Two recent court decisions may make it easier for whistleblowers to pursue a qui tam lawsuit filed under the False Claims Act (FCA). The rulings focus on the “public disclosure bar”, a procedural hurdle that dismisses a whistleblower’s case if it is “based upon the public disclosure of allegations or transactions” in specific ways, including a government “report, hearing, audit, or investigation,”; this does not apply if the whistleblower is the original source of that information.
In 1999, the U.S. Court of Appeals for the Seventh Circuit ruled that the public disclosure bar was applicable if information given to a “competent government official” was “publicly disclosed.” This decision can be problematic for whistleblowers because it allows cases to be dismissed if information was disclosed to the government but never available to the general public.
Other federal appellate courts have rejected the Seventh Circuit’s interpretation. This recently occurred with two courts in the past month. The U.S. Court of Appeals for the Fourth Circuit considered a case that has been ongoing for 14 years and considered whether “public disclosures” include reports that have been distributed within the government but the general public. The case involves a employee of a county government program intended to help counties affected by storm damage. In 1995, the employee reported concerns about fraud to the USDA. An audit was issued at one of the counties the following year, and a report was issued substantiating the whistleblower’s claims. Other parts of her allegations were supported in another reporting following a 1997 investigation. Various state and federal government agencies received these reports, but they were never made available to the general public. The Fourth Circuit ruled that these reports do not count as “public disclosures”. The public disclose bar only applies when information is made to the public at large or to the public domain, the court ruled.
The U.S. Court of Appeals for the Sixth Circuit made a similar decision a few weeks later. The case was filed against a defendant that operated in a hospital; the whistleblower alleged that the defendants overbilled for certain services, subsequently submitting false claims to federally-funded healthcare programs such as Medicare and Medicaid. It turns out that in late 2006, the government started auditing the defendant’s billing practices which led to an administrative settlement in late 2009. The whistleblower was unaware of this information, but his case was dismissed by the district court under the premise that the audit counted as “public disclosure” The Sixth Circuit overturned this decision, and ruled that since government is not “public”, information to the government does not by itself count as “public disclosure”.