If a qui tam False Claims Act suit rests on genuinely new and material information not publicly disclosed by a government audit, report, hearing or investigation, the suit may proceed though it arises from the same transactions as the prior public disclosure. Under the federal False Claims Act, a court lacks jurisdiction of a qui tam action “based upon the public disclosure of allegations or transactions . . . in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation.” (31 U.S.C. §3730(e)(4)(A).) Three conditions must be satisfied before this public disclosure provision bars a claim: the disclosure must have been by one of the means stated in the statute, it must have been public, and the qui tam suit must be based on the publicly disclosed allegations or transactions. This decision holds that this suit escapes the public disclosure bar because the third element is not satisfied. The earlier public audit disclosed incompetence by the federal contractor, but did not any allegation of deception or fraud. In determining whether the qui tam suit’s allegations are the same as the publicly disclosed ones, a court should not view either at the highest level of generality, but should find that the qui tam suit is not barred if it rests on genuinely new and material information. This qui tam suit contributes such information and alleged a fraud different in kind and degree from that which the public audit disclosed. Hence, the qui tam suit was not barred.
Ninth Circuit Court of Appeals (Friedland, J.); March 7, 2016; 2016 WL 860337