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HomeNewsCan Information Obtained through Freedom of Information Act be the Basis of a Qui Tam Action Under the False Claims Act? Supreme Court Says “No.”

Can Information Obtained through Freedom of Information Act be the Basis of a Qui Tam Action Under the False Claims Act? Supreme Court Says “No.”

Date Published
Sep 03, 2011

On May 16, 2011, the Supreme Court issued its decision in Schindler Elevator Corp. v. United States ex rel. Kirk, No. 10-188, holding that a federal agency’s written response to a Freedom of Information Act (“FOIA”) request constitutes a “report” for purposes of the public disclosure bar of the False Claims Act (“FCA”). Writing for the Court, which was split 5-3, Justice Thomas explained that, because the term “report” is not defined in the public disclosure bar, the Court must rely upon its “ordinary meaning.” As such, the Court cited dictionary definitions that describe “report” as “something that gives information” and a “notification.” Thomas concluded that such expansive commonplace definitions were “consistent with the generally broad scope of the FCA’s public disclosure bar.”

The Court further explained that there was “no textual basis for adopting a narrower definition of report.” Specifically, Thomas criticized the lower court’s analysis because it only analyzed the words “immediately surrounding” the term “report” rather than employed an evaluation of the statute as a whole. The Court buttressed its position by arguing that the “ordinary meaning” of report-presumably something that gives information” and a “notification-does not “render superfluous other sources of public disclosure” contained in the statute.

Judge Thomas attacked the relator, Daniel Kirk, who is a former employee of Schindler Elevator, stating that his case is a “classic example of the ‘opportunistic’ litigation that the public disclosure bar is designed to discourage.” Yet, and as noted by Justice Ginsburg in her dissent, which was joined by Justices Breyer and Sotomayor, the Court reached this conclusion despite the fact that Kirk was using the FOIA request merely as “corroboration for his allegations”-which were based on personal knowledge-rather than as the sole evidentiary basis for his complaint.

One bright spot in the opinion for whistleblowers is certain language used by Justice Thomas in discussing whether a relator’s knowledge is “based upon” the information already publicly disclosed. Namely, in addressing Schindler’s argument that, if responses to FOIA requests are considered “reports” for purposes of the public disclosure bar, unscrupulous defendants will “insulate themselves from liability by making a FOIA request for incriminating documents,” Justice Thomas stated that Schindler’s argument, presumably wrongly, “assumes that the public a written FOIA response forever taints that information for purposes of the public disclosure bar.” Rather, as Justice Thomas noted, a relator could “come by that information from different source [other than the FOIA response]” and, as such, have “a legitimate argument that his lawsuit is not ‘based upon’ the initial public disclosure.”

This interpretation of “based upon” by Justice Thomas-which indicates that for a relator’s knowledge to be “based upon” the public information, the relator must have relied upon the information-supports the minority, and less stringent, view endorsed by the Fourth Circuit. See, e.g., U.S. ex rel. Siller v. Becton Dickinson & Co. By & Through Microbiology Sys. Div., 21 F.3d 1339, 1348 (4th Cir. 1994) (To “base upon” means to “use as a basis for.” Rather plainly, therefore, a relator’s action is “based upon” a public disclosure of allegations only where the relator has actually derived from that disclosure the allegations upon which his qui tam action is based.”) Most circuits have taken the broader view, which is more harmful to whistleblowers, that “a qui tam suit is ‘based upon’ a public disclosure whenever the allegations in the suit and in the disclosure are the same, ‘regardless of where the relator obtained his information.’” Minnesota Ass’n of Nurse Anesthetists v. Allina Health Sys. Corp., 276 F.3d 1032, 1044-7 (8th Cir. 2002) (adopting majority rule and collecting cases).

In sum, although the Court’s broad reading of the public disclosure bar in Schindler Elevator is damaging for whistleblowers who seek to bring well-supported FCA claims, there is at least some limited language that may be beneficial to relators and it is possible that Congressional action will limit, or nullify, the Court’s decision. Namely, just as Congress abrogated the Court’s decision in Graham County Soil and Water Conservation District v. United States ex rel. Wilson, 130 S. Ct. 1396 (2010)-a case relied upon by the Schindler Elevator Court-by amending the FCA (see 31 U.S.C. § 3730(e)(4)(A)(i)-(ii)), Congress could take similar action here. Indeed, Justice Ginsburg said as much in her dissent, stating that the Court’s decision “severely limits whistleblowers’ ability to substantiate their allegations” and calling the problem one that is “worthy of Congress’ attention.”

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