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Whistle-blower loses his high-court case

He will get no reward for exposing fraud at a weapons plant. Critics predict a chilling effect.

WASHINGTON - The Supreme Court left an 81-year-old retired engineer without a penny to show for his role in exposing fraud at a former nuclear-weapons plant in a ruling that makes it harder for whistle-blowers to claim cash rewards.

James Stone stood to collect up to $1 million from a suit he filed in 1989 against Rockwell International, now part of aerospace firm Boeing Co., over problems with environmental cleanup at the now-closed Rocky Flats nuclear-weapons plant northwest of Denver.

A court eventually ordered Rockwell to pay the government nearly $4.2 million for false claims the company submitted. Stone could have received up to a quarter of Rockwell's payment, under the False Claims Act.

But Justice Antonin Scalia, writing in the 6-2 ruling yesterday, said Stone was not entitled to any money, because he lacked "direct and independent knowledge of the information upon which his allegations were based."

The company must pay the entire penalty anyway. The only question before the court was whether Stone would get a cut.

The outcome was cheered by business groups that wanted the court to limit whistle-blowers in false-claims lawsuits. Since Congress reinvigorated the Civil War-era law in 1986, those suits have returned $11 billion to the government. Recent high-profile cases include settlements with leading pharmaceutical manufacturers.

Sen. Charles Grassley (R., Iowa), a leading congressional supporter of whistle-blower claims, said lawmakers should consider changes to the False Claims Act to make sure people are rewarded when they uncover wrongdoing.

"The Supreme Court has made it even more difficult to get to the bottom of waste, fraud, and abuse of taxpayer money," Grassley said.

The Bush administration sided with Stone, arguing that it was in the government's interest to encourage whistle-blowers, even though the government keeps more money now that Stone has lost.

Hartley Alley, a Colorado-based lawyer who represented Stone, said the decision failed to recognize the importance of Stone's actions at Rocky Flats, now a Superfund cleanup site.

The company pleaded guilty in 1992 to violating federal environmental laws.