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Week of 5.11.07

Whistleblower Rights and Protections

Last month a federal judge dismissed a lawsuit that ruled the Kerr-McGee Corporation had underpaid the government millions of dollars in oil royalties. The judge agreed with the jury's verdict but ruled that Bobby Maxwell, a veteran government auditor who brought the lawsuit, was not able to reclaim money under the False Claims Act. The act encourages whistleblowers to help recover money from companies that owe the government. What are the wider implications of the decision for whistleblowers in general? William Weaver, a senior advisor for the National Security Whistleblower's Association and an associate professor at the University of Texas at El Paso, sheds light on the issue.

NOW: On what grounds did the federal judge, Phillip S. Figa, dismiss the lawsuit?

William Weaver William Weaver (WW): Federal Courts are courts of limited jurisdiction. This means that they can only hear cases when they are authorized by statutes or that arise under the U.S. Constitution. This is called the "subject matter jurisdiction" question. Every plaintiff in a civil suit must allege, under appropriate statute or the Constitution, that the federal court in question possesses subject matter jurisdiction over the case. Subject matter jurisdiction is unique in law in that a person can, for example, win at district court, win on appeal, get taken to the U.S. Supreme Court and the defendant, just before time runs out in oral argument may raise the subject matter jurisdiction question. And if the defendant is correct, the case and all the judgments in favor of the plaintiff go away. It may be raised at any time in a case and defendants do not waive their right to making such an argument by failing to bring it up earlier.

In this case, the court had already ruled once, in 2006, that it had subject matter jurisdiction. Ironically, evidence developed at trial gave Kerr-McGee another chance to argue that the plaintiff did not meet the subject matter jurisdictional requirements of the False Claims Act. The court found that it lacked subject matter jurisdiction over the case for two reasons. First, the False Claims Act states that a person cannot sue to recover if the information used in the suit had already been made public. The idea here is to prevent a cascade of suits by members of the public and to keep people from suing on publicly available information and thus enriching themselves without having done any work or been in a unique position to know of wrongdoing that is essentially otherwise secret. This is done to encourage people with private information to come forward and help recover government funds lost through fraud with the promise that they will be monetarily rewarded.

I would point out that the federal government could have intervened as a plaintiff at any time before the decision to dismiss was filed and that would have cured the subject matter jurisdiction problem, as then the Attorney General would also be a plaintiff and that would remedy the problem. This raises the question of why the government did not intervene. It appears almost to be collusion in fraud against itself.

NOW: How unprecedented is it to have a case where the verdict stands but the plaintiff is disqualified from bringing the case?

"This raises the question of why the government did not intervene. It appears almost to be collusion in fraud against itself."
WW: It certainly is common for a jury to find liability and for the judge to grant a "judgment notwithstanding the verdict," which effective wipes out the jury award. It is not common at all for a court to reverse its opinion concerning subject matter jurisdiction after trial and after a jury has made an award. That is especially so when there is a very high level quality of "lawyering," as in this case, because of the amounts of money at issue and the possibility that a plaintiff victory could spark similar suits.

NOW: What makes this case unique in legal circles? Is this a unique interpretation of the False Claims Act?

WW: There are unique elements to the case. Maxwell's position as a relatively high ranking manager raises questions of whether or not whole teams of people working for government can discover, through their assigned duties fraud against the government and then turn that information into a big payday. There are a couple of sides to this issue. First, you want to reward federal employees for discovering fraud and recovering public monies. But you don't want to create a predatory environment where there is incentive to target companies, provide an incentive to exaggerate evidence, and so forth. Also, you don't want employees looking for the big score and then bailing from government. Of course, these observations are a bit overwrought, but there is some concern here. In this case there would be no worries if the government bureaucrats had not essentially colluded with those that defrauded it. Why was no order ever issued requiring repayment of monies demonstrably the result of fraud against the government?

NOW: In a statement, Kerr-McGee attorney Scott Barker said, "Judge Figa's order is a vindication of Kerr-McGee's position from the very outset of the case." Is that true?

"The company probably acted criminally and certainly walked off with a big hunk of taxpayer money."
WW: Absolutely not. The jury quite clearly saw the fraud. Kerr-McGee got lucky through a novel situation that simply denied a plaintiff subject matter jurisdiction under the False Claims Act. The company probably acted criminally and certainly walked off with a big hunk of taxpayer money.

NOW: Figa did not question the jury's verdict that Maxwell had uncovered that Kerr-McGee underpayments of about $7.5 million by Kerr-McGee. So what's next?

WW: Good question. Because of the publication attendant through trial no private plaintiff could probably ever sue under the False Claims Act. I'm not exactly sure about the posture of the case, but at this time it would seem to be up to the Attorney General. After a finding like that made by the jury I would want to know why Department of Justice is not pursuing this case.

NOW: Three other federal auditors in Oklahoma City have filed similar lawsuits against more than a dozen oil companies. Will this decision affect their cases in any way?

WW: Certainly the courts will look very carefully at Judge Figa's decision, but it may not have that much effect. I do not know what circuits the other three have filed in, but if it is not the 10th Circuit, then the outcome could be markedly different. Details will also make the difference, such as the federal position held by the employee suing and other facts that may go to a determination of "original source" under the false Claims Act. I also think it is likely that other courts may treat Figa's holding that the e-mail to the Louisiana official was a public disclosure, depriving the court of jurisdiction over the plaintiff's case.

NOW: Will this ruling have an impact on whistleblowers in general?

WW: It will in the sense that federal employees will not, if Figa's position becomes general law, be able to balance a potential future payday under the False Claims Act against the retaliation they know will be forthcoming in the workplace. Any competent attorney would have to say to federal employees seeking advice that the terrain has become markedly more difficult to negotiate.

NOW: What legal protections are currently available for whistleblowers?

"I have seen repeatedly, almost without exception, that the employee who blows the whistle on illegal activity in government is completely destroyed."
WW: Whistleblower protection varies. The Whistleblower Protection Act appears to provide robust protection, but this is an illusion. It applies to most of the federal work force, but anyone who relies on it for protection is foolish. Workers in national security, intelligence, and law enforcement agencies have no protections whatsoever. Recovery statutes and audit accountability statutes such as the False Claims Act and Sarbanes Oxley provide a fair measure of protection for mostly private employees.

NOW: Is there any new legislation on the table for whistleblowers?

WW: Yes, there is significant legislation proposed to provide greater protection to whistleblowers. The legislation, the Whistleblower Protection Enhancement Act of 2007, is presently in committee in the Senate and has already been passed by the House. It would provide some protection for national security whistleblowers, but that promised protection is weak and would do little to provide meaningful help to whistleblowers in intelligene and national security agencies. The bill would provide more substantial protection to other federal employees by, once again, attempting to reign in the Merit Systems Protection Board and the Federal Circuit Court of Appeals, which are extremely hostile to whistleblower claims. Claims are handled administratively by the MSPB and by law, the Federal Circuit must hear all Whistleblower Protection Act appeals. According to recent figures by the Government Accountability Project, "Whistleblowers have a 2-53 record for decisions on the merits at the administrative level since 1999, and not a single victory since 2003 when the Bush administration appointed a new Chairman of the Merit Systems Protection Board. At the Federal Circuit Court of Appeals, which holds a monopoly over judicial interpretation of the [Whistleblower Protection Act], whistleblowers have a 1-122 won-loss record for final decisions on the merits since Congress voted to strengthen the WPA in 1994." Another notable feature of the legislation is that it prohibits retaliation against employees for reporting waste, fraud and abuse directly to members of Congress.

NOW: In a recent Mother Jones article you said "When people call me and ask about blowing the whistle, I always tell them 'Don't do it.'" Why?

WW: I have seen repeatedly, almost without exception, that the employee who blows the whistle on illegal activity in government is completely destroyed. Employees are separated from their peers, given no work, given poor job ratings, berated and subjected to abuse (sometimes physical abuse), placed in dangerous situations on purpose and eventually fired when all that is left is a shell. The process is designed to inform others of what will happen if they blow the whistle and regardless of the agency or employment environment the actions are so identical from case to case as to justify calling it a bureaucratic pathology. I want you to understand that I am not talking about cases where people are blowing the whistle on stolen pens or staplers; I'm talking about cases where the government has facilitated murder, engaged in aiding drug traffickers; covering up espionage activity, etc.

Related Links:

NOW: Notable Whistleblowers

Bloomberg: Kerr-McGee Wins Bid to Reverse Oil Lease Verdict

House Committee on Oversight and Government Reform—Whistleblower Protection Enhancement Act of 2007: Testimony of William G. Weaver [pdf]

Washington Whistleblower Week

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