Seventh Circuit Rejects Public Disclosure Bar in Recent Whistleblower Lawsuit

As we have explored in previous posts, there are several defenses available to defendants named in a qui tam whistleblower lawsuit under the False Claims Act. One of the most well-known legal mechanisms used to avoid False Claims Act liability is known as the public disclosure bar. This term refers to the False Claims Act’s prohibition against allowing a qui tam plaintiff the opportunity to pursue a whistleblower lawsuit based on facts that are already part of the public sphere of knowledge – regardless of whether the plaintiff ever actually heard about the facts prior to filing. Common examples of public disclosures include court documents, investigations, and information released by the media.

However, in a recent whistleblower lawsuit considered by the U.S. Court of Appeals for the Seventh Circuit, the Court determined that the public disclosure bar did not apply to preclude the whistleblower from receiving his reward – finding that the relator’s claims were not based solely on information readily available on the internet.

Facts of United States ex rel. Heath v. Wisconsin Bell, Inc.

The facts of the Heath case involve the provision of telecommunications services by provider Wisconsin Bell to several school districts in the Wisconsin area. Under the Telecommunications Act of 1996, any private telecommunications organization providing services to a government entity (i.e., a school district) must promise to provide rates for service that are below those offered to the general public. These telecommunications services are subsidized by the federal government for qualifying school districts, and must be provided in a cost-effective manner.

According to the relator’s complaint, Wisconsin Bell was not abiding by the requirement to provide low-cost rates to certain school districts, and was in fact charging certain school districts higher rates than others. According to the relator, who served as an auditor for the school, he was able to expose the varying rates by accessing the Voice Network Services Agreement on the Department of Administration’s public website. As a result, his case was dismissed by the District Court for lack of subject matter jurisdiction, citing the public nature of the information as a complete bar to his recovery.

On appeal, the relator advanced the argument that the information contained on the website in the Voice Network Services Agreement would, by itself, be insufficient for the average person to deduce fraudulent activity was afoot. The court agreed, holding that “no one….could view the agreement in a vacuum and realize that Wisconsin Bell was overcharging school districts.”  Further, the court explained that it was the relator’s “extensive knowledge of the schools’ telecommunications pricing that made his claim possible.”

Contact a Reputable Whistleblower Attorney Today!

If you are aware of possible fraud under a government contract for services or products, do not be afraid to come forward. Plaintiffs advancing a successful whistleblower lawsuit can recover up to 30 percent of the ultimate recovery. For more information about the False Claims Act process, contact Berger Montague today.

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By | 2018-03-27T09:39:41+00:00 September 4th, 2014|False Claims Act Legal News|