The False Claims Act and Environmental Law Enforcement
By Ann M. Lininger
INTRODUCTION
On June 17, 1996, M/G Transport Services, Inc., The Midland Company, and R&F Coal Company (collectively “defendants”) settled an action brought by two former employees under the False Claims Act (“FCA” or “the Act”), for $1.762 million. The employees alleged that defendants had engaged in systematic violations of the Clean Water Act while transporting coal by barge to government power plants pursuant to a government contract. Specifically, the employees alleged that M/G Transport intentionally discharged oil, human waste, and other pollutants directly into the Ohio, Cumberland, Tennessee, and Mississippi Rivers. The employees asserted that defendants presented false claims to the government by failing to notify the authorities of these discharges or to record them in the barge's log, and by submitting invoices to the government for payment as if the work had been performed in compliance with contract terms, which required the defendants to comply with applicable environmental laws.
In the wake of this impressive settlement, as well as several other recent FCA decisions, the FCA has gained stature as a tool for environmental law enforcement. Environmental litigators now consider the potential of qui tam actions to enforce everything from grazing permit requirements to resource extraction limitations on public land. They contemplate the use of qui tam actions as a means of enhancing environmental protection in the face of a Congress which may seek to relax environmental law enforcement. Finally, they look to the Act's financial incentives, which enable a successful litigant to recover attorney's fees and up to thirty percent of the total damages imposed against a defendant, as a promising source of income.
Before environmental lawyers devote significant resources to FCA litigation, however, they should closely examine emerging jurisprudence interpreting two components of an action under the FCA-the meaning of a “claim” and the definition of “public disclosure.” While recent decisions and public policy considerations provide support for the use of the FCA as an environmental protection tool, several less favorable recent decisions undermine the utility of the FCA in this context. In light of these decisions, as well as unanswered questions regarding the meanings of “claim” and “public disclosure,” environmental lawyers should proceed cautiously in this new realm of litigation.
Part I of this Article outlines the provisions of the FCA. Part II examines recent jurisprudence regarding the meaning of a “claim” under the FCA. Part III discusses emerging jurisprudence concerning the definition of “public disclosure.” Part IV applies this case law to several environmental protection scenarios to illuminate the FCA's utility as an environmental protection tool. Part IV also explores policy considerations supporting the liberal construction of the FCA in the environmental protection context, as well as two unresolved issues, the ultimate determination of which may limit the FCA's utility as an environmental protection tool.
On June 17, 1996, M/G Transport Services, Inc., The Midland Company, and R&F Coal Company (collectively “defendants”) settled an action brought by two former employees under the False Claims Act (“FCA” or “the Act”), for $1.762 million. The employees alleged that defendants had engaged in systematic violations of the Clean Water Act while transporting coal by barge to government power plants pursuant to a government contract. Specifically, the employees alleged that M/G Transport intentionally discharged oil, human waste, and other pollutants directly into the Ohio, Cumberland, Tennessee, and Mississippi Rivers. The employees asserted that defendants presented false claims to the government by failing to notify the authorities of these discharges or to record them in the barge's log, and by submitting invoices to the government for payment as if the work had been performed in compliance with contract terms, which required the defendants to comply with applicable environmental laws.
In the wake of this impressive settlement, as well as several other recent FCA decisions, the FCA has gained stature as a tool for environmental law enforcement. Environmental litigators now consider the potential of qui tam actions to enforce everything from grazing permit requirements to resource extraction limitations on public land. They contemplate the use of qui tam actions as a means of enhancing environmental protection in the face of a Congress which may seek to relax environmental law enforcement. Finally, they look to the Act's financial incentives, which enable a successful litigant to recover attorney's fees and up to thirty percent of the total damages imposed against a defendant, as a promising source of income.
Before environmental lawyers devote significant resources to FCA litigation, however, they should closely examine emerging jurisprudence interpreting two components of an action under the FCA-the meaning of a “claim” and the definition of “public disclosure.” While recent decisions and public policy considerations provide support for the use of the FCA as an environmental protection tool, several less favorable recent decisions undermine the utility of the FCA in this context. In light of these decisions, as well as unanswered questions regarding the meanings of “claim” and “public disclosure,” environmental lawyers should proceed cautiously in this new realm of litigation.
Part I of this Article outlines the provisions of the FCA. Part II examines recent jurisprudence regarding the meaning of a “claim” under the FCA. Part III discusses emerging jurisprudence concerning the definition of “public disclosure.” Part IV applies this case law to several environmental protection scenarios to illuminate the FCA's utility as an environmental protection tool. Part IV also explores policy considerations supporting the liberal construction of the FCA in the environmental protection context, as well as two unresolved issues, the ultimate determination of which may limit the FCA's utility as an environmental protection tool.