Argument of Speaker
Mr. Speaker: The opinion of the Court in No. 01-1572, Cook County Illinois versus United States ex rel Chandler will be announced by Justice Souter.
Argument of Justice Souter
Mr. Souter: This case comes to us on writ of certiorari to the Court of Appeals for the Seventh Circuit.
The respondent, Janet Chandler, used to supervise a medical research study for Cook County Hospital funded by $5,000,000 grant from the national institute of drug abuse.
Because Chandler believed that the County had violated certain terms of the grant relating to research protocols, she sued the County under the False Claims Act.
So far as it concerns us here, the False Claims Act imposes civil penalties on any person, those are its words, who knowingly presents a fraudulent claim to the Federal Government.
The Government itself can sue for fraud but a private plaintiff like Chandler may sue also by bringing what is known as a qui tam suit on the Government's behalf.
If she succeeds, she may get up to 30% of the proceeds for herself.
The question presented in this case is whether local governments like Cook County are persons subject to qui tam suits under the False Claims Act.
In the Steven’s case decided three terms ago, we held that person does not include States.
The Seventh Circuit held that municipalities are nonetheless covered, and in an opinion filed with the Clerk today we affirm.
The term "person" is not defined in the Act but the word has been in the statutes since it was enacted in 1863.
We have no trouble concluding that the term then included municipalities.
The common understanding going back at least to Cook’s Institute was that corporations including municipal corporations were deemed to be artificial persons for statutory purposes.
Of course Congress could have given a word a narrower definition than the usual one just described but nothing in the Act's text or history leads us to think that it did.
We also conclude that nothing in the 1986 amendments to the False Claims Act repealed municipal liability.
To be sure those amendments raised the ceiling on damages from double to treble damages, the change that the Steven’s case described has turned what had been a remedial provision into a punitive one.
The County argues that because local governments enjoy common law immunity from punitive damages, Congress' adoption of treble damages should be read as implied repeal of municipal liability, but the punitive nature of the treble damages under the Act is modest and it therefore offers only limited support for the argument that Congress must have repealed the Act in so far as it covered municipalities.
To the contrary, the clear purpose of the 1986 amendments was to strengthen the Government’s hand in fighting all fraud which local Governments are capable of committing when they receive and administer federal funding.
We conclude that municipal liability existed under the original False Claims Act and that the 1986 amendments did not implicitily eliminate it.
The opinion of the Court is unanimous.
