For several months, Justice Department officials have engaged in intense internal debate over the merits of a 1986 law designed to encourage citizens to become "whistle blowers" and expose fraud against the government.
Some Justice Department lawyers want to challenge the constitutionality of the law, while others contend that this would be a foolhardy decision, according to government sources and attorneys representing both whistle blowers and defense contractors.
The Justice Department's position could have a significant impact not only on a major constitutional issue but also on efforts to ferret out fraud by defense contractors, Medicare providers and other companies that do business with the government. Millions, perhaps billions, of dollars could ride on the outcome. Since the law was passed, $26 million has been recovered from government contractors in 11 cases. More than 150 lawsuits, many in California, are pending.
The law in question is called the False Claims Act, originally enacted in 1863. As amended in 1986, it permits a private citizen to file a civil suit in the name of the government alleging fraud by a contractor and to share in any financial recovery by the government. The act also provides that any whistle blowers who lose their jobs or experience any career discrimination as a consequence of filing the suit can sue for damages.
The possibility that the Justice Department might challenge the law's validity has prompted a bipartisan coalition of U.S. senators, led by conservative Iowa Republican Charles E. Grassley, to press Atty. Gen. Dick Thornburgh to take a clear stand supporting the law's constitutionality.
Grassley also has lobbied Solicitor General Kenneth Starr. The senator maintains that the law has had a significant deterrent effect on fraud and that its impact will grow as knowledge of the statute and how it can be used spreads.
The senator said he is particularly disturbed by reports that the Justice Department, which had supported enactment of the whistle-blower amendments in 1986, might now come out against the law.
The Justice Department's position could become known as early as this week. U.S. District Judge David Kenyon has given the department until Wednesday to inform him if it plans to take a stand on constitutionality in a Los Angeles suit by former employees of Northrop who have accused the company of knowingly using defective parts on guidance systems for the Air Force's MX missile.
Deputy Solicitor General Tom Merrill and Gina Talamona, a Justice Department spokeswoman, said the department has "no comment" on its constitutionality stance.
Defense contractors contend that the law violates the separation of powers and appointments clauses of the Constitution and that private citizens do not have standing to sue because they have not been individually injured by the alleged wrongdoing. They also assert that the law encourages unfounded suits by disgruntled, money-seeking employees who file cases hoping that companies will settle simply to avoid costly litigation.
Whistle-blower lawyers maintain that the law is clearly constitutional. They note that the Justice Department has the ability to take over any of these cases or to veto settlements in those it does not take over. The plaintiffs' lawyers also contend that courts have "consistently recognized the congressional prerogative" to grant standing to a person to sue on behalf of the government.
Solicitor General Starr has held private meetings with lawyers on both sides of the issue. Among those attacking the law in the meetings was former Solicitor General Rex Lee, now president of Brigham Young University, who filed a brief last week in Los Angeles challenging the law on behalf of two defense industry lobbying organizations and Brad Brian and Carolyn Kuehl of Los Angeles' Muger, Tolles and Olson, a firm defending Northrop and Litton in whistle-blower cases.
Among those supporting it were Robert Montgomery, former chief counsel at the Energy Department who is the attorney for Business Executives for National Security and who represents whistle blowers in cases against Raytheon and Singer Co., and Herbert Hafif, a Claremont lawyer with several cases against Northrop.
This year, three federal judges in California--William D. Keller and Mariana R. Pfaelzer in Los Angeles and Robert Aguilar in San Jose--have upheld the constitutionality of the law. The Justice Department did not take a stand in any of those cases or an earlier one in Ohio.
But sources inside and outside the government said several lawyers in the department's civil fraud section, including its chief, Michael F. Hertz, believe that the whistle-blower law tramples on government prerogatives to make decisions about who will be prosecuted for fraud. Hertz could not be reached for comment.
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