D.C. Court of Appeals Shuts Down Recycled Fraud Claims Under Public Disclosure Bar

In United States ex rel. O’Connor v. USCC Wireless Investment, Inc., relators filed a qui tam action under the False Claims Act (“FCA”). On February 11, 2025, the D.C. Court of Appeals (the “Court”) affirmed a district court’s ruling that (1) a previous lawsuit had raised substantially the same allegations, triggering the FCA’s public disclosure bar; and (2) the relators bringing the action were not original sources of the information.

Background

The FCA, codified at 31 U.S.C. §§ 3729-3733, empowers private individuals, known as relators, to bring qui tam lawsuits on behalf of the U.S. government for false or fraudulent claims submitted for federal reimbursement. When relators sue under the FCA, their claims must not trigger the public disclosure bar. Under federal law, the public disclosure bar prohibits a relator from bringing an FCA lawsuit based on fraud that has already been disclosed through certain public channels. Unless the relator is the original source of the information, they cannot bring a qui tam action that is publicly known. 31 U.S.C. §3730(e)(4)(A). The public disclosure bar was originally added to the FCA after World War II to avoid “parasitic” lawsuits in which whistleblowers learned of fraud indictments through the courts, or even the media, and filed FCA actions that did nothing to alert the government of new claims, but enriched the relators.

In 2008, Lampert, O’Connor and Johnston, P.C. (“Lampert”) filed a qui tam action alleging the government was defrauded because a governmental entity, the Federal Communications Commission, awarded millions of dollars in bidding credits to defendants as a result of the defendants’ fraud. The government investigated the allegations and declined to intervene in the suit. Lampert then voluntarily dismissed the suit.

Subsequently, in 2015, Lampert filed a qui tam action alleging similar facts; however, instead, Lampert focused its subsequent suit on a specific defendant: King Street. Specifically, Lampert allegedly discovered new information regarding King Street’s involvement in the scheme.

However, the district court dismissed Lampert’s 2015 suit, finding the relators’ complaint asserted “substantially the same” allegations as the 2008 qui tam action and the realtors did not meet the criteria for the original source exception. The relators appealed.

The Public Disclosure Bar

On appeal, the relators asserted that the FCA’s public disclosure bar did not apply to their 2015 suit, either because their allegations were not “substantially the same” as those in the 2008 suit, or because they qualified for the original source exception. The Court rejected both arguments.

1. The Relators’ Allegations Were Substantially the Same

In analyzing whether the relators’ 2015 suit was substantially the same as their 2008 suit, the Court emphasized that the critical inquiry is whether the government had enough information to investigate the case or whether the information could at least have alerted law-enforcement authorities to the likelihood of wrongdoing.

The Court found that, despite the relators’ inclusion of some additional facts and allegations, their complaint described a fraud that was merely a continuation of, and therefore substantially the same as, the scheme disclosed in the 2008 suit.

2. The Relators Did Not Qualify for Original Source Exception

The relators maintained that they were an original source under the public disclosure bar because (1) the 2008 suit was filed by the relators’ law firm; and (2) the 2015 suit “materially adds” to the publicly disclosed allegations in the 2008 suit.

A. The Relators’ Law Firm and Relators Are Distinct

The Court swiftly rejected the relators’ argument that their law firm’s 2008 suit qualified them as an original source, emphasizing that a professional corporation is a separate legal entity from its shareholders. Thus, although the relators were partners at the law firm and were involved in filing the complaint, the relators could not attribute the firm’s suit to themselves.

B. The Relators Did Not “Materially Add” to the Prior Suit

The Court began its analysis of the relators’ second argument by clarifying the standard for “material addition” for purposes of the original source exception: a relator “materially adds” to public disclosures by contributing information that “is sufficiently significant or essential” to influence the government’s decision to prosecute fraud.

The Court held that relators did not “materially add” to the 2008 suit because any new information was insignificant and would not have influenced the government’s decision to prosecute, given that the 2008 action already disclosed the fraud allegations.

Practical Takeaways

• Past Allegations Can Bar New FCA Claims: If fraud allegations were previously disclosed, even in a dismissed case, relators cannot refile similar claims against health care providers.
• Original Source Must Add Significant New Information: Relators must present truly new details, not minor updates, to pursue FCA cases against health care entities.

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