U.S. Supreme Court Holds FCA's Public Disclosure Bar Prohibits Relators From Basing FCA Lawsuits On Information Obtained In Response To FOIA Requests
On May 16, 2011, in a 5-3 split, the United States Supreme Court issued an opinion in Schindler Elevator Corp. v. United States ex rel. Kirk, No. 10-188 concerning the public disclosure bar of the False Claims Act. The Supreme Court agreed with FCA defendant Schindler Elevator and held that a federal agency’s response to a request for records under the Freedom of Information Act (“FOIA”) constitutes a “report” within the meaning of the False Claims Act’s pre-PPACA public disclosure bar. The Supreme Court observed that because the FCA's public disclosure bar does not define "report," the Court looked first at the term's ordinary meaning. Relying on several dictionary definitions, the Supreme Court held that a "report" is "something that gives information" or a "notification" or "an official or formal statement of facts or proceedings." The Court observed that the broad ordinary meaning of “report” is consistent with the generally broad scope of the FCA’s public disclosure bar.
The Court next held that there was no textual basis for adopting a narrower definition of “report” because applying the ordinary meaning of the term does not render superfluous the other sources of public disclosure in 3730(e)(4)(A). The Supreme Court further held that any records the agency produces along with its written FOIA response are part of that response just as if they had been reproduced as an appendix to a printed report. Nothing in the public disclosure bar suggests that a document and its attachments must be disaggregated and evaluated individually. If an allegation or transaction is disclosed in a record attached to a FOIA response, it is disclosed “in” that FOIA response, and therefore, disclosed “in” a report for the purposes of the public disclosure bar.
Applying this framework to the FOIA responses at issue, the Supreme Court held that the Department of Labor's three written FOIA responses in the case, along with the accompanying records produced to the relator's wife, are reports within the meaning of the public disclosure bar. In so holding, the Supreme Court observed that "the sort of case that Kirk has brought seems to us a classic example of the 'opportunistic' litigation that the public disclosure bar is designed to discourage. Although Kirk alleges that he became suspicious from his own experiences as a veteran working for Schindler, anyone could have filed the same FOIA requests and then filed the same suit." The Supreme Court expressly rejected the argument posed in the amicus brief submitted by Taxpayers Against Fraud Education Fund that “the public disclosure bar is intended only to exclude qui tam suits that 'ride the investigatory coattails of the government’s own processes.'”
The Supreme Court left open the issue of whether the relator's suit is "based upon . . . allegations or transactions" disclosed in those reports, and remanded the issue to the Second Circuit to resolve.
Justices Ginsburg, Breyer, and Sotomayor dissented, noting their concern that whistleblowers, attentive to the heightened pleading standards of Rule 9(b) of the Federal Rules of Civil Procedure, will be barred from court if they seek corroboration for their allegations through a FOIA request simply for copies of a contractor's filings. The dissent concluded by stating that "[a]fter today's decision, which severely limits whistleblowers' ability to substantiate their allegations before commencing suit, that question is worthy of Congress' attention."
Justice Kagan did not participate in the decision because she worked on the case while serving as Solicitor General. See our prior posts here and here discussing the factual background, lower court proceedings, and Supreme Court oral argument in the Schindler Elevator case.