Judge limits rights of whistleblowers
HOUSTON (AP) -- Declaring that individuals have no standing to receive bonuses on government money once lost to fraud, a federal judge has ruled the whistleblower provision of the 134-year-old False Claims Act unconstitutional.
In an opinion filed last month, U.S. District Judge Kenneth Hoyt said Congress has no right to create standing for an uninjured party to sue, nor does it have the power to give an individual the right of the executive branch to pursue a fraud claim.
The "qui tam" provision of the 1863 False Claims Act enables employees of government contractors to sue on behalf of the U.S. government if they believe the company has committed fraud.
The provision, strengthened by Congress in 1986, allows the whistleblower to claim as much as 25 percent of any money recovered, even if the government does not intervene in the suit.
Hoyt's ruling is at odds with other judicial opinions, and attorneys on both sides agree that if upheld it could have far-reaching consequences.
In making his ruling, Hoyt threw out the 1994 lawsuit that spurred it.
Former heart-transplant nurse Joyce Riley had sued St. Luke's Hospital, Baylor College of Medicine and other health-care providers, contending she had uncovered evidence that hospital officials allowed an unlicensed doctor to practice medicine as part of a scheme to defraud the government of Medicare claims, said her attorney, Jim Perdue.
Ms. Riley's lawsuit also contended officials conspired to move heart-transplant patients to intensive-care units sooner than necessary, inflating hospital profits.
But defense attorneys argued that Ms. Riley's allegations were untrue -- and that she had no standing to file the suit.
In his 21-page opinion, Hoyt agreed.
Ms. Riley's lawyer plans to appeal to the 5th U.S. Circuit Court of Appeals.
Another Houston case involving a "qui tam" claim was settled earlier this month.
Former Stewart & Stevenson employee John Runion filed a claim against the Houston-based company, alleging fraud on a defense contract.
The company agreed to pay $2 million to the Defense Department to settle civil claims. Runion stands to collect some of the money, prosecutors said.