U.S. Supreme Court Adds Wrinkle to the Old Public Disclosure Bar

Faced with a split among the federal circuits, the U.S. Supreme Court recently decided to broadly read a key term of the False Claims Act’s public disclosure bar, constructing additional headaches, largely for whistleblowers with cases based on conduct years ago.  Unless a whistleblower can demonstrate that he has independent knowledge of a fraud, the public disclosure bar will generally derail a qui tam suit that is “substantially similar” to publicly disclosed “allegations or transactions…in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation.” 31 U.S.C. § 3730 (e) (4) (A). Recently, in Schindler Elevator Corp. v. United States ex rel. Kirk, No. 10-188 (May 16, 2011), the Court held that a written response to a FOIA request qualifies as a governmental “report”, triggering the False Claims Act’s public disclosure bar.

The Court’s reading of “report” is largely disconnected from reality. When the federal government receives a FOIA request, it responds by handing over a copy of the requested document. End of story. A government official does not pen an extensive report, detailing official government policy on the content of the requested document. Indeed, in the vast majority of cases, the “report” consists of a boilerplate cover form, memorializing the disclosure of the copied document. Nearly half of the circuits and three of the Justices recognize this reality.

So what does this mean for would-be-whistleblowers? Not much. First, it is important to note that Congress amended the public disclosure bar in 2010, clarifying that the public disclosure bar only silences whistleblowers who simply parrot publicly disclosed fraud allegations. Second, even under the old public disclosure bar, a whistleblower can move forward with a qui tam suit as long as his knowledge of the fraud is not dependent on the publicly disclosed allegations.

For more information about qui tam law and healthcare fraud, contact Nolan & Auerbach, P.A.