Two Courts Reject Previous Ruling about ‘Public Disclosure Bar’ in Whistleblower Lawsuits

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‚ÄėPublic Disclosure Bar‚Äô in Whistleblower Lawsuits ruling rejected

‚ÄėPublic Disclosure Bar‚Äô in Whistleblower Lawsuits ruling rejected

An potential obstacle for whistleblowers looking to file a qui tam lawsuit under the False Claims Act (FCA) is “public disclosure bar”. This bars a whistleblower from suing if information is ‚Äúbased upon the public disclosure of allegations or transactions‚ÄĚ in specific ways, including a government ‚Äúreport, hearing, audit, or investigation,‚ÄĚ If the whistleblower is the original source of that information, then this does not apply. In 1999, the U.S. Court of Appeals for the Seventh Circuit ruled that ‚Äúpublic disclosure‚ÄĚ includes information given to a ‚Äúcompetent government official‚ÄĚ and ‚Äúpublicly disclosed‚ÄĚ. This can be an issue for whistleblowers if information was disclosed to the government but never available to the general public.

The U.S. Court of Appeals for the Fourth Circuit recently rejected this interpretation and ruled that the ‚Äúpublic disclosures‚ÄĚ only constitute information that is made to the public at large or the public domain. The case, which has been in the legal system for 14 years, was filed by an employee of a county government program intended to help counties affected by storm damage who reported concerns of fraud to the USDA in 1995. One of the counties was audited the following year and a report was issued supporting the whistleblower’s allegations. In 1997, an investigation was conducted an a subsequent report substantiated her other claims. Because these reports were distributed to various state and federal government agencies but never provided to the general public, the Fourth Circuit ruled that they are not public disclosures.

The U.S. Court of Appeals for the Sixth Circuit came to a similar conclusion in considered a case alleging that false claims were submitted to federally-funded healthcare programs such as Medicare and Medicaid through overbilling. The whistleblower was unaware that the government had already initiated an audit of the defendant’s billing practices in 2006. This led to an administrative settlement in late 2009. The district court dismissed his case under the premise that the audit counted as ‚Äúpublic disclosure‚ÄĚ. However, the Sixth Circuit overturned this decision, and ruled that since government is not ‚Äúpublic‚ÄĚ, information to the government does not by itself count as ‚Äúpublic disclosure‚ÄĚ.