Vermont Agency of Natural Resources v. United States Ex Rel. Stevens

2000-05-22

Headline: Whistleblowers may sue on the United States’ behalf, but the Court says the False Claims Act does not make States or state agencies liable, limiting lawsuits against state governments.

Holding: The Court held that a private whistleblower has Article III standing to sue for the United States under the False Claims Act, but that the Act does not subject a State or state agency to whistleblower suit liability.

Real World Impact:

Allows private whistleblowers to sue on the United States’ behalf.
Bars federal whistleblower suits that name States or state agencies under the FCA.
Leaves open whether the United States itself can sue States under the Act.

Topics: whistleblowers, False Claims Act, state immunity, government fraud

Summary

Background

A former state employee, Jonathan Stevens, sued his old employer, the Vermont Agency of Natural Resources, claiming it overstated employee time on federal EPA grants and caused excess federal payments. Stevens, acting as a private whistleblower who brings suit for the United States and can receive a share of any recovery, filed under the False Claims Act after the Government declined to intervene. The State moved to dismiss, arguing a State is not a “person” under the Act and that constitutional protections bar such suits; the lower courts divided and the case reached this Court.

Reasoning

The Court first held that a private whistleblower has the right to bring a federal suit on the United States’ behalf because the statute effectively assigns part of the Government’s claim to the relator and historical practice supports such suits. Turning to the statute, the majority applied a long-standing presumption that the word “person” does not include a sovereign State unless Congress clearly says so. The Court noted that a related investigative provision expressly defines “person” to include States but §3729 (the liability provision) does not, and that the Act’s treble damages and related laws suggest Congress did not clearly intend to expose States to qui tam suits. The Court therefore read the statute as not subjecting States or state agencies to these private whistleblower suits.

Real world impact

The decision lets private whistleblowers continue to bring FCA suits for the United States, but it prevents them from using the Act to sue States or state agencies in federal court. The Court left open whether the United States itself can sue a State under the same law and did not resolve the separate constitutional immunity question.

Dissents or concurrances

Justices Ginsburg and Breyer joined parts of the judgment; Justice Stevens dissented, arguing the 1986 amendments and history show Congress intended to include States under the Act.