The FCA continues to be the federal government’s primary civil enforcement tool for investigating allegations that healthcare providers or government contractors defrauded the federal government. In the coming weeks, we will take a closer look at recent legal developments involving the FCA. This week, we examine the FCA’s public disclosure bar and recent cases considering whether disclosures are sufficient to bar FCA claims.
The FCA’s public disclosure bar prevents a relator from filing a qui tam complaint based on information previously disclosed to the public, thereby dissuading parasitic lawsuits based on publicly available information. In cases considering the scope of the public disclosure bar, courts have continued to examine the issue of how or to whom information must be disseminated in order to constitute a “public disclosure,” which often has resulted in a narrowing of the public disclosure bar’s scope in a given case. Such cases marked a shift away from decisions favorable to FCA defendants toward a more nuanced and specific application of the public disclosure bar.
Determining what disclosures are sufficient to bar FCA allegations most often has arisen in the context of analyzing disclosures made to government or regulatory entities. U.S. ex rel. Wilson v. Graham County Soil & Water Conservation Dist., 777 F.3d 691 (4th Cir. 2015), involved allegations of fraud against the government with respect to an Emergency Watershed Protection Program. The district court found that the relator’s allegations were previously publicly disclosed in an audit report prepared by county auditors and in an investigation report prepared by the USDA and dismissed the relator’s complaint. The Fourth Circuit reversed the district court on the grounds that the reports at issue were not “publicly” disclosed because they were disclosed only to governmental agencies. The Fourth Circuit held that “a ‘public disclosure’ requires that there be some act of disclosure outside the government.” The Fourth Circuit noted that “the Government is not the equivalent of the public domain” and that “nothing in the record suggests that either report actually reached the public domain.” Notably, the Fourth Circuit clarified that the fact that the reports were accessible to the public through public information laws did not affect its analysis because the reports were never actually requested by or disclosed to the public.
Citing Wilson, the Sixth Circuit issued a similar opinion three weeks later in U.S. ex rel. Whipple v. Chattanooga-Hamilton County Hospital Authority, 782 F.3d 260 (6th Cir. 2015). In that case, the district court granted partial summary judgment in favor of the defendant on the grounds that the relator’s allegations were previously publicly disclosed through a government audit and investigation. The Sixth Circuit reversed the district court, holding that disclosure of allegations only to the government or its contractors was not sufficiently “public” to trigger the public disclosure bar. The Sixth Circuit reasoned that the relevant disclosures were made only to the government, its agents and the defendant’s own consultant, which were subject to confidentiality obligations to the defendant, and that the public disclosure bar requires a broader disclosure to the public. According to the Sixth Circuit, to hold otherwise would be to render the term “public” superfluous.
In U.S. ex rel. Little v. Shell Exploration & Production Co., 602 F. App’x 959 (5th Circuit 2015), two federal auditors filed a qui tam suit based on allegations learned during the course of their official duties. The district court granted summary judgment for a second time in favor of the defendants on public disclosure grounds, holding that the “substance” of the qui tam complaint previously was publicly disclosed through public comments, administrative and court decisions, and a government audit and investigation. The Fifth Circuit reversed the district court, re-affirming its previous holding in the case that disclosures that were “never disseminated into the public domain” were not “proper subjects for analysis” under the public disclosure bar. Limiting its analysis only to information disclosed beyond the defendants and the government, the Fifth Circuit held that the remaining disclosures did not disclose the substance of the allegations in the relators’ qui tam complaint.
Although federal appellate courts remain split on the issue of what type of disclosure is sufficient to trigger the public disclosure bar, the opinions in both Wilson and Whipple note that the approach adopted by the Seventh Circuit is increasingly becoming an isolated, minority approach. The Seventh Circuit is the only court to hold that disclosure of information to “a competent public official” who has “managerial responsibility” for the type of fraudulent claim alleged is sufficient to bar FCA allegations. U.S. ex rel. Mathews v. Bank of Farmington, 166 F.3d 853, 861 (7th Cir. 1999), overruled on other grounds, Glaser v. Wound Care Consultants, Inc., 570 F.3d 907 (7th Cir. 2009). Thus far, the Supreme Court has declined the opportunity to address this circuit split.