Susan Schneider Thomas Published in the University of Dayton Law Review

Berger Montague attorney Susan Schneider Thomas recently had her law review article published concerning the False Claims Act (“FCA”). The article is entitled “Misguided Meanders: The ‘Trail of Fraud’ under the Public Disclosure Bar of the False Claims Act,” published in 42 Univ. of Dayton Law Rev. 161 (2018).

The Public Disclosure Bar (“PDB”) is a provision of the False Claims Act that seeks to prevent private citizens from simply using public information to file a case on behalf of the government – and then claim a share of the government’s recovery. Pursuant to the PDB, a Relator is precluded from proceeding in a FCA case if “substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed,” 31 U.S.C. 3730(e)(4)), through certain defined sources.

The Public Disclosure Bar is frequently invoked by defendants to try to have whistleblower cases dismissed. Typically, defendants amass all types of media or governmental reports that mention the subject matter of the lawsuit and argue that those public disclosures were sufficient to “put the government on the trail of fraud,” hence making the whistleblower unnecessary.

Because the FCA wants to avoid having the government indebted to a whistleblower who didn’t truly render assistance to the government in uncovering the fraud, Congress has provided that basis for dismissing whistleblower’s complaints. Notably, the “trail of fraud” language does not appear in the Act, but many courts latched on to that language from a very early FCA case as the standard for assessing whether the Public Disclosure Bar should be applied.

Essentially, the PDB is an effort to find the right balance between encouraging private whistleblowers to report fraud versus preventing “opportunistic” relators who might not deserve the type of award that is given to successful whistleblowers whose cases result in recovery for the federal government. In their zest to cut out these so-called opportunistic relators, many would argue that courts have been overly aggressive in dismissing cases even where the relator truly has valuable, non-public information about particular wrongdoers.

This article argues that the “trail of fraud” language does not strike the proper balance, was derived from a now-abandoned provision of the FCA, and likely keeps the government from being informed about substantial frauds or impairs the government’s ability to recover for those frauds because the knowledgeable insiders have been pushed out of the cases.

As Ms. Thomas explained, “The idea for this article stems all the way back to my initial days working with a group of law firms on a series of drug price cases, in the early 2000’s, where we ultimately recovered several billion dollars for the federal and state governments. My first task was to read literally dozens of government reports about problems with reported prices and argue that those reports did not provide defendants with either a ‘government acquiescence’ or a public disclosure defense. I was puzzled and frustrated by the trail of fraud language under the PDB and have now put something together that could help get that language dropped from the jurisprudence.”

Ms. Thomas is an attorney in the Firm’s False Claims Act, Whistleblower and Qui Tam Group and concentrates her practice in the areas of healthcare and defense contractor fraud. She has served on the Editorial Advisory Board for Law360’s Aerospace and Defense, and Health, online newsletters and has lectured on various topics concerning the False Claims Act, including whistleblower retaliation.

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Susan Schneider Thomas

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