The public-disclosure bar is a defense to the False Claims Act (FCA) that prevents relators from pursuing fraud and false claims allegations that have already been publicized, unless the relator is the original source of the information. As statutorily defined, a relator is an “original source” if they voluntarily disclosed the information to the government prior to the public disclosure, or if they have knowledge that is independent of and materially adds to the publicly disclosed allegations (see 31 U.S.C. § 3730(e)(4)(B)).
Whether “original source” status is conferred on a relator because their information “materially adds” to the public disclosure is a fact-specific inquiry. The D.C. Circuit recently provided guidance on what constitutes a material addition to a public disclosure through a pair of related qui tam actions filed against U.S. Cellular Corporation and other defendants.
Background
The Federal Communications Commission (FCC) is responsible for managing and licensing the electromagnetic spectrum for commercial users and distributes spectrum licenses through public auctions. Because there are high barriers to entry in the telecommunications market, the FCC has a program designed to promote licenses for small businesses using bidding credits that effectively discount the cost of the licenses. Both cases before the D.C. Circuit involved FCA claims by the same relators that U.S. Cellular, one of the largest telecommunications companies in the country, concealed its controlling position in sham entities, including King Street Wireless, L.P. and Advantage Spectrum, L.P., to fraudulently obtain millions of dollars’ worth of bidding credits intended for small businesses for license auctions conducted by the FCC.
In each case, the district court applied the public-disclosure bar and dismissed the complaints, finding a prior public disclosure had raised substantially the same allegations and the relators were not the original sources of the information. Earlier this year, the D.C. Circuit affirmed one of the district’s court’s decisions in United States ex rel. O’Connor v. USCC Wireless Inv., Inc., et al., 128 F.4th 276 (D.C. Cir. 2025) (King Street). However, the same D.C. Circuit panel recently reversed the district court’s decision in the related case, United States ex rel. O’Connor v. U.S. Cellular Corp., et al., No. 23-7041 (D.C. Cir. Sept. 26, 2025) (Advantage), reviving the complaint and finding the whistleblowers qualified as “original sources” of the allegations because their information “materially added” to the publicly disclosed information.
Decisions
In both the King Street and Advantage opinions, the D.C. Circuit stated that information “materially adds” to a public disclosure where the information “is sufficiently significant or essential to influence the government’s decision to prosecute” an FCA case. By contrast, information that simply adds detail or color to previously disclosed allegations is insufficient for a relator to qualify as an original source. In King Street, the panel found that the additional information provided by the relators provided “some additional color” only, while in Advantage the panel found the additional information materially advanced the allegations of fraud.
Of course, the difference between additional information that merely fills in details versus that which materially advances allegations of fraud can be determined only by asking this question: What information has already been publicly disclosed? A key factual distinction between the Advantage and King Street cases was the content of the prior public disclosure relied upon by defendants in asserting the public-disclosure bar. In King Street, the prior public disclosure was an earlier filed qui tam complaint, which contained detailed allegations regarding the same alleged fraud later asserted in the King Street complaint, i.e., that the sham entities were under de facto control of U.S. Cellular and existed solely to obtain bidding credits intended for U.S. Cellular’s use. The court found that the additional information pleaded in the King Street complaint, which related to continued activity by U.S. Cellular and the sham entity post-licensing, did not materially add to the fraud that was already alleged in the prior qui tam complaint and thus the relators were not original sources.
By comparison, in Advantage, the defendant cited their own filings with the FCC as the public disclosures. The Advantage court found the relators were “original sources” because their allegations materially added to the information in the publicly disclosed FCC filings. Specifically, the opinion highlighted two allegations by the relators that were absent from the FCC disclosures: 1) an allegation that the sham entity never functioned as an independent business, and 2) that the sham entity and U.S. Cellular entered into an agreement for the sham entity to transfer its licenses after a certain period. These two allegations strengthened the case that U.S. Cellular exercised de facto control over the sham entity and had an undisclosed agreement with the sham entity. The Advantage panel underscored that neither of those allegations could have been inferred from the public FCC filings and they materially added to the public filings.
Takeaway
Taken together, this pair of decisions exhibits the spectrum of potential outcomes when asserting the public-disclosure defense. The Advantage decision serves to remind companies facing FCA matters that a public-disclosure defense is more likely to be effective when the publicly disclosed information includes — or would at least allow an inference of — all material facts.
