America’s primary whistleblower reward statute is the Federal False Claims Act. Whistleblowers who come forward with original source information about fraud against the government or a government program can receive a reward of up to 30% of whatever the government collects from the wrongdoer. A key component of the program is the requirement that the whistleblower possess “original source” or inside information. This prevents people from seeking awards based on information already in the public domain. For example, people who read something in the newspaper are generally precluded from seeking a reward.
The law says that would be whistleblowers are barred from obtaining a reward for information that is “based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation . . . unless . . . the person bringing the action is an original source of the information.” Lawyers call this the “public disclosure bar.”
In 2010, the United States Supreme Court said the public disclosure bar allows “whistle-blowing insiders with genuinely valuable information” to bring actions, but bars “opportunistic plaintiffs who have no significant information to contribute of their own.”
The public disclosure bar isn’t absolute but it can present big hurdles depending on the information possessed by the whistleblower and its source. A recent federal appeals court decision in the 7th Circuit interpreting the public disclosure bar is a big win for whistleblowers.
In Todd Heath vs. Wisconsin Bell, the whistleblower was a telecommunications auditor. Mr. Heath reviewed phone bills for businesses to make sure they were getting the best rates. School districts are entitled to the lowest rate tariffs under a federal subsidy program passed by Congress in 1996.
Heath discovered that some school districts were paying too much. When the phone company refused to fix its rates, Heath filed a whistleblower complaint under the False Claims Act.
Wisconsin Bell asked the court to dismiss Heath’s complaint because much of the rate information relied on for his complaint was readily available on the Internet. They claim it was “publicly disclosed.”A federal judge in Milwaukee agreed and dismissed the complaint.
Last year, a three judge appeals panel reversed the trial court and reinstated Heath’s whistleblower complaint. The 7th Circuit Court of Appeals said that the trial judge had misinterpreted the public disclosure bar.
In reinstating Heath’s whistleblower complaint, the court said,
“Heath is not one of the opportunistic plaintiffs who have no significant information to contribute of their own. Through his own investigation and initiative, Heath established that schools were being charged prices well above [what the law allows]. [He] brought genuinely new and material information to the government’s attention. Accordingly, the public disclosure bar does not preclude his allegations.”
Because he added real value to the information otherwise publicly available, he is entitled to bring his claim. A complaint can’t be solely based on public information but the appeals court certainly reaffirmed the ability to partially rely on public information and still collect an award.
The decision to reinstate the complaint doesn’t mean the case is over. The case is awaiting trial in Milwaukee.
Tens of thousands of people “blow the whistle” each year. Despite a record number of whistleblowers, less than 800 whistleblower complaints were filed under the federal False Claims Act last year. To qualify for an award, would be whistleblowers must file a lawsuit under seal in a federal court.
If you think you have valuable information and may qualify for an award, give us a call. We have helped many whistleblowers and have brought several, billion dollar cases including the largest civil recovery ever in a whistleblower case, last year’s $16.65 billion case against Bank of America. Not every case is that large but every case is equally important to us.