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Federal Employees May Now Serve as Whistleblowers under the False Claims Act

A recent Fifth Circuit decision, Little v. Shell Exploration & Production Co. et al., Civ. A. No. 11-20320 (5th Cir. July 31, 2012), has widen the pool of would-be whistleblowers to include federal employees.

In Little v. Shell Exploration & Production Co. et al., Civ. A. No. 11-20320 (5th Cir. July 31, 2012), the Fifth Circuit held that two relators’ employed as federal auditors were not deprived of standing, simply because of their employment status, under the False Claims Act. The specific question under review was “[i]s a federal employee, even one whose job it is to investigate fraud, a ‘person’ under the False Claims Act such that he may maintain a qui tam action?”

Little, was a Senior Auditor and, Arnold, his co-relator, was a Supervisory Auditor. Both worked for the Minerals Management Service (MMS), a former agency within the Department of the Interior that administered leases for Defendant Shell. Part of MMS’ function was to detect fraud in the royalty programs. While employed by MMS, the two relators reported to their supervisor that Shell had deprived the U.S. of royalties by taking unauthorized deductions for certain expenses. Having received no response to their report, the two relators filed a qui tam action in 2006 alleging that Shell had defrauded the Department of the Interior of at least $19 million between 2001 and 2006.

After the government declined to intervene in the case, Shell was served and promptly moved for summary judgment. The district court granted summary judgment in favor of Shell and the relators timely appealed. On appeal, Shell and the government unsuccessfully argued that 31 U.S.C. § 3730(b)(1)’s subsection heading – “Actions by private persons,” restricts the pool of potential relators under the FCA to only non-governmental persons. The U.S. Government filed an amicus curiae brief siding with Shell on the issue.

Acknowledging that there is somewhat of a circuit split on the issue, the Fifth Circuit, however, disagreed and found that the statutory text and legislative history of the False Claims Act, as well as simple logic did not support such a limitation. Thus, the doors are now open wider for employees of the federal government to bring claims under the Federal False Claims Act.

If you or someone you know has evidence of fraud against the government, you may still be able to qualify as a whistleblower under the False Claims Act, even though you work for the government and even if you work as an auditor. Contact the whistleblower attorneys at Levy Konigsberg LLP for a free and confidential consultation by calling our 24/7 hotline at (800) 315-3806, or by submitting an email inquiry.

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