Supreme Court to Rule on Whistle-Blowing

WASHINGTON -- After 17 years, James Stone has perhaps a few more months to wait before he learns whether he will collect up to $1 million for exposing fraud by a government contractor at a now-closed nuclear weapons plant.

A court ordered Rockwell International, now part of aerospace giant Boeing Co., to pay the government nearly $4.2 million for fraud connected with environmental cleanup at the Rocky Flats plant northwest of Denver. Stone, a former employee at the facility, could be entitled to as much as one-quarter of the payment under the federal False Claims Act.

The 81-year-old retired engineer filed his whistle-blower lawsuit in 1989, the year Rocky Flats shut its operations after nearly 40 years of production. He has survived legal challenges by Rockwell to dismiss the claim or deprive him of his share. The government joined the suit as Stone's partner 10 years ago.

The Supreme Court now has the case. The ruling could affect an anticipated crush of fraud suits if the high court makes it harder for whistle-blowers to share in the proceeds.

If Rockwell wins, "it's going to be much more difficult for whistle-blowers and there are going to be fewer cases," said James Moorman, president of the Taxpayers Against Fraud Education Fund, an advocacy group.

Rockwell must pay the entire penalty no matter how the Supreme Court rules, although it would not have to pay Stone's attorney fees. The only question before the court is whether Stone will get his cut.

The company, backed by defense, energy and pharmaceutical interests, wants the justices to restrict when an individual can collect for suing on the government's behalf.

The Bush administration is on Stone's side even though the government collects more money if Rockwell wins.

"It might be natural for the court to wonder why would it be in the government's interest to advocate that a share of the money damages in this case should be given to a private party," Justice Department lawyer Malcolm Stewart told the justices during the oral argument in early December. "In our view, Stone is precisely the type of relator that Congress intended to encourage." A relator is an individual who sues under the False Claims Act.

The False Claims Act allows individuals, acting on the government's behalf, to file fraud suits against companies that do business with the government. If they prevail, they receive a portion of what the contractor must pay the government.

During World War II, Congress amended the Civil War-era law to make whistle-blower suits more difficult. Since Congress changed the law again in 1986, such suits have returned $11 billion to the government. Recent high-profile cases include settlements with leading pharmaceutical manufacturers.

Sen. Charles Grassley, who led the fight to reinvigorate the False Claims Act in 1986, urged the court to rule in Stone's favor.