05 February 2015

Fourth Circuit Holds That Disclosures Made Solely Within The Government Do Not Trigger The Public Disclosure Bar

Posted by Robert J. Conlan and Kristen A. Knapp

Earlier this week, the Fourth Circuit followed five other Circuits and held that a disclosure of information made solely within the government does not constitute a “public disclosure” under the FCA. While the decision – United States ex rel. Wilson v. Graham Cnty. Soil & Water Conservation Dist., No. 13-2345 (4th Cir. Feb. 3, 2015) – addresses the pre-Patient Protection and Affordable Care Act (PPACA) version of the public disclosure bar, the PPACA amendments did not alter the requirement that triggering disclosures be “public.” Thus, the Fourth Circuit’s decision will have ongoing significance.

The Wilson case has a long history, having been to both the Fourth Circuit and the Supreme Court twice before. The case comprises a qui tam action that the relator filed against a North Carolina county, various county entities and individuals related to disaster recovery work conducted under the Emergency Watershed Protection (EWP) Program. In 1995 and 1996, one of the named county entities was audited and an Audit Report was published that detailed various issues with the handling of the EWP Program. Subsequently, the U.S. Department of Agriculture Inspector General’s office issued a Report addressing other aspects of the handling of the EWP Program. Copies of the Audit Report and USDA Report were distributed only to certain state and federal agencies. Each report made clear on its face that it was intended for official use only, and the USDA Report included a warning that it was not to be distributed outside the receiving agency without prior consent from the USDA IG’s office.

The relator filed her qui tam action in 2001, alleging that fraudulent invoices had been submitted to the government under the EWP Program. After the relator made various amendments to the complaint and the case had taken two trips up and down the appellate ladder, the district court in 2013 dismissed the qui tam action for lack of jurisdiction. It concluded that the Audit Report and USDA Report constituted public disclosures under the FCA, that the relator had based her allegations on them, and that the relator was not an original source under the FCA.

On review, the Fourth Circuit reversed. The sole question that the panel considered was whether the reports were publicly disclosed for FCA purposes. The panel held that a public disclosure “‘requires that there be some act of disclosure outside of the government.'” Wilson, No. 13-2345, slip op. at 13 (quoting Rost v. Pfizer, Inc., 507 F.3d 720, 728 (1st Cir. 2007)). In so holding, the Fourth Circuit joined five other circuits to consider this question and rejected the Seventh Circuit’s reasoning in United States v. Bank of Farmington, 166 F.3d 853, 861 (7th Cir. 1999), which found disclosure to a “competent public” official sufficient to constitute public disclosure

The Fourth Circuit instead reasoned that public disclosure requires that the information reach the public domain. To hold otherwise, the Wilson panel concluded, would incorrectly equate the government with the public and render superfluous the “public” aspect of the public disclosure bar. The Fourth Circuit stated that its conclusion is bolstered by the history of the FCA, since Congress, in the 1986 amendments to the Act, replaced the so-called “government knowledge bar,” which barred qui tam actions based on information in the possession of the United States, with the public disclosure bar. Finally, the Fourth Circuit noted that the fact that the Audit Report and USDA Report were eligible for disclosure to the public through the use of a public records act request was not sufficient to constitute public disclosure because the talisman of the public disclosure bar is information that is “affirmatively provided to others.” Wilson, No. 13-2345, slip op. at 17 (citing United States ex rel. Ramseyer v. Century Healthcare Corp., 90 F.3d 1514, 1521 (10th Cir. 1996)).

A copy of the Fourth Circuit’s opinion can be found here.

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