United States: CIVIL FALSE CLAIMS ACT: Supreme Court Hears Oral Argument On Whether A FOIA Response Is A "Public Disclosure"

Today, in a debate notable more for its liveliness than its import, the Supreme Court heard oral argument on the latest False Claims Act "public disclosure" bar question to have reached the Court's doorstep due to conflicting circuit court decisions.  This is now the third time in four years that the Court has focused on FCA Section 3730(e)(4), which bars qui tam suits if the allegations were "publicly disclosed" in enumerated sources unless the relator is an "original source" of the information underlying the allegations.  This section of the FCA, which serves to encourage whistleblowers to bring information about fraud to the government's attention while preventing parasitic qui tam suits that are essentially based on publicly disclosed information, provides:

In today's case, Schindler Elevator Corp. v. United States ex rel. Kirk, the Court wrestled with the question of whether a government agency's response to a request under FOIA constitutes a "report" or "investigation" within the meaning of Section 3730(e)(4)(A).  (Section 3730(e)(4) was amended in the Affordable Care Act of 2010, but that revision is not retroactive and therefore does not apply to the issue in this case.) 

Schindler's Issue

In Schindler, the relator's FCA claims were based on a false certification theory.  In particular, the relator claimed that the elevator services company was liable for false claims to its government agency customers on the grounds that the company falsely certified that it had filed VETS-100 reports with the Department of Labor ("DOL") showing the number of veterans that the company employed.  The relator―who lacked direct and independent knowledge of the contents of the VETS-100 reports―based his claim, in part, on information obtained through a FOIA request submitted by relator's wife, namely, that DOL did not find the company's VETS-100 reports for certain years.  The company sought to dismiss the FCA claim on the grounds that the FOIA response obtained and relied on by the relator constituted a "report" or "investigation" within the meaning of Section 3730(e)(4)(A).  The Second Circuit reversed the district court's ruling that the FOIA responses amounted to a public disclosure, and the Supreme Court probed that question―in detail―in today's session.  

Petitioner's Argument

Consistent with the arguments submitted in its brief, the company argued today that the Court must afford the terms "report" and "investigation" their ordinary meanings, which easily encompasses the process by which the government agency responds to a FOIA request―that is, by evaluating the request, searching for responsive information within the agency, determining whether the information is releasable, and issuing the agency's response to the requesting party.  This prompted some skepticism from the Court, including Chief Justice Roberts, who questioned whether the mere ministerial act of gathering and producing existing agency documents should be construed as a government "report."  Likewise, Justice Ginsburg seemed troubled by the notion that an agency FOIA official's mechanical production of raw filings made by private parties should transform those documents into a "government report." In response, Petitioner's counsel insisted that every FOIA response is itself a "report."  Counsel repeatedly pointed out that a ruling by the Court that FOIA responses are "public disclosures" would not prevent the suit from going forward as long as the relator could establish that he was an "original source" of the allegations.   Petitioner's counsel also noted that the 2010 revision of the public disclosure bar changes the import of this question in the future because it allows the government to oppose imposition of the bar.  See Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119, 901-02 (2010) (amending 31 U.S.C. § 3730(e)(4)).  See also FraudMail Alert No. 10-03-24. 

Arguments of Respondent and the United States 

Relator argued on brief that it would be more appropriate to apply narrower meanings of "report" and "investigation," differentiating those terms from other terms in the public disclosure provision, such as "audit" and "hearing."  At today's argument, relator's counsel argued that the case could be resolved most readily with a simple ruling that agency FOIA responses―which are distinct from the normal agency mission―simply are not administrative reports or investigations.  This argument provoked some skepticism as well.  Justice Alito pointed out that a FOIA response could qualify as a "report" or "investigation" under Respondent's dictionary definition as well as the one used by the Second Circuit.  Justice Scalia added that the Court needed reasons to choose a narrower definition.  He also questioned whether the statutory purposes were met by the relator, who needed the information gained in the FOIA response to make his fraud allegations in this case.  Further, Justice Alito wondered how to distinguish FOIA reports or investigations from other government reports that do not involve the kind of substantive analysis that Respondent asserted FOIA responses lack.     

Justices Alito and Scalia posed similar questions to counsel for the United States, who responded that if a FOIA response was considered a substantive analysis of facts, every government disclosure would qualify as a report under the FCA's public disclosure bar.  Justice Breyer questioned whether it made sense to determine whether the information at issue is a "report" based on the source of the request―for example, a FOIA request for the information versus a request for the same information made by a fraud or compliance official within the agency.   Finally, Justice Scalia simply declared:

Based on the arguments today, it appears unlikely that the Court will issue an opinion that will stray far from the very narrow question of whether a FOIA response is a public disclosure.  If the Court adopts the bright-line test advocated by Petitioner that all information disclosed pursuant to FOIA requests is a public disclosure, this will serve to prevent parasitic suits by opportunistic relators who have nothing to contribute to the FCA allegations other than information obtained from the government's own files.  On the other hand, if the Court rules that FOIA responses do not fall within the ambit of Section 3730(e)(4), it will likely encourage more prospective relators to mine the government's own files for information in order to generate FCA claims.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.