What Kind of Information Matters in a False Claims Act Case?

New information is what matters. The idea behind the False Claims Act is to encourage individuals to provide information about fraud that the government does not already know.

In fact, in the law’s early history, Congress became enraged when individuals filed cases based on information they obtained simply by waiting outside courthouses and reading government indictments.  People attempted to get fast rewards by repackaging government criminal investigations into new civil complaints.

So, now the law includes a “Public Disclosure Bar.” Simply put, it is difficult to file a case based upon information or allegations that have been publicly disclosed. There is an exception to this general rule for people who can show they are an original source of the information. The “Public Disclosure Bar” was narrowed slightly by recent amendments, and the ability to qualify as an original source was also broadened. Under the law amended, a person qualifies as an original source when he or she:

  • Voluntarily discloses the information to the government prior to the public disclosure itself, or;
  • Has knowledge that is independent and materially adds to the publically disclosed allegations, and
  • Voluntarily provides that information to the government before filing the case.

How Does Being an Original Source Work?

The new requirements to be an original source have not been fully tested in Court as of yet. In any case, establishing the plaintiff’s right to sue as an original source is an additional burden to bear when filing any suit based on information which as been publically disclosed

There are additional provisions in the law, which make it clear that new information is what is valuable in these cases. For example, there is a “First-to-File Bar” and a bar against filing a case based on allegations that are already the subject of a government proceeding to determine monetary damages.

It all comes back to the simple idea that the law is designed to encourage people to provide information to the government, which it could not easily obtain from another source. In practice, the government is dependent upon whistleblowers to provide information about fraud. It is almost impossible to investigate fraud committed in a defense contract, for example, unless an individual on the inside discloses some information first. It is true for almost every type of business the government funds. Whether its fraudulent Medicare billing or a a false application for NIH grants funds, inside information is the most valuable commodity in any effort to fight fraud committed against the government. That is the kind of information the law is designed to reward.