By Shauna Itri
Early Public Disclosure Bar
In the early 1940s, some enterprising individuals filed False Claims Act (“FCA”) actions based not on their own independent knowledge of a fraud but on information revealed in criminal indictments. S.Rep. No. 99–345, at 10–11 (1986). This harmed the government because the FCA required the government to pay these relators, even though the government already knew about the fraud.
1943 Amendment to the Public Disclosure Bar
To counteract these “parasitic lawsuits,” Congress added a provision in 1943 that denied jurisdiction over FCA actions that were “based upon evidence or information in the possession of the United States, or any agency, officer or employee thereof, at the time such suit was brought.” 31 U.S.C. § 232(C) (1946). But this “government knowledge defense” had the unintended effect of also eliminating meritorious lawsuits, because courts strictly interpreted § 232(C) as barring FCA actions even when the government knew of the fraud only because the relator had reported it. U.S. ex rel. Moore & Co., P.A. v. Majestic Blue Fisheries, LLC, 812 F.3d 294, 298 (3d Cir. 2016).
1986 Amendment to the Public Disclosure Bar
“In 1986, Congress sought ‘[t]o revitalize the qui tam provisions,’” U.S. ex rel. Mistick PBT v. Housing Authority of City of Pittsburgh, 186 F.3d 376, 382 (3d Cir. 1999) (quoting U.S. ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v. Prudential Ins. Co., 944 F.2d 1149, 1154 (3d Cir. 1191)), in an effort “to strike a balance between encouraging private persons to root out fraud and stifling parasitic lawsuits,” United States ex rel. Zizic v. Q2 Administrators, LLC, 728 F.3d 228, 235 (3d Cir. 2013). As a result, Congress enacted 31 U.S.C. § 3730(e)(4)(A), which provides:
No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or General Accounting Report, hearing, audit, or investigation, or from the news media, unless the person bringing the action is an original source (31 U.S.C. § 3730(e)(4)(A)).
31 U.S.C. § 3730(e)(4)(A) (the “Public Disclosure Bar”).
2010 Amendment to the Public Disclosure Bar
Congress amended the provisions of the public disclosure bar in 2010 as follows:
(A) The court shall dismiss an action or claim under this section, unless opposed by the Government, if substantially the same allegations or transactions as alleged in the action or claim were publicly 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; or
(iii) from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.
(B) For purposes of this paragraph, “original source” means an individual who either (i) prior to a public disclosure under subsection (e)(4)(a), has voluntarily disclosed to the Government the information on which allegations or transactions in a claim are based, or (2) who has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and who has voluntarily provided the information to the Government before filing an action under this section.
See 31 U.S.C. § 3730(e)(4) (2010).
Substantively, the 2010 amendments left the test for application of the public disclosure bar largely unchanged. Under either version, then, the public disclosure bar applies where: (1) information was publicly disclosed via a source listed in § 3730(e)(4)(A); (2) the public disclosure included an “allegation or transaction” within the meaning of the statute; and (3) the complaint is “based upon” or “substantially the same” as those disclosures of fraud. See Moore, 812 F.3d at 301.