On May 16, 2011, the United States Supreme Court issued its decision in Schindler Elevator Corp. v. United States ex rel. Kirk, 563 U.S. ___ (2011) holding that allegations based on federal agency responses to requests made under the Freedom of Information Act (FOIA), 5 U.S.C. § 552, constitute public disclosures under the federal False Claims Act’s (FCA) public disclosure bar. The relator, a former employee of Schindler Elevator Corporation (Schindler), alleged that Schindler had submitted false claims for payment under the company’s government contracts which were subject to the Vietnam Era Veterans’ Readjustment Assistance Act of 1972 (VEVRAA). According to the relator, Schindler violated VEVRAA’s reporting requirements by failing to submit certain required reports and submitting false information in other reports made to the government. The relator alleged that these violations constituted false claims under the FCA.

The relator’s allegations, however, were based on information received in response to FOIA requests made by the relator’s wife. Schindler filed a motion to dismiss contending, among other things, that the district court was deprived of jurisdiction under the FCA’s public disclosure bar because the FOIA responses constituted a governmental “report” or “investigation.” The district court agreed with Schindler and dismissed the relator’s complaint. The Second Circuit vacated and remanded, concluding that a federal agency’s response to a FOIA request did not constitute a “report” or an “investigation.” After concluding that the plain and ordinary meaning of the term “report” included a federal agency’s response to a FOIA request, the Supreme Court reversed the Second Circuit’s decision and remanded the case to the district court for further proceedings. In holding that FOIA responses are reports under the FCA public disclosure bar, the Court noted that the relator’s lawsuit appeared to be a “classic example of the ‘opportunistic’ litigation that the public disclosure bar is designed to discourage.” Although this case was based on the pre-PPACA version of the public disclosure bar, the decision should continue to have applicability since PPACA did not delete the term “report” from the provision. It remains to be seen, however, whether Congress will step-in, as it did in response to the Supreme Court’s decision in Allison Engine Co. v. United States ex rel. Sanders, 553 U.S. 662 (2008), to further narrow the scope of potential defenses under the FCA. Indeed, in her dissenting opinion, Justice Ginsburg suggested that Congress should intervene to correct the Court’s decision. Such action appears unnecessary since PPACA has already weakened the public disclosure bar defense by removing its jurisdictional status and permitting an otherwise barred relator to remain in the case if the government opposes the defendant's motion to dismiss.

The Supreme Court’s decision is available by clicking here.