Academic journal article Boston College Law Review

WHO NEEDS TO KNOW? THE SEVENTH CIRCUIT ACCEPTS INFORMATION SENT TO GOVERNMENT AS PUBLICLY DISCLOSED IN CAUSE OF ACTION V. CHICAGO TRANSIT AUTHORITY

Academic journal article Boston College Law Review

WHO NEEDS TO KNOW? THE SEVENTH CIRCUIT ACCEPTS INFORMATION SENT TO GOVERNMENT AS PUBLICLY DISCLOSED IN CAUSE OF ACTION V. CHICAGO TRANSIT AUTHORITY

Article excerpt

Introduction

Watchdog agencies and individual whistleblowers rely on the False Claims Act ("FCA" or "the Act") and its qui tam provisions to expose fraud against the United States government.1 The potential for financial windfall through a private action brought under the FCA carries with it the specter of parasitic lawsuits.2 An important tool for ensuring that only legitimate individ1 uals are rewarded for bringing qui tam actions is the public disclosure bar.3 The public disclosure bar prohibits qui tam actions from being brought once evidence or an allegation of fraud is widely circulated.4

In February 2016, in Cause of Action v Chicago Transit Authority, the U.S. Court of Appeals for the Seventh Circuit held that information disclosed to and acted upon by a responsible public employee had effectively entered the public domain, triggering the public disclosure bar.5 The Seventh Circuit reasoned that the primary goal of publicly disclosing instances of fraud is to alert authority figures, so they may take the necessary steps to investigate and rectify the situation.6 In contrast, the U.S. Court of Appeals for the First Circuit, among other circuits, has determined that informing only government officials of fraudulent activity does not constitute a public disclosure barring an action, thus affirming the FCA's deliberate structuring to incentivize whistleblowing.7

This Comment argues that the Seventh Circuit has erred in allowing mere government knowledge and preliminary action on alleged fraudulent activity to constitute a public disclosure.8 Though bringing instances of deception to the attention of individuals or agencies with the power to prosecute offenders and rectify the situation accomplishes one major purpose of the False Claims Act, which is to combat fraud, it simultaneously falls short of addressing another, which is to prompt action.9 Congress enacted the False Claims Act to help ensure honesty and transparency not only in private companies, but also in the government's interactions with those companies accused of fraud.10 Without true public disclosure of alleged incidents, taxpayers have no way of knowing if their public representatives are honestly working to combat fraud, or sweeping deceit under the rug.11 Barring qui tam actions only when information ex7 posing fraud has been disseminated to the public at large, rather than to a government official alone, allows knowledgeable private citizens to provoke governmental action in instances where, due to administrative secrecy, a constituency could not otherwise hold their representatives accountable or publicly pressure agencies to pursue perpetrators of fraud.12

Part I of this Comment develops the historical framework upon which the modern False Claims Act is built, and provides essential background information regarding the Seventh Circuit case at the center of the controversy.13 Part II of this Comment highlights the discrepancies in the Seventh Circuit's interpretation of the public disclosure bar and considers its interpretation, in addition to the one more widely accepted by other Circuits.14 Part III of this Comment analyzes the effects each of those interpretations has, and whether those effects align with the policy goals evident from Congress's amendments to the False Claims Act.15

I. History of the False Claims Act and Cause of Action

The FCA protects the federal government in instances of fraud.16 The Act provides the methods through which the government can pursue fraudulent actors in order to reclaim lost funds and impose punishments.17 Section A of this Part develops the history of the False Claims Act, dissecting several amendments and the reasons Congress chose to make them.18 Section B of this Part explores the factual and procedural history of Cause of Action}9

A. History of the False Claims Act

The United States government relies on the False Claims Act to recover losses that result from fraud committed against it. …

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