Whistleblowing & Compliance Law Blog : Whistleblowing Defense Lawyer & Attorney : Epstein Becker & Green Law Firm : Employment Retaliation, Compliance Counsel

By: Stuart M. Gerson

On May 16, 2011, the U.S. Supreme Court decided the case of Schindler Elevator Corp. v. United States ex rel. Kirk (pdf), holding that the public disclosure bar of the False Claims Act (FCA) is triggered by a federal agency’s written response to a Freedom of Information Act (FOIA) request. This important, and much awaited, decision makes it clear that an agency’s FOIA response constitutes a “report” for purposes of the FCA’s public disclosure bar, which forecloses private parties from bringing qui tam whistleblower suits to recover falsely or fraudulently obtained federal payments where those suits are "based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation, or from the news media." 31 U. S. C. §3730(e)(4)(A).

The Respondent in the underlying case, a Vietnam War Veteran, brought a qui tam lawsuit under the FCA, alleging that his former employer submitted hundreds of false claims for payment under federal contracts that were subject to certain reporting requirements under the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA). Specifically, the Respondent alleged that his former employer failed to adequately report the number of veterans it employed to the U.S. Department of Labor (DOL). In support of his allegations, the Respondent relied upon three written responses to FOIA requests, which his wife received from the DOL, which supplied the reports filed by the company, or lack thereof. 

The U.S. Court of Appeals for the Second Circuit, reversing an order of dismissal from the U.S. District Court for the Southern District of New York, held that the DOL’s response was neither a “report” nor an “investigation,” as contemplated by the FCA’s public disclosure bar. The Supreme Court reversed per Justice Thomas, writing for himself, Chief Justice Roberts and Justices Scalia, Kennedy and Alito.  Justice Ginsburg, joined by Justices Breyer and Sotomayor, dissented. Justice Kagan took no part in this case.

By Stuart M. Gerson

Suits in the name of the United States under the Federal False Claims Act (“FCA”) brought by private individuals known as qui tam relators are among the most common forms of whistleblower actions in the federal system. The Supreme Court rendered its much-anticipated decision in Graham County Soil and Water Conservation District, et al. v. United States ex rel. Wilson (pdf), imposing a significant limitation on the ability of these relators to satisfy an important jurisdictional bar.

The FCA authorizes both the Attorney General and private qui tam relators to bring actions against persons who make or facilitate fraudulent claims for payment from the United States. However, in the absence of the government, a relator will be barred from proceeding on his own if the action is based upon the public disclosure of allegations or transactions in, inter alia, "a congressional, administrative, or Government Accounting Office ("GAO") report, hearing, audit, or investigation." 31 U. S. C. §3730(e)(4)(A). The Graham County case involved federal contracts and funding for the repair of flood damage. The relator, Wilson, a local government employee, alerted both federal and county and state officials to irregularities in performance. Both the county and the state issued reports making findings about these potential irregularities and Wilson thereupon filed a qui tam action against the county conservation districts administering the contracts. The District Court dismissed for lack of jurisdiction because it held that the allegations publicly disclosed in the county and state reports constituted "administrative" reports under the FCA's public disclosure bar. The Fourth Circuit reversed, holding that only federal administrative reports may trigger the public disclosure bar.

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