Ninth Circuit Endorses Relator-Friendly Interpretation of Public Disclosure Bar

The U.S. Court of Appeals for the Ninth Circuit reversed a district court order dismissing the False Claims Act (“FCA”) lawsuit brought by Relator Steven Mateski against his former employer, Raytheon. The suit, which potentially exposes Raytheon to more than $1 billion in damages, is based on allegations that the company failed to comply with provisions of its contract with the government to develop a sensor for a meteorological satellite, covered up its noncompliance, and improperly billed the government for incomplete work.

The district court dismissed the case for lack of subject matter jurisdiction under the Public Disclosure Bar, 31 U.S.C. § 3730(e)(4)(A), which prohibits FCA suits that are “based upon the public disclosure of allegations or transactions.” Specifically, the court found that public documents, such as reports from the Government Accountability Office and various newspaper articles, described the rampant mismanagement and deviations from protocol that characterized the sensor project. The district court conceded that Mateski added detail to the publicly available information, but concluded that such amplification did not render the allegations sufficiently distinct to survive scrutiny under § 3730(e)(4)(A).

The Ninth Circuit Court of Appeals, however, held that the lower court had erroneously compared the Mateski complaint with the public documents at “the highest level of generality.” While the complaint and the documents both described problems with the project, Mateski provided the government with useful, “infinitely more precise” details that were lacking from the public documents, including numerous false waivers and certifications, as well as documentation of the use of substandard materials in production of the sensor. Barring his action, according to the Court, would upset the FCA’s carefully struck balance between encouraging private litigants to discover fraud, yet stifling parasitic lawsuits.

In deciding the matter, the Mateski Court expressly endorsed and adopted the “levels-of-generality” approach employed by the Seventh Circuit Court of Appeals. But Mateski also shares analytical common ground with the U.S. Court of Appeals for the Third Circuit’s recent decision in Moore & Company (also discussed on this blog). There, the Court held that the operative question under the Public Disclosure Bar was whether the relator’s allegations materially added to the “who, what, when, where, and how” of the events set forth in public documents. Although they frame the issue differently, both Mateski and Moore & Company strictly construe the Public Disclosure Bar to ensure that relators who add significant relevant details to fraud generally described in newspapers and other public documents retain the ability to pursue FCA claims on behalf of the federal government.

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