On May 16, 2011 the US Supreme Court resolved a split among federal circuits and ruled in Schindler Elevator Corp. v. United States ex rel. Kirk that a federal agency’s response to a Freedom of Information Act (FOIA) request amounts to a “report” within the False Claims Act’s (FCA) pre-PPACA public disclosure bar and therefore cannot form the independent basis of an FCA claim.
The FCA is frequently used in health care fraud cases brought by whistle-blowers (also known as qui tam actions) who are permitted to stand in the shoes of the government.
The Court’s holding is both noteworthy and limited. Prohibiting individuals from using FOIA-discovered public information as grounds for a qui tam action halts potential misuse by litigation-hungry parties who may have sued on the theory that the FOIA information was false. On the other hand, the Court’s decision leaves unanswered questions. PPACA altered many parts of the FCA’s public disclosure bar. For instance, PPACA limited the statute’s applicability from reports in general to only federal reports. Noting the recent changes to the public disclosure bar, the Court made clear that its Schindler Elevator decision applied pre-PPACA law. Expect more litigation of a similar vein in the future.
This post was contributed by Aaron S. Mensh.