Abstract: Every year, investigative reporters uncover stories of waste, fraud, and corruption, alerting the government to taxpayer ripoffs that had previously gone undiscovered or ignored. For decades, non-journalists have been reaping windfall rewards—sometimes in the millions—by using false-claims statutes to bring whistleblower actions on the government’s behalf. With news organizations struggling for their economic survival, and efforts to secure alternative financial support through government bailouts faltering, is it time for journalists to seek a share of the money they recoup for taxpayers by becoming plaintiffs?
This Article explores the possibilities, and downside risks, of using the federal False Claims Act, and its state and municipal counterpart laws, to infuse money into financially strapped newsrooms. It traces the history and evolution of the FCA, from a Civil War-era attempt to crack down on shoddy weapons suppliers to a juggernaut that today recovers $3 billion a year for the federal treasury, with private (“qui tam”) plaintiffs collecting $400 million in bounties for helping litigate the claims.
The Article examines how Congress and the courts have recalibrated the FCA incentive structure repeatedly over nearly two centuries, based on whether policymakers believe there is too much false-claims litigation or not enough. It critiques the rigidity of case law interpreting the FCA that forecloses recovery if any portion of the claim is based on publicly disclosed information—a standard courts have applied unforgivingly to dismiss even seemingly strong fraud cases.
Given journalists’ ethical reluctance to accept anything that looks like a government handout, the Article considers the potential ethical implications of suing to claim a reward for investigative reporting that uncovers fraud. It concludes that there should be no absolute ethical prohibition against journalistic use of qui tam litigation, given that the potential of receiving a bounty does nothing to distort newsrooms’ ample preexisting incentives to pursue high-value stories exposing fraud on the taxpayers.
The Article concludes that the primary obstacle to qui tam as an effective tool for journalists—or for any outsider who is not an internal company whistleblower—is the Supreme Court’s errant 2011 decision in Schindler Elevator, which bars any claim derived from records obtained from the government. The author recommends that lawmakers should override the Schindler rule and recognize the validity of claims based on documents and data to which plaintiffs—including journalists—add their expert analysis.
