Two Courts Rule that ‘Public Disclosure Bar’ Does Not Bar Whistleblower Suits if Info is Given to Government but Not General Public

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‘Public Disclosure Bar’ Does Not Bar Whistleblower Suits
‘Public Disclosure Bar’ Does Not Bar Whistleblower Suits

‘Public Disclosure Bar’ Does Not Bar Whistleblower Suits
‘Public Disclosure Bar’ Does Not Bar Whistleblower Suits

Some whistleblowers may have an easier time filing a lawsuit under the False Claims Act (FCA) due to recent rulings at two separate courts. The issue was the “public disclosure bar”, which prevents a whistleblower from suing if information is “based upon the public disclosure of allegations or transactions” in specific ways, including a government “report, hearing, audit, or investigation,” If the whistleblower is the original source of that information, then this does not apply.
The U.S. Court of Appeals for the Seventh Circuit ruled in 1999 that information was given to a “competent government official” and “publicly disclosed” then the public disclosure bar can be applied. This can pose a problem for whistleblowers if information was disclosed to the government but never available to the general public.

The Seventh Circuit’s interpretation has been rejected by other federal appellate courts. Most recently, the U.S. Court of Appeals for the Fourth Circuit ruled that the “public disclosures” only constitute information that is made to the public at large or the public domain. The case, which has been in the legal system for 14 years, was filed by an employee of a county government program intended to help counties affected by storm damage who reported concerns of fraud to the USDA in 1995. In 1996, an audit was issued at one of the counties and a report was issued substantiating the whistleblower’s claims. Other parts of her allegations were supported in another reporting following a 1997 investigation. The Fourth Circuit ruled that these reports are not “public disclosures” because even though they were distributed to various state and federal government agencies they were never provided to the general public.

A similar ruling was made by the U.S. Court of Appeals for the Sixth Circuit, who considered a case alleging that false claims were submitted to federally-funded healthcare programs such as Medicare and Medicaid through overbilling. What the whistleblower did not know was that the government had already initiated an audit of the defendant’s billing practices in 2006, which led to an administrative settlement in late 2009. The district court dismissed his case under the premise that the audit counted as “public disclosure” The Sixth Circuit overturned this decision, and ruled that since government is not “public”, information to the government does not by itself count as “public disclosure”.