On February 25, 2015, the Sixth Circuit reversed a district court’s decision to dismiss FCA allegations pursuant to the FCA’s public disclosure bar because the “publicity” aspect of the public disclosure bar was not satisfied.   The Sixth Circuit’s opinion became the most recent appellate decision to require disclosure beyond the government or the government’s agents or contractors to implicate the public disclosure bar.

In U.S. ex rel. Whipple v. Chattanooga-Hamilton County Hosp. Authority, OIG instituted an audit of the defendant’s billing practices in response to an anonymous complaint.  That audit led to a subsequent investigation by OIG, during which it consulted with the DOJ.  In 2009, the defendant resolved the matter through a refund to the government, and the government declined to pursue the matter further.

In 2011, the relator filed a qui tam complaint against the defendant.  After the government declined intervention, the parties conducted limited discovery related to the public disclosure issue.  The defendant then moved to dismiss the qui tam allegations because they had been publicly disclosed through the government’s previous audit and investigation of the defendant and the relator was not an original source of those allegations.  The district court granted dismissal on those grounds.

On appeal, the Sixth Circuit held that the disclosure of allegations to the government – and only to the government or its contractors – was not a “public” disclosure sufficient to trigger the FCA’s public disclosure bar. The Sixth Circuit noted that the relevant disclosures were made only to the government, its agents, and the defendant’s own consultant, which were subject to confidentiality obligations to the defendant, and that the public disclosure bar requires a broader disclosure to the public.  According to the Sixth Circuit, to hold otherwise would be to render the term “public” superfluous.

The Sixth Circuit’s decision in Whipple is consistent with the majority view that disclosure must be outside the government to be “public” under the FCA.  The ruling is representative of a continuing trend to interpret the FCA’s public disclosure bar narrowly, and potentially opens the door for more FCA qui tam lawsuits to move forward and limits an otherwise powerful defense available to FCA defendants.