Supreme Court Places a New Roadblock in the Way of Qui Tam Relators


The False Claims Act’s “public disclosure bar” generally forecloses qui tam suits that are “based upon the public disclosure of allegations or transactions” in a governmental “report, hearing, audit, or investigation.” On May 16, 2011, in Schindler Elevator Corp. v. United States ex rel. Kirk, the Supreme Court held that “a federal agency’s written response to a request for records under the Freedom of Information Act . . . constitutes a ‘report’ within the meaning of the public disclosure bar.” The Supreme Court’s decision, which reversed the Second Circuit and reflects a Court that continues to be highly receptive to FCA defendants, places a significant new roadblock in the way of relators whose qui tam complaints are based on information they learned from materials obtained through FOIA requests. Such relators will now have their qui tam complaints dismissed at the pleadings stage unless they can make the difficult showing that they are the “original sources” of the information underlying their complaints. Equally important, Schindler suggests that the Court may be willing to endorse further restrictions on the ability of relators to pursue “opportunistic” FCA lawsuits, for example, by narrowing the circumstances in which a relator can premise a suit on “false certification theories.”

Schindler involved a qui tam complaint brought by Daniel Kirk alleging that his longtime employer, Schindler Elevator Corporation, had failed to file with the U.S. Department of Labor so-called “VETS-100 reports,” which notify the Department how many of a company’s employees are “qualified covered veterans.” According to Mr. Kirk, Schindler’s failure violated statutory and regulatory requirements, as well as a condition of payment under the company’s “hundreds” of federal contracts. Mr. Kirk alleged that Schindler had submitted “hundreds of false claims for payment under its Government contracts” because it had “falsely certified” to the Department that it had complied with its obligations to file the VETS-100 reports.

Mr. Kirk had learned of Schindler’s failure to file the VETS-100 reports as a result of FOIA requests that his wife had made to the Department. In response to those FOIA requests, the Department informed Mrs. Kirk in writing that “it had found no VETS-100 reports filed by Schindler in 1998, 1999, 2000, 2002, or 2003.” For the other years, the Department provided Mrs. Kirk “with copies of the reports filed by Schindler, 99 in all.”

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