On April 30, 2015, the United States District Court for the District of Columbia dismissed a complaint alleging violations of the federal False Claims Act (FCA) for lack of subject matter jurisdiction on the grounds that the relator’s claims were based upon publicly disclosed information, of which the relator was not the original source. The version of the FCA in effect when the relator filed his Complaint provided that “[n]o court shall have jurisdiction over an action . . . based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit or investigation, or from the news media, unless . . . the person bringing the action is an original source of the information.” 31 U.S.C. § 3730(e)(4)(A) (2008).
The relator alleged that the defendant, Philip Morris USA, violated the FCA by falsely certifying that it was providing the United States military with the best prices for its cigarettes. The United States declined to intervene. Specifically, the relator alleged that since at least 2002, the defendant had supplied the Navy Exchange Service Command (“NEXCOM”) and the Army and Air Force Exchange Service (“AAFES”) with cigarettes “pursuant to purchase orders . . . that have incorporated, expressly or impliedly” most favored customer (“MFC”) warranties. The relator alleged that the defendant violated these warranties by “knowingly [selling] cigarette products identical to the cigarettes sold to AAFES and NEXCOM to affiliates of defendant . . . at prices lower than the prices such cigarettes were sold to NEXCOM and AAFES.”
The defendant moved to dismiss the Complaint on the grounds that the “the MFC provisions were publicly disclosed for FCA purposes either as administrative reports or as disclosures through the news media.” The defendant based this argument on a website it had discovered which featured archived government documents detailing the terms of the government’s purchase orders, including the MFC warranties. The relator responded, first, that a disclosure can only constitute an administrative report if “there is some
kind of focused inquiry or analysis by which the government compiles the information that is being disclosed” and that the defendant had “present[ed] no evidence of any such inquiry or analysis.” The relator further contended that categorizing NEXCOM and AAFES’s webpages as administrative reports “would effectively mean that any document on any government website anywhere . . . would be an ‘administrative report.’” Finally, the relator argued that the webpages could not constitute disclosures by the news media because the term “news media” means “a person or entity that gathers information of potential interest to a segment of the public, uses its editorial skills to turn the raw material into a distinct work, and distributes that work to an audience.”
The district court sided with the defendant, ruling that the archived documents on the website qualified as “reports” and “news media” under the public disclosure bar and, as a result, the court lacked subject matter jurisdiction over the case.. The court explained that “report” has been defined by the Supreme Court as “something that gives information or a notification . . . or an official or formal statement of facts or proceedings.” (citing Schindler Elevator Corp. v. United States ex rel. Kirk, 131 S. Ct. 1885, 1892 (2011)). The court found that the webpages at issue were “administrative” because both AAFES and NEXCOM are agencies within the U.S. Department of Defense. The court further found that in light of the broad interpretation expounded in Kirk, the webpages constituted “reports,” noting that they clearly “give[ ] information.” The court added that the webpages inform the public, including potential government contractors, of the terms and conditions on which AAFES and NEXCOM do business. Finally, the court explained that “news media” has repeatedly been extended to non-traditional media outlets and includes information posted online in public searchable databases. For this reason as well, the court ruled that the archived documents constituted a public disclosure.
Through this ruling, the D.C. District Court joins a growing number of courts1 in expanding the scope of the public disclosure bar. In particular, courts are broadly interpreting the statutory phrase “news media.” As the forms and reach of media and news outlets continue to grow and change, so will the issues and questions surrounding public disclosure.