The Supreme Court recently granted certiorari to decide whether allegations or transactions described in a state or local government report or audit are "public disclosures" sufficient to bar a qui tam lawsuit under the False Claims Act (FCA), 31 U.S.C. § 3730(e)(4)(A). Graham County Soil & Water Conservation District v. United States ex rel. Wilson, No. 08-304. Under the FCA, private citizens, known as "relators," can bring lawsuits on behalf of the United States, known as qui tam suits, against persons who, inter alia, knowingly submit false claims to the Government for payment. 31 U.S.C. §§ 3729(a)(1) & 3730(b)(1). Such an action is barred, however, if it is based upon information publicly disclosed in an "administrative . . . report, hearing, audit, or investigation," unless the relator is an "original source" of the information. Id. § 3730(e)(4).
The Circuit Courts of Appeal have split over whether audits and reports issued by state and local governmental entities trigger the public disclosure bar, or whether the bar only applies to information disclosed in an audit or report issued by the Federal Government. In Graham County, the Fourth Circuit agreed with a prior Third Circuit decision and held that the public disclosure bar encompasses only federal audits, reports, hearings and investigations. See United States ex rel. Dunleavy v. County of Del., 123 F.3d 734, 745 (3d Cir. 1997). The Ninth and Eleventh Circuits, however, have concluded that the public disclosure bar encompasses non-federal reports and audits. United States ex rel. Bly-Magee v. Premo, 470 F.3d 914, 918-919 (9th Cir. 2006), cert. denied, 128 S. Ct. 1119 (2008); Battle v. Bd. of Regents, 468 F.3d 755, 762 (11th Cir. 2006).
The Supreme Court's decision in Graham County should be of significant interest to contractors that do business with the Federal Government and that are also subject to audit or investigation by state and local governmental entities. The facts in Graham County, however, present a unique twist on the issue before the Court, because one of the audit reports at issue was prepared at the request of Graham County, one of the defendants in the underlying qui tam suit. See United States ex rel. Karen T. Wilson v. Graham County Soil & Water Conservation District, 528 F.3d 292, 297 (4th Cir. 2008).