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Communications Were Not Public Disclosures under FCA

An internal government publication and a statement to a contracting officer did not bar the exercise of jurisdiction by the District Court for the Southern District of Illinois, because neither communication constituted a "public disclosure" under the False Claims Act. The qui tam relator's complaint included allegations the defendant overcharged the government for shipping and failed to remit the correct amount of Industrial Funding Fee. The defendant contractor moved to dismiss, contending the allegation regarding shipping was publicly disclosed by the news media in an Internet article and the allegation regarding IFF was disclosed in an administrative investigation. Under the FCA, courts lack jurisdiction over actions that are based on public disclosures of allegations or transactions by the news media, or in government hearings, audits, and investigations (31 USC 3730(e)(4)(a)). Allegations are publicly disclosed "when the critical elements exposing the transaction as fraudulent are placed in the public domain."

No Jurisdictional Bar

The court denied the motion, holding the FCA's jurisdictional bar did not apply. The Internet article cited by the defendant was an internal university publication, not a product of the news media. Also, the article only stated the defendant had been charging for shipping and reminded university employees they were not required to pay shipping costs. It did not discuss the alleged scheme to overcharge the government or other alleged frauds. Therefore, the article did not contain the critical elements exposing the transaction as fraudulent. The defendant's communications with a CO regarding a mistake involving IFF also did not constitute a public disclosure. A voluntary disclosure to a public official with managerial responsibility about an alleged false claim is a public disclosure within the scope of 3730(e)(4)(A). However, these types of disclosures must be made pursuant to an administrative investigation, and the disclosure here arose from the defendant's own internal audit. (U.S. ex rel. Liotine v. CDW Government, Inc., DC SD Ill, 53 CCF 79,186)




(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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