On Monday, May 16 the U.S. Supreme Court held that a federal agency’s written response to a FOIA request for records constitutes a “report” within the meaning of the public disclosure bar in the False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq. (See Schindler Elevator Corp. v. United States ex rel Kirk). Reversing a decision of the Second Circuit, and resolving some discord between various circuit courts of appeal, the Court’s decision strengthened the public disclosure bar and characterized the case as “a classic example of the ‘opportunistic’ litigation that the public disclosure bar is designed to discourage.” In its 5-3 decision,[1] the Court found that the words congressional, administrative or GAO, which precede the word report, “tell us nothing more than that a ‘report’ must be governmental.”
The FCA’s public disclosure bar precludes private parties from bringing qui tam suits to recover falsely or fraudulently obtained federal payments where those suits are “based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation, or from the news media.” 31 U.S.C. § 3730(e)(4)(A). In Schindler, the qui tam relator brought such a suit, alleging that his former employer had submitted hundreds of false claims for payments to the federal government. The relator alleged that the company’s claims for payment were false because the company had falsely certified its compliance with the Vietnam Era Veteran’s Readjustment Assistance Act of 1972 (VEVRAA). VEVRAA requires the company to submit to the government certain information, including how many of its employees are “qualified covered veterans,” on “VETS-100” forms on a yearly basis. In support of his allegations, the relator relied on information regarding the company’s VETS-100 submissions that he obtained via three records requests his wife filed under the Freedom of Information Act (FOIA), 5 U.S.C. § 552.
The district court granted the company’s motion to dismiss, concluding that the FCA’s public disclosure bar prohibited its jurisdiction over relator’s allegations that were based on information disclosed in a Government “report” or “investigation.” The Second Circuit vacated and remanded the district court’s decision, effectively holding that an agency’s response to a FOIA request is neither a “report” nor an “investigation.” The Supreme Court then reversed and remanded the Second Circuit’s decision, holding that a response to a FOIA request is a report for purposes of the FCA’s public disclosure bar.[2] The Court reasoned that the word “report” in this context carries its ordinary, dictionary-defined meaning, and there is no textual basis for adopting a narrower definition of “report.”
This Supreme Court decision resolves some discrepancy within the circuit courts of appeal with regard to this issue. Although most circuits addressing the issue have already come to the conclusion that a response to a FOIA request constitutes a public disclosure, that conclusion was not uniform. See e.g. United States v. Cath. Heatlhcare W., 445 F.3d 1147, 1153 (9th Cir. 2006) (response to FOIA request triggers public disclosure bar only if the underlying document itself emanates from an enumerated source in section 3730(e)(4)(A)); United States ex rel Siller v. Becton Dickinson & Co., 21 F.3d 1339, 1347-48 (4th Cir. 1994) (requiring proof that relator’s allegations are actually derived from the publicly disclosed information).
Notwithstanding the Supreme Court’s determination of this matter, however, the scope and applicability of the public disclosure bar may not be a closed issue. The majority issued a strongly-worded opinion that derided the relator’s conduct as the very type of “opportunistic” conduct “that the public disclosure bar is designed to discourage.” It further reasoned that a different interpretation of the public disclosure bar would allow anyone to “identify a few regulatory filing and certification requirements, submit FOIA requests until he discovers a federal contractor who is out of compliance, and potentially reap a windfall in a qui tam action under the FCA.” The dissent, on the other hand, lamented that the Court “weaken[ed] the force of the FCA as a weapon against fraud on the part of Government contractors” by “severely limit[ing] whistleblowers’ ability to substantiate their allegations before commencing suit.” Accordingly, the dissent effectively invited Congress to turn its attention to the matter. Of late, there has been much Congressional attention to strengthening anti-fraud laws, including recent amendments to the FCA through the Fraud Enforcement and Recovery of 2009, as well as the Patient Protection and Affordable Care Act. Following this trend, it appears that further such legislation would not be out of the question.
[1] Justice Kagan took no part in the consideration or decision of the case.
[2] The Court did not address whether an agency’s search in response to a FOIA request also qualifies as an “investigation.”
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