Court narrows scope of whistle-blower act

WASHINGTON, June 9 (UPI) -- The U.S. Supreme Court, in a victory for government contractors Monday, ruled unanimously that the federal whistle-blower law must be narrowly interpreted.

The court's opinion, written by Justice Samuel Alito, parsed the language of the U.S. False Claims Act very carefully. The nation's highest court said it is not enough for whistle-blowers to show that a false statement from a contractor resulted in the payment or approval of government funds, or that government money was used to pay the false or fraudulent claim.

The whistle-blower, who under the act receives a portion of the fine if claims are proven in court, must show that a company intended that the false statement is "material" -- or central -- to the government's decision to pay or approve the false claim.

The case involves the Navy, which contracted with two shipyards to build destroyers, each needing generator sets, or "gen-sets," for electricity. The shipyards subcontracted with General Tool Co. to assemble them, and GTC subcontracted with Southern Ohio Fabricators Inc. to build the gen-set bases and enclosures.

The subcontracts included a requirement that each set have a certificate of performance, certifying the unit was built according to Navy specifications.

Two former GTC employees brought a whistle-blower suit against Allison, saying the company had issued certificates falsely stating the sets were built according to specs.

A federal appeals court ruled in part in favor of the whistle-blowers, saying they did not have to prove Allison intended to defraud the government. But the Supreme Court said Monday that eliminating the element of intent was going beyond Congress's intent.

The high court threw out the appellate ruling and sent the case back down for a new ruling congruent with the justices' opinion.

(No. 07-214, Allison Engine Co. Inc. et al vs. U.S. ex rel Sanders et al)