Using the Freedom of Information Act to Support a False Claims Act Case?

There is no doubt that a whistleblower who has documents supporting his allegations will be much more prepared to prove his allegations than a whistleblower who is acting just on a hunch.  In fact, many qui tam attorneys require some sort of validating information or documentation before proceeding with the case.

When searching for documents, there is a very fine line that cannot be crossed without jeopardizing the case.  This blog recently covered the potential obstacles that may arise when a whistleblower seeks to use internal corporate documents.  This post addresses another commonly-considered, but potentially hazardous method of obtaining supporting information – a Freedom of Information Act, or “FOIA,” request.

FOIA Requests and the Public Disclosure Bar          

Nearly every government office and department is subjected to the Freedom of Information Act, a transparency provision which allows private citizens to seek disclosure of government documents, records or information.  Each government department has its own set of rules and procedures for making a FOIA request, as well as its own method for responding to a proper request.  While there are nine standard exceptions and three special law enforcement exceptions that prevent documents from being publicly disclosed, most records are ultimately obtainable.  In the Fiscal Year 2012, more than 93% of FOIA requests resulted in full or partial records disclosures.

With such an attractive and available source of federal government records, it is not a surprise that potential whistleblowers with suspicions of fraud may feel compelled to make FOIA requests to support their allegations.  However, the federal False Claims Act contains a provision known as the “public disclosure bar” which generally prohibits whistleblowers from bringing qui tam suits based on publicly available information, including federal “reports, hearings, audits or investigations.”

On May 16, 2011, the United States Supreme Court issued an unprecedented opinion in Schindler Elevator Corp. v. United States ex rel. Kirk, 131 S.Ct. 1885 (2011), holding that the government’s response to a FOIA request, even one filed by a whistleblower looking for corroborative evidence of fraud, is a “report” for purposes of the public disclosure bar.

Daniel Kirk was a veteran working at Schindler Elevator Corporation when he developed suspicions that the company was falsifying reports to the federal government by overstating the number of veterans it employed in government contract work.  Kirk’s wife filed three FOIA requests to the Department of Labor and, in response, received reports which corroborated Kirk’s beliefs.  Based in part on the supporting documents, Kirk filed a qui tam lawsuit against Schindler Elevator on behalf of the federal government.

Schindler Elevator sought to dismiss the case, arguing that the case was subject to the public disclosure bar because the responses to the  FOIA requests were effectively public reports made by the government.  The Second Circuit found in favor of Kirk, but Schindler appealed to the Supreme Court.

The Supreme Court reversed the lower court’s decision, finding in favor of Schindler in a 5-to-3 decision (Justice Kagan did not participate).  The Court reasoned that the ordinary meaning of a government “report” includes responses to FOIA requests and that “anyone could have filed the same FOIA request and then filed the same suit.”  Justice Thomas further called Kirk’s suit “a classic example of the opportunistic litigation” that the False Claims Act forbids.  Justice Ginsburg wrote a strong dissent, warning that the majority opinion “weakens the force of the FCA as a weapon against fraud….”

Much discussion and legal analysis has followed Schindler Elevator, particularly because Kirk appeared to have personal, first-hand knowledge of the fraud that was confirmed by the FOIA-produced records.  His situation was plainly unique from a third-party corporate outsider who stumbled upon some indication of fraud purely by reviewing government documents.  However, because the Court did not take the opportunity to distinguish between those who used FOIA-obtained information to support first-hand knowledge and those who used FOIA-obtained information to entirely form the basis of qui tam suit, potential whistleblowers must be careful to completely avoid this issue.

In sum, the Schindler Elevator case stands for the proposition that a potential whistleblower may face severe consequences if he receives a response to a FOIA request prior to filing a False Claims Act case on the same issue.  Any potential whistleblower should consult with experienced qui tam counsel before making a FOIA request to discuss methods for properly obtaining corroborating evidence that will minimize the risk to a case’s ultimate success.

If you believe you have information regarding fraud against the government and are considering bring a False Claims Act case, please contact James Hoyer for an evaluation of your claims.  Click here for more information about the firm and to submit your information electronically, or you may contact our office at 813-397-2300.

Written by Jesse Hoyer

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