U.S. Supreme Court Clarifies Important Criteria for Qui Tam Litigation
The federal False Claims Act, 31 U.S.C. §§ 3729-3733 (“FCA”), provides that whistleblowers, called “Relators,” can file suit under the False Claims Act (“FCA”) against a firm that has purportedly fraudulently overcharged the federal government. If the case leads to recovery, either through trial or settlement, the relator is paid a portion of the amount recovered. The FCA limits a relator’s recovery right by providing that courts have no jurisdiction to hear (and thus a relator cannot share in any recovery from) an FCA case if the factual basis for the lawsuit was already in the public domain at the time the relator filed his case unless the relator is the original source of the information. The contours of this public disclosure bar and its original source exception have been the subject of divergent decisions in the federal trial and appellate courts. The paper discussed the Rockwell decision’s clarification of both points by holding that the public disclosure bar is jurisdictional and thus could be raised at any time during the litigation. The Court also held that the original source exception meant that the relator had to have direct and independent knowledge of the information on which the qui tam complaint allegations are based, and that the government’s intervention in the case could not supply the basis for the relator being an original source. The presentation also discusses steps firms can take to strengthen the public disclosure defense.