Last week, the Ninth Circuit issued an opinion in U.S. ex rel. Mateski v. Raytheon Co., affirming that the public disclosure bar should be construed narrowly.
The Ninth Circuit explained that allegations of false claims should not be viewed “at the highest level of generality . . . in order to wipe out qui tam suits that rest on genuinely new and material information.” United States ex rel. Mateski v. Raytheon Co., No. 13-55341, 2016 U.S. App. LEXIS 4247, at *25 (9th Cir. Mar. 7, 2016). Rather, the Court explained that publicly disclosed information should be scrutinized more closely to see if it “differs in kind and degree from the previously disclosed information.” Id. at 3. Under this closer examination, claims that are “similar only at a high level of generality” should not trigger the public disclosure bar. Id. at 21-22, 30-32.
In Mateski, the defendant, Raytheon, entered into a contract with the federal government to design and build a VIIRS sensor for a larger satellite system used to collect “meteorological, oceanographic, environmental, and climatic data.” Id. at 4. The United States District Court for the Central District of California granted the defendant’s motion to dismiss, explaining, “‘[I]t was publicly known that there was rampant mismanagement, deviations from protocol, and other problems with VIIRS. . . . [W]hile the public disclosures d[id] not discuss the problems on the VIIRS program in the level of detail that Mateski does in his [Complaint], the allegations are nonetheless the same for the purposes of 31 U.S.C. § 3730(e)(4)(A).’” Id at 7.
The Ninth Circuit disagreed with the district court’s broad construction and application of the public disclosure bar. The Ninth Circuit held the whistleblower’s claims were not precluded because his “allegations differ in both degree and kind from the very general previously disclosed information about problems with VIIRS.” Id. at 32.
En route to reversal, the Ninth Circuit explained that public disclosures of “some generalized fraud in a massive project or across a swath of an industry” do not bar “FCA suits identifying specific instances of fraud in that project or industry.” Id. at 26. The Court further explained that allowing a broad interpretation of the bar “would deprive the Government of information that could lead to the recovery of misspent Government funds and prevention of further fraud.” Id at 26. Scrutinizing public disclosures more closely brought the Court, “closer to ‘the golden mean between adequate incentives for whistle-blowing insiders with genuinely valuable information and discouragement of opportunistic plaintiffs who have no significant information to contribute of their own.’” Id at 26 (internal citation omitted).
The Ninth Circuit’s opinion in Mateski will benefit taxpayers and the government. Under Mateski, defendants can no longer expect courts to view public disclosure of general information and whistleblowers’ specific and detailed information and allegations, identifying specific fraudulent conduct, as “substantially the same.” The closer level of examination required under Mateski should result in more False Claims Act cases being litigated on their merits. As the Court put it, “the practical consequence of . . . defining substantial similarity . . . [at a lower level of generality] is to allow relators who provide the government with genuinely new and material information of fraud to move forward with their qui tam suits.” Id. at 30.
Eric Buescher is a partner at Cotchett, Pitre & McCarthy, LLP where he works on fraud cases as well as water and land use litigation. Eric focuses on the federal and California False Claims Acts, financial elder abuse, and complex mass ...
Emanuel B. Townsend is a partner at Cotchett, Pitre & McCarthy, LLP, where he represents whistleblowers in qui tam actions in both state and federal court, victims of complex financial fraud, employees who have been unlawfully ...