Alaska Employment Law

Introduction

On March 30, 2010, the United States Supreme Court issued an opinion addressing the public disclosure bar to qui tam claims filed under the False Claims Act.  The case is Graham County Soil & Water Cons. Dist. v. United States ex rel. Wilson. This summary briefly discusses the opinion and its significance.

The Case

Karen Wilson was an employee of a county department.  She filed a qui tam action under the False Claims Act against miscellaneous entities arguing that they had filed false claims against the United States.  In a qui tam action, a private individual acts as a sort of private attorney general, prosecuting claims for the government and receiving a percentage of any recovery as compensation for the time and effort expended. However, there is a “public disclosure” jurisdictional bar.  No qui tam action is allowed if there was a prior public disclosure of any alleged wrongdoing that forms the basis of the suit.  Public disclosure includes reports from the GAO, Congress, media, and “administrative” reports.  The information that Wilson relied on was contained in state and local government reports.  The district court dismissed her suit, reasoning that state and local reports were included within the concept of “administrative” reports.   The Fourth Circuit reversed.  The court concluded that the public disclosure bar only applied to reports and audits prepared by the federal government. 

The issue here concerned what is meant by “administrative” reports under the public disclosure bar.  There is a circuit split.  In the Third and Fourth Circuits, only federal reports qualify.  In the Eighth, Ninth, and Eleventh Circuits, public disclosure can include state reports. 

The Opinion 

The Court reversed by a 7-2 margin, with Justice Stevens authoring the majority opinion.  The majority concluded that there was no reason to narrowly interpret “administrative reports” as being restricted to reports issued by a federal agency, because the statute did not do so and  nothing in the legislative history reflected Congressional intent to exclude state or local administrative reports.   

Significance

The Court’s opinion broadens the scope of administrative reports.  This expands the public disclosure bar and will make it more difficult for private citizens to successfully prosecute False Claims Act claims.  In my annual preview, I predicted:

In Graham County, I think the Court will reverse.  The statutory bar does not define which reports or audits fall within the scope of the public disclosure bar for “administrative” reports.  There is typically a significant amount of overlapping authority and regulatory shading between state and federal agencies.   There are also parallel funding tracks.  Part of the idea behind the public disclosure bar is that potential plaintiffs should not piggy-back on regularly occurring or pending audits or investigations.  The public disclosure bar serves twin goals—to discourage professional “opportunistic” plaintiffs and to reward honest whistleblowers.  Moreover, there is a media prong.  It makes little sense to apply the public disclosure bar to a media outlet (no matter its size or location) but to deny it to a large state agency report.  Add it all up and it suggests to me that the public disclosure bar should be broadly construed to include all reports, audits, and investigations from any governmental entity (federal, state, or local).