Today the Supreme Court granted certiorari in one case of interest to the business community:
False Claims Act—“Public Disclosure” Bar
The False Claims Act authorizes “qui tam” suits by “relators”—private citizens acting on behalf of the United States—against those who submit fraudulent claims to the federal government. 31 U.S.C.
§§ 3729(a), 3730(b). In a provision known as the “public disclosure” bar, the Act states, in relevant part, that courts lack jurisdiction over a qui tam action if it is “based upon the public disclosure of allegations or transactions * * * in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation * * * , unless the action is brought by * * * an original source of the information.” 31 U.S.C. § 3730(e)(4)(A). Today the Supreme Court granted certiorari in Graham County Soil & Water Conservation District v. United States ex rel. Wilson, No. 08-304, to decide whether an audit and investigation performed by a State or its subdivision constitutes an “administrative * * * report, hearing audit, or investigation”—or whether the bar is instead limited to federal administrative proceedings.
The Court’s decision will be of significant interest to the business community. The False Claims Act authorizes the recovery of treble damages and attorneys’ fees, 31 U.S.C. §§ 3729(a)(7), 3730(g), and it permits relators to share any recovery with the federal government, whether or not the government has intervened in the case, 31 U.S.C. § 3730(d). Plaintiffs’ lawyers therefore have enormous incentives to bring qui tam suits, and potential defendants include any businesses that contract with the federal government or receive federal funding. The decision in Graham County will be especially significant to businesses that are subject to inspections and audits by state and local government agencies, because the results of those inspections and audits are frequently made available to the public, and thus to potential relators and their lawyers.
In the decision below, the Fourth Circuit held that the provision at issue applies only to a federal “administrative * * * report, hearing, audit, or investigation.” The court therefore allowed the relator’s suit to proceed despite the prior public disclosure of the information on which it was based in reports commissioned by Graham County, North Carolina and an agency of the State of North Carolina. The Fourth Circuit’s interpretation is the same as the Third Circuit’s but contrary to that of the Eighth, Ninth, and Eleventh Circuits, which have held that the bar also covers disclosures resulting from state and local administrative proceedings. After requesting the views of the Solicitor General, which defended the Fourth Circuit’s decision but nevertheless recommended in favor of review, the Supreme Court granted certiorari to resolve the conflict.
At the petition stage, Mayer Brown LLP filed an amicus brief on behalf of the National League of Cities in support of the petition.
Absent extensions, which are likely, amicus briefs in support of the petitioners will be due on August 13, 2009, and amicus briefs in support of the respondent will be due on September 14, 2009. Any questions about this case should be directed to Dan Himmelfarb (+1 202 263 3035) in our Washington, DC office.
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