On March 14, a three-judge panel of the Fourth Circuit held that a defendant’s SEC filings may trigger the FCA’s public disclosure bar. In U.S. ex rel Jones v. Collegiate Funding Services, Inc., No. 11-1103 (4th Cir. March 14, 2012), 2012 U.S. App. LEXIS 5574 (slip opinion attached), the relators alleged that CFS, a major student loan lender, violated the FCA by falsely certifying compliance with a variety of loan program requirements. The defendants successfully moved to dismiss the relators’ amended complaint on the ground that certain allegations had been publicly disclosed in various places, including the defendant’s SEC filings.
On appeal, the relators argued that SEC filings do not qualify as “administrative reports” for purposes of the FCA’s public disclosure bar. The Fourth Circuit panel affirmed the district court, holding that “the SEC filings by CFS were reasonably determined to be administrative reports because they were submitted under the SEC’s administrative regulatory requirements of the company. Forms 8-K and S-1 are mandatory filings for all publicly traded companies. While these documents were not authored by the SEC or created under their supervision, they were produced at the request of and were made public by the SEC in the course of carrying out its activities as a federal agency.”
While the opinion is unpublished, and therefore of no precedential value, its reasoning has persuasive value. As the Fourth Circuit panel explained, “the Supreme Court has noted that statutory construction of the FCA should be guided by the likelihood that a disclosure will ‘put the Government on notice of a potential fraud . . . . Congress passed the public disclosure bar to bar a subset of those suits that it deemed unmeritorious or downright harmful . . . . The statutory touchstone, once again, is whether the allegations of fraud have been [publicly disclosed].’ [citing Graham County Soil & Water Conservation Dist. v. United States ex rel. Wilson, 130 S. Ct. 1396, 176 L. Ed. 2d 225 (2010)]. Here, the SEC forms in question were requested, received, made public, and presumably included in any corporate profiles compiled by the agency. While such a report does not necessarily alert federal agencies to wrongdoing, it certainly provides easily accessible notice of the transactions between CFS and its customers from which an investigation could have begun or developed.” Therefore, the panel concluded that “the SEC filings in question . . . were properly considered by the court below in the mix of publicly available information on the basis of which, in whole or in part, the Relators’ claims are based.”