Untangling the Public Disclosure Bar
Whistleblowers often face the unfounded accusation of being “opportunists” or “parasites” taking advantage of what defendants claim was already known to the government or known to the public. It is often an unfair smear, but also speaks to an important but complex part of the False Claims Act: the “public disclosure bar.”
Congress has struggled since enactment of the FCA in 1863 (amending it at least three times) to find the right balance between preventing truly parasitic use of public information and encouraging whistleblowers to come forward with actionable information.
The current statutory language, as amended in 2010, provides: “The court shall dismiss an action or claim under this section, unless opposed by the Government, if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed—(i) in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party; (2) in a congressional, Government Accountability Office, or other Federal report, hearing, audit, or investigation; or (iii) from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.” 31 U.S.C. § 3730(e)(4)(A).
Further, an original source is defined as “an individual who either (1) prior to a public disclosure under subsection (e)(4)(a), has voluntarily disclosed to the Government the information on which allegations or transactions in a claim are based, or (2) who has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and who has voluntarily provided the information to the Government before filing an action under this section under this section.” Id. at § 3730(e)(4)(B).
While defendants frequently raise the public disclosure bar, when analyzed properly, it applies only in very specific circumstances.
Not All That’s Public Is A “Public Disclosure”
Though defendants often try to argue that anything “public” is a “public disclosure,” unless the public disclosure is from one of the three channels enumerated by statute, it is not a qualifying disclosure.
First, the public disclosure bar applies to “Federal criminal, civil, or administrative hearing[s] in which the Government or its agent is a party.” The term “hearings” in this context includes things like court proceedings, administrative proceedings, or publicly-filed documents relevant to them. However, it is important to understand whether the proceeding or its documents are “public.” For example, if a document is filed under seal, or if it is produced privately in discovery, is that a public disclosure? Courts are mixed on these questions. It is important for attorneys to carefully analyze litigation or hearing sources and the case law in their particular jurisdiction.
Second, the public disclosure bar applies to “congressional, Government Accountability Office, or other Federal report[s], hearing[s], audit[s], or investigation[s].” This includes the obvious, like reports drafted by Congressional committee staff, or investigative reports by an agency, but also includes other materials in the federal government’s possession that are less intuitive. For example, some courts have concluded that reports prepared by non-government actors at the government’s request can count in this context, like SEC filings. [1] The Supreme Court has also held that materials produced by the government in response to a Freedom of Information Act (FOIA) request count as publicly-disclosed “reports” and/or “investigations.”[2]
Third, the public disclosure bar applies to information “from the news media.” This term is fairly intuitive when it comes to traditional media, like newspapers, television, magazines, and so on. But in the internet age, it has become more difficult to draw the line between news media and not. Some courts have found that internet pages that would never in common parlance be called “news media” fall under this channel, like general public websites of companies or government agencies.[3] Other courts have declined to go that far, considering it a sweeping conclusion that everything on the internet would qualify as news media.[4] Many courts are in the middle, trying to analyze the media-like qualities of a website to determine whether it counts. For example, some courts have looked at whether the information is in any way curated or expected to be reliable,[5] or whether it shows other qualities of being media-like such as newsworthiness, editorial independence, intent to disseminate widely, and so on.[6]
Tomato, Tom-ah-to: Substantially the Same Allegations or Transactions?
Next, even if there is a disclosure from a relevant source, it is not an actionable “public disclosure” under the FCA unless it revealed “substantially the same allegations or transactions as alleged” in the whistleblower’s qui tam complaint. But what is “substantially the same” or not? And what are “allegations or transactions”?
Courts have held that an “allegation of fraud” for public disclosure purposes has not occurred unless “the publicly disclosed information … contain[s] an explicit accusation of wrongdoing.”[7] And a substantially similar “transaction” is only publicly disclosed for this purpose using the following formula logic: “[i]f X + Y = Z … the combination of X and Y must be revealed, from which readers or listeners may infer Z, i.e., the conclusion that fraud has been committed.”[8]
In other words, the public disclosure of one piece of the puzzle is not enough. The disclosure either has to include an actual allegation of the same wrongdoing alleged in the qui tam case, or has to allege all the pieces of the scheme that would lead to that conclusion. The Ninth Circuit Court of Appeals recently confirmed this approach when it rejected a defendant’s public disclosure argument because in that case “the scattered qualifying public disclosures each contain[ed] a piece of the puzzle, but none show[ed] the full picture. In his qui tam action, [the whistleblower] filled the gaps by putting together the material elements of the allegedly fraudulent scheme.”[9]
Points for Originality: The Original Source Exception
Finally, even if a qualifying public source disclosed “substantially the same” information, there is still one more step that protects whistleblowers from dismissal. If the whistleblower is an “original source,” the public disclosure bar does not apply.
The original source requirement — only relevant once the other steps have been passed — is satisfied in one of two ways. First, an original source can be someone who, prior to the relevant public disclosure, “has voluntarily disclosed to the Government the information on which the allegations or transactions in a claim are based.” The first part is fairly intuitive: was the information disclosed before the relevant public disclosure? Whistleblowers and their attorneys should keep detailed records of disclosures to the government in case they need to prove status as an original source down the line. The second part creates an important limitation: the prior disclosure has to include “the allegations or transactions” on which the case is based. This means whistleblowers may struggle to rely on an early and incomplete disclosure.[10]
Second, even without prior disclosure, a whistleblower can be an original source if they have “knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions” and provide their information to the Government before filing. Again, record keeping is critical so that whistleblowers and their attorneys can confirm prior voluntary disclosure if needed. More importantly, courts are all over the map on what qualifies as “independent of and materially adds to” the public information. It is safe to say that not all independent information is sufficient to “materially add” to a public disclosure. The more that independent information does something like establish the defendant’s knowledge, add to the time frame, or otherwise expand the scope of the fraud, the more likely it is to satisfy this requirement.[11]
Max Rodriguez is the Principal & Founder of the Law Office of Max Rodriguez.
[1] See, e.g., U.S. ex rel. CKD Project, LLC v. Fresnius Medical Care Holdings, Inc., 551 F. Supp. 3d 27 (E.D.N.Y. 2021), aff’d, 2022 WL 17818587 (2d Cir. 2022).
[2] Schindler Elevator Corp. v. United States ex rel. Kirk, 563 U.S. 401 (2011).
[3] See, e.g., U.S. ex rel. Repko v. Guthrie Clinic, P.C., 2011 WL 3875987 (M.D. Pa. 2011), aff’d, 490 Fed. Appx. 502 (3d Cir. 2012).
[4] See, e.g., U.S. ex rel. Hong v. Newport Sensors, Inc., 728 Fed. Appx. 660 (9th Cir. 2018).
[5] See, e.g., 2014 WL 4375638 (E.D. Pa. 2014) (finding a data collection site is news media, but eBay is not).
[6] U.S. ex rel. Integra Med Analytics LLC v. Providence Health and Servs., 2019 WL 3282619, at *14–15 (C.D. Cal. 2019), rev’d on other grounds, 854 Fed. Appx. 840 (9th Cir. 2021).
[7] U.S. ex rel. Mateski v. Raytheon Co., 816 F.3d 565, 571 (9th Cir. 2016).
[8] Id.
[9] Silbersher v. Valeant Pharms. Int’l, Inc., 76 F.4th 843, 857 (9th Cir. 2023).
[10] See, e.g., U.S. ex rel. Lockey v. City of Dallas, Tex., 2013 WL 268371 (N.D. Tex. 2013), aff’d, 576 Fed. Appx. 431 (5th Cir. 2014) (whistleblower did not include all material allegations from complaint in prior disclosure).
[11] U.S. ex rel. Mitchell v. CIT Bank, N.A., 2022 WL 135438 (E.D. Tex. 2022) (scienter from relator’s knowledge); U.S. ex rel. Hoggett v. University of Phoenix, 2012 WL 2681817 (E.D. Cal. 2012) (defendant continued scheme after prior lawsuit revealed some of it); U.S. ex rel. Booker v. Pfizer, Inc., 9 F. Supp. 3d 34 (D. Mass. 2014) (relator’s knowledge covered different time frame).
