5th Circuit Takes Limited View of Reverse False Claims Act

While not a whistle-blower claim, today's decision by the 5th Circuit under the so-called Reverse False Claims Act is significant as it limits a company's potential exposure to those types of claims brought by would be whistle-blowers. Here an employee maintained that the company falsified environmental reports, that if made truthfully, would have exposed the company to fines. The company argued that the possibility of imposition of fines was too uncertain to qualify under the Reverse False Claims Act. The United States which had intervened, agreed with the company although it would have a slightly more nuanced position. Holding it did not have to decide if there was a real difference in the two positions, the 5th Circuit reversed the district court holding the mere avoidance of regulatory action alone was not the type of reverse false claim covered under the statute. USA v.Georgia Gulf Corp. (5th Cir. 9/27/04)[pdf].