed a brief proposing a new standard for the courts to follow when interpreting the fraud statute.
The Supreme Court is examining the issue of whether a whistleblower is entitled to a reward for reporting fraud by Allicon Engine Company, which is a subcontractor helping to build a Navy ship costing $1 billion. The whistleblower argued that the company supplied defective engine components. The subcontractor convinced the district court to dismiss the case on a technical ground that the wording of the fraud statute does not extend to subcontractors who commit fraud under government contracts. At issue was whether the False Claims Act contains a requirement that the invoice actually be submitted to the government. In order to dismiss the case, the district court had to read words into the statute to reach a decision that subcontractors are exempt from the fraud statute.
Professor Hesch’s brief, filed on January 22, points out that the parties have not correctly framed the issue, and that the Court is needlessly being asked to read words into the anti-fraud statute. He also pointed out that virtually every court that had addressed the situation had previously held that subcontractors are covered by the anti-fraud statute. He formulated a three-part test for the courts to use when interpreting the False Claims Act. Under his test, the Court would not need to reword the statute to reach the correct result.
The False Claims Act is the nation’s primary tool for fighting fraud. In addition to requiring a wrongdoer to repay triple the amount of their fraud, it allows whistleblowers to receive rewards between 15 and 25 percent of any recovery based upon their allegations of fraud against the government.
Before coming to Liberty, Professor Hesch served over fifteen years as a trial attorney with the Civil Fraud Section of the United States Department of Justice in Washington, D.C. That office has nationwide responsibility for litigating significant fraud and False Claims Act cases. It was there that Professor Hesch led numerous fraud investigations affecting more than 20 different federal agencies. The cases he worked on recovered more than $1 billion from companies that cheated under federal contracts and programs. One of the fraud cases he worked on went before the U.S. Supreme Court last year, in the case named Rockwell v. United States. Professor Hesch wrote a scholarly law review article in that case providing guidance to the courts in interpreting whether whistleblowers are entitled to rewards when newspapers had previously printed stories about the fraud. His article was cited five times in a brief before the Supreme Court.
Oral arguments are scheduled for February 26, 2008, and a decision by the Supreme Court is expected to be issued in the spring of 2008.
Please see Professor Hesch’s brief (PDF).