1.17.2007

Split Widens as to Whether Non-Federal Documents are "Public Disclosures" Within the Meaning of the False Claims Act

BNA reported in U.S. Law Week (Vol. 75, No. 24, Jan. 2, 2007) on the Ninth Circuit case U.S. ex rel. Bly-Magee v. Premo, 470 F.3d 914 (9th Cir. Dec. 13, 2006), which sided with the Eighth Circuit over the Third Circuit in a split over whether a state audit report constitutes a "public disclosure" under the Act. Here is an excerpt from Judge Canby's opinion:

The question . . . arises whether disclosure in [a] report, issued by a state agency, amounts to a "public disclosure" for purposes of the False Claim Act.

Section 3730(e)(4)(A) lists the sources of public disclosure that give rise to a jurisdictional bar when the relator is not an original source of the information. The listed sources can be divided into three categories: (1) "a criminal, civil, or administrative hearing"; (2) "a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation"; and (3) "the news media." Id. The California audit report would appear to fall under category (2) as an "administrative ... report [or] audit." Some doubt arises, however, because the other sources in category (2), such as congressional reports or reports of the Government Accounting Office, refer exclusively to federal agency materials.

This court has not previously addressed whether an administrative report, audit, or investigation prepared by a state entity (as opposed to the federal government) qualifies as a source of public disclosure under the second category. Two circuits that have addressed the question have reached opposite conclusions. In United States ex rel. Dunleavy v. County of Delaware, 123 F.3d 734, 745 (3d Cir.1997), the Third Circuit applied the doctrine of a sociis and held that, because the word "administrative" is placed between "congressional" and "Government Accounting Office," when read with the word "report" it "refers only to those administrative reports that originate with the federal government." Id. In Hays v. Hoffman, 325 F.3d 982, 988 (8th Cir.2003), the Eighth Circuit rejected Dunleavy and concluded that Medicaid audits prepared by a state agency are public disclosures within the meaning of the Act. We agree with the Eighth Circuit and now hold that the second category of sources includes non-federal reports, audits, and investigations.

Even when it is read literally, the language of ยง 3730(e)(4)(A) does not compel a conclusion that "administrative" in category (2) means "federal administrative"--a phrase that Congress could have used but did not. The words "congressional" "administrative" and "Government Accounting Office" are separated by commas and the conjunction "or." Id. Accordingly, each word may be read as a separate modifier for the nouns that follow. See generally Flora v. United States, 362 U.S. 145, 150 (1960) (confirming that grammar can be relevant to statutory interpretation). As long as this reading of the plain language produces a reasonable interpretation consistent with the rest of the statute, it should control. See Robinson v. Shell Oil Co., 519 U.S. 337, 340 (1997) (explaining that the process of statutory interpretation ceases if the language is plain and " 'the statutory scheme is coherent and consistent' ") (citation omitted).
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