Supreme Court To Disclose Meaning Of “Public Disclosure”

The Supreme Court recently granted certiorari to hear an important case regarding the False Claims Act.  In Graham County Soil & Water Conservation District v. United States ex rel. Wilson, the Court will address a circuit split regarding the interpretation of a particular clause within the Act known as the “public disclosure” bar.

As courts have recognized, the “public disclosure” bar is intended to “further the twin goals of rejecting suits that the Government is capable of pursuing itself, while promoting those which the government is not equipped to bring on its own.”  (This quote comes for a 1994 decision by the D.C. Circuit.)  The relevant section of the False Claims Act states that no court has jurisdiction over a qui tam action “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” unless the relator “is an original source of the information.”

If that makes you head spin, don’t worry because you are in good company.  The Ninth and Eleventh Circuit Courts of Appeals have interpreted the clause to mean one thing, while the Third and Fourth Circuits have interpreted the clause to mean something entirely different.  Basically, the clause functions to prevent individuals from bringing qui tam suits once the government has already learned about an alleged False Claim.  But this begs the question:  which government?

Both sides of the circuit split agree that the “public disclosure” bar applies to federal government reports and audits; so the issue boils down to whether the bar also applies to state and local reports and audits.  The Ninth and Eleventh Circuits have determined that the clause applies not only to federal reports and audits, but also to state and local audits.  The Third and Fourth Circuits have determined that the clause applies only to federal reports and audits.

Here’s why this matters — if the Supreme Court determines that the clause applies only to federal reports and audits, then this means an individual can still bring a qui tam suit, even after a state or local report or audit has disclosed an alleged violation of the False Claims Act.  If, instead, the Supreme Court determines that the “public disclosure” bar is held to apply to state and local reports and audits (in addition to federal audits), then this means that once a state or local report or audit had disclosed an alleged violation of the False Claims Act, it is too late for an individual to bring a qui tam suit (unless of course that individual was an original source of the information).

The Supreme Court’s decision – which likely will come in late-2009 or early-2010 – will define the scope of the bar.  Stay tuned for more updates on this case.  Meanwhile, if you want to read up on this case, check out the briefs posted on SCOTUSBLOG.

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