Newspaper article The Christian Science Monitor

More Rulings in Favor of States

Newspaper article The Christian Science Monitor

More Rulings in Favor of States

Article excerpt

The US Supreme Court handed an important victory to the State of Vermont on Monday with a decision that exempts states from citizen- initiated lawsuits under a federal whistle-blower law.

In a 7-to-2 decision, the court ruled that Congress did not intend to make states vulnerable to potential lawsuits filed by ordinary taxpayers seeking to uncover fraud against the government.

The law limits targets subject to suit under the False Claims Act to any "persons" suspected of bilking the federal government. The court determined that states are not "persons," and are not covered by the law.

The case had been closely watched by states rights advocates, who were hoping the court would use the case to further bolster state immunity from private lawsuits and advance its string of federalism decisions.

But the court decided the case solely on statutory grounds. "The FCA was enacted in 1863 with the principal goal of 'stopping the massive frauds perpetrated by large [private] contractors during the Civil War,' " Justice Antonin Scalia wrote for the majority. "Its liability provision ... bore no indication that states were subject to its penalties."

The case stems from a lawsuit filed by a former employee of the Vermont Agency of Natural Resources alleging that the agency had perpetuated a billing scam aimed at bilking the federal government out of environmental aid that the state did not deserve.

The employee sued the agency in 1995 under the federal False Claims Act. The so-called whistle-blower law allows citizens to sue to recover the ill-gotten proceeds of any fraud on the government. Under the law, the government receives three times the amount of the fraud, and the whistle-blower receives up to 30 percent of the recovered funds.

Many states were worried that if the court upheld the suit, it could trigger a flood of similar suits questioning accounting practices in a range of federal-state programs. …

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