“Expert” Analyzing FOIA Report Barred as Public Disclosure

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A federal district judge in the Northern District of California dismissed a qui tam suit in late 2020 under the public disclosure bar of the False Claims Act (“FCA”). United States ex rel. Jones v. Sutter Health, No. 18-CV-02067-LHK, 2020 WL 6544412, at 9 (N.D. Cal. Nov. 6, 2020). In a holding consistent with the Supreme Court’s application of the public disclosure bar, and as has been discussed in previous McGuireWoods alerts, the district court held that information acquired through a Freedom of Information Act (“FOIA”) report is “publicly disclosed” and, therefore, that the relator was barred from using this information to form the basis of her FCA action.

By way of background, the public disclosure bar prohibits a relator from bringing a qui tam action based on information that has already been disclosed through certain public channels. The doctrine is intended to prevent “parasitic” claims in which relators feed off previous disclosures of fraud against the government. There is, however, an “original source” exception to the public disclosure bar, which allows a relator to avoid dismissal of the case provided the publicly disclosed information is used in conjunction with relator’s own independent and material knowledge of the transactions in question. 31 U.S.C. § 3730(e)(4)(A)(iii) Effectively, then, courts first determine whether the same allegations or transactions underlying the suit were previously disclosed through an enumerated channel. If that is the case, the courts then consider if the relator can serve as an “original source” within the meaning of the statute by offering independent and material additional information.

Here, the Sutter Health court ruled that the Supreme Court’s Schindler Elevator holding, which defines a FOIA report as “a ‘report’ within the meaning of the public disclosure bar,” controlled. Schindler Elevator Corp. v. U.S. ex rel. Kirk, 563 U.S. 401, 404 (2011). To paraphrase Schindler Elevator, using a FOIA request to build or collect evidence for a qui tam claim is “a classic example of the ‘opportunistic’ litigation that the public disclosure bar is designed to discourage” because “anyone could file the same FOIA requests and then file the same suit.”

With FOIA reports clearly falling under the public disclosure bar, relator’s ability to proceed with her suit rested upon her ability to paint herself as an “original source.” Quoting from the 6th, 7th, and 9th Circuits, the judge reiterated that independent and material knowledge must “add value to what the government already knew,” as well as be “essential” and “significant.”

Relator argued that because she received personal care from the defendant health system, and that because she had a background in reading and interpreting medical bills, she had direct and independent knowledge of the alleged fraud thereby surpassed the meaningful hurdle of the “original source” exception.  The court, however, was not convinced. Criticizing relator’s use of the old definition of “original source” (“direct and independent knowledge”) the court found that reading and analyzing data from a FOIA report does not add significant value to what the government already knew. Furthermore, the fact that relator possesses first-hand knowledge by means of being a patient was insufficient to be an original source.

This case restates the fact that a court is bound to classify a FOIA report as publicly disclosed information subject to the public disclosure bar of the FCA. With the public disclosure bar prohibiting a qui tam suit, a relator who utilizes such a report must qualify as an “original source” within the meaning of the statute and case law, which is no small hurdle to cross. Merely applying some independent knowledge and expertise to the report is not enough; additional independent knowledge needs to materially add to what is provided to the government.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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