U.S. Supreme Court Resolves Circuit Split: FCA Relators Cannot Base Claims on Information Received Through FOIA Requests

The U.S. Supreme Court resolved a split among federal circuits in its May 16 ruling that the public disclosure bar of the federal False Claims Act (FCA) precludes plaintiffs from bringing claims under the FCA based on information obtained through Freedom of Information Act (FOIA) requests for public documents. Schindler Elevator Corp. v. United States ex rel. Kirk, No. 10-188, 563 U.S. ___ (May 16, 2011).1 The FCA’s public disclosure bar generally forecloses qui tam suits that are “based upon the public disclosure of allegations or transactions . . . in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation.” Id. The Court found that a federal agency’s written response to a FOIA request for records constitutes a “report” within the meaning of the FCA’s public disclosure bar and, as such, cannot form an independent basis for an FCA claim. See 31 U.S.C. § 3730(e)(4)(A).

Background

Relator Daniel Kirk worked for petitioner Schindler Elevator Corporation (Schindler) for 25 years before resigning in 2003. In 2005, Kirk filed the instant action against Schindler under the FCA, alleging that Schindler had submitted hundreds of false claims for payments under its government contracts. Specifically, he alleged that the company’s claims for payments were accompanied by false certifications that it was in compliance with the Vietnam Era Veterans’ Readjustment Assistance Act of 1972 (VEVRAA), which requires contractors like Schindler to report certain information to the Department of Labor (DOL), such as how many of their employees are “qualified covered veterans” under the statute. He further alleged that Schindler violated VEVRAA’s reporting requirements by failing to file certain required VETS-100 reports, or including false information in the VETS-100 reports it did file. Although Kirk did not specify the amount of damages he sought on behalf of the United States for these false claims, he did estimate that the value of the VEVRAA contracts exceeded $100 million.