Private parties may sue government contractors for billing fraud using the qui tam provisions of the False Claims Act, and recover up to 30% of the amount in controversy. However, the information they use to bring their claims must not generally be information that is disclosed in an administrative report or investigation. This case involves a private party that received his information through a Freedom of Information Act request, and the issue before the Supreme Court is whether that FOIA disclosure is an administrative report or investigation under the False Claims Act that would bar the suit. Federal courts have split on the issue.
On May 16, 2011, the Court decided 5-3 that the FOIA response is a report consistent with the public disclosure bar. It sent the case back to the lower court to determine whether the qui tam suit was based on allegations or transactions disclosed in the FOIA report.
The case is important, since allowing suits based on FOIA information would have allowed anyone to search through government contract documents to determine whether any of a variety of statutory or regulatory requirements were fully satisfied. The financial incentives to bring qui tam suits are enormous, and the False Claims Act is designed to ensure that those rewards are available only to plaintiffs with firsthand knowledge of an alleged wrongdoing. Allowing opportunistic suits in this situation would have encouraged litigation and undermined the judgment of contracting agencies in handling issues relating to compliance with government contracts.