The False Claims Act’s (FCA) “public disclosure bar” and its “original source exception,” have been amended several times over the years, but the basic statutory objectives have remained the same since 1986. Congress wants to encourage qui tam filings from those who have inside knowledge of fraud, while discouraging filings from those who merely copy information from particular public sources.

Some courts have made the mistake of misreading “public” out of “the public disclosure bar.” In the most recent example, a Tennessee district court ruled that the FCA public disclosure bar derailed a qui tam action because the hospital disclosed the fraud during an administrative investigation and audit. The Sixth Circuit reversed the decision and held  that a hospital’s disclosure of information to the government in an administrative audit and the investigation does not qualify as a “public” disclosure. Moreover, the Court held that the involvement of a contractor to review the subject claims did not trigger the public disclosure bar.

Picture a physician reading a newspaper article about the inner workings of his hospital. The article generally describes a healthcare fraud scheme that she sees every single day. The government’s ability to investigate this fraud would be greatly assisted by the physician’s inside knowledge and expertise. In most jurisdictions, the public disclosure bar’s original source exception would permit such an individual to file a qui tam action.

For some healthcare whistleblowers, though, the tougher question involves supposed “public disclosures” made during administrative investigations or audits. For instance, various government agencies regularly conduct administrative audits and investigations of hospitals’ inpatient billings. Oftentimes, these inquiries involve oversights, communications, and audits by the government, consultants, attorneys and contractors. However, unless these disclosures reach the general public, courts will typically conclude that a triggering “public” disclosure has not occurred. The Sixth Circuit decision correctly holds this position.

More information for whistleblowers is located at the Nolan Auerbach & White website.