Blowing the Whistle in the Public Domain

Suppose you’re privy to some major government fraud, and you’re thinking of blowing the whistle on it. That could be good because, under the federal False Claims Act (FCA), you may stand to receive anywhere from 15-30% of whatever the government can recover. Multiply that by millions or even billions of dollars in damages, and you’ve got quite a bounty.

But you can’t blow the whistle on something that’s already public, right?

Well, yes and no.

Yes, the rule is that you can’t make a case based substantially on facts or allegations that have already been disclosed publicly—whether in the news media, a federal court hearing, or a federal agency report, audit, hearing, or investigation.

But no, this public-disclosure bar doesn’t apply if you’re considered an “original source” of information, which means two things:

1. You have independent knowledge that materially adds to the publicly-disclosed information; and
2. You voluntarily provide this information to the government before filing your case.

So wait, don’t you have to be the one who first brought things to light?

Not necessarily. It used to be the case in some courts that you had to have brought your case before the public disclosure, or played some part in making it public, but that’s no longer true, as a recent appellate decision helps explain.

Bear in mind, however, that if a court finds that your case is based primarily on the already-public stuff then your share of the recovery is capped at ten percent and may be less.

And if another “original source” has already filed the same case then you’re out of luck. That’s because, under the FCA’s first-to-file rule, you can’t blow the whistle on the same material facts and allegations that someone has already sued on.

The rationale behind all this is to encourage all brave whistleblowers to come forward but discourage sheer opportunists from jumping on the bandwagon.