On May 16th, the Supreme Court, in a 5-3 decision, held that a whistleblower's complaint under the False Claims Act (FCA) cannot be based upon information obtained from a request under the Freedom of Information Act (FOIA).
The False Claims Act prohibits the submission of false or fraudulent claims for payment to the United States. The statute allows lawsuits to be brought not only by the government, but also by private party qui tam whistleblowers who sue in the name of the government and are eligible to receive a percent of the money recovered in a successful suit. The False Claims Act has recovered billions of dollars into the federal fisc. In fiscal 2010 alone, the government recovered $3 billion in civil settlements and judgments. Whistleblowers, during this same time period, received $385 million.
Permitting private parties to sue on behalf of the government has historically been susceptible to abuse by "parasitic" whistleblowers who bring FCA claims based on information that is already within the public domain or that the relator did not otherwise discover for him or herself. In 1986, Congress amended the FCA to walk a fine line between encouraging whistle-blowing and discouraging opportunistic behavior. One of those limitations was the "public disclosure bar" which bars claims that are based upon public information. The statute defines public information as "the public disclosure of allegations or transactions . . . in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation," but it was not clear whether "report" included information that a whistleblower obtained from a FOIA request. The Supreme Court has now held that it does.
The case before the Court involved a United States Army veteran who alleged that his former employer, Schindler Elevator Corporation, had filed, with the US Department of Labor ("DOL"), false reports about its employment of veterans. As part of the plaintiff's evidence, he relied on information that his wife had obtained from DOL through requests under the Freedom of Information Act. The Court held that information obtained in response to a FOIA request satisfies the dictionary definition of "report" as "something that gives information" or a "notification," and therefore could not be the source for the whistleblower's complaint. The Court also banned a...