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Are Federal Agencies Immune From Whistleblower Cases?

by Hoyer Law Group, PLLC | Oct 28, 2015 | Whistleblowers

Whistleblower CaseSome potential clients have asked: are federal agencies immune from whistleblower cases?

For example, a federal health agency employee may have witnessed what they perceive the be wasteful spending of Medicare dollars or in some cases outright fraud. As any taxpayer would, they’d like to report what they’ve seen done with taxpayer money, and if found to be true, be rewarded for their efforts.

Unfortunately, the answer to the question of whether they can bring a False Claims Act (FCA) whistleblower case against their federal employer is generally “no.”

This is because “federal agencies are not proper Defendants for a qui tam action under the FCA. Not only is this the equivalent of the United States suing the United States, but the United States has not waived sovereign immunity as to FCA claims.” Taxpayers of the U.S. v. Bush, 2004 WL 3030076, *5 (C.D. Cal. Dec. 30, 2004) (finding FCA contains no waiver of sovereign immunity); Juliano v. Fed. Asset Disposition Ass’n, 736 F. Supp. 348, 351-53 (D.D.C. 1990) (declining to expand FCA to allow a qui tarn suit against a federal agency where not provided for under the statute); see also Balser v. Dep’t of Justice, Office of U.S. Tr., 327 F.3d 903, 907 (9th Cir. 2003) (finding suits against federal agencies are suits against the United States and the United States is immune absent waiver of sovereign immunity).

The Ninth Circuit Court of Appeals has explained:

The Supreme Court has held that states are not “persons” subject to qui tam liability under the FCA. The Stevens Court did not reach the issue of sovereign immunity, construing the FCA to avoid that constitutional question. The Supreme Court did, however, rely on canons of statutory construction related to state sovereignty, such as (1) the presumption that the term “person” does not include the sovereign; (2) the rule that Congress must clearly state its intention to subject states to liability; and (3) the presumption against imposition of punitive (treble) damages on governmental entities. Relying on Stevens, we have held that “states and state agencies enjoy sovereign immunity from liability under the FCA.”

United States ex rel. Ali v. Daniel, Mann, Johnson & Mendenhall, 355 F.3d 1140, 1145 (9th Cir. 2004) (omitting several citations to Vt. Agency of Natural Res. v. United States ex rel. Stevens, 529 U.S. 765 (2000)).

So what can these potential whistleblowers do? Well, they are always free to report their allegations through one of various fraud hotlines that will look into the claims and hopefully recover any ill-gotten or wasted taxpayer money. Unfortunately, the whistleblowers can’t expect a relator’s share for their good deed.

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