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Supreme Court Rules That Public Disclosure Bar to False Claims Act Qui Tam Actions Applies to County and State Administrative Reports, Audits, and Investigations

On March 30, 2010, the Supreme Court issued an opinion widening the public disclosure bar to qui tam actions brought under the False Claims Act (FCA), holding that “the reference to ‘administrative’ reports, audits, and investigations” contained in the public disclosure bar of the FCA “encompasses disclosures made in state and local sources as well as federal sources.”  In Graham County Soil and Water Conservation District et al v. United State ex rel. Wilson, the Court ruled that a relator could not maintain a qui tam suit when the information that her suit is based on is contained in county and state administrative reports. 

Wilson filed suit in 2001, alleging that the defendants and a number of local and federal officials violated the FCA by submitting false claims under 1995 contracts which provided federal funds to aid with flood restoration.  The defendants argued that no federal court has the jurisdiction to hear Wilson’s claim because 31 U.S.C. § 3730(e)(4)(A) removes jurisdiction over qui tam actions based on information publicly disclosed “in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation. . .”  Examining the construction of the statute and legislative history, the court sided with the defendants, holding that the FCA’s public disclosure bar is not limited to federal disclosures.

However, the impact of this decision is minimal as the Patient Protection and Affordable Care Act of 2009, signed by President Obama on March 23, 2010, replaces 31 U.S.C. 3730(e)(4) with language clarifying that the public disclosure bar only pertains to information disclosed “(i) in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party; (ii) in a congressional, Government Accountability Office, or other Federal report, hearing, audit, or investigation. . .”  In addition, under the new statute, the public disclosure bar is no longer jurisdictional and the Government may object to the dismissal of a claim based upon publicly disclosed information.  For more information about the impact of the Patient Protection and Affordable Care Act of 2009’s impact on whistleblowers, click here.

For information about The Employment Law Group® law firm’s False Claims Act Practice, click here.

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