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Ninth Circuit says prior state audit is “public disclosure”

The United States Court of Appeals for the Ninth Circuit has ruled that an administrative audit, report or investigation prepared by a state entity qualifies as a public disclosure for purposes of barring a whistleblower suit under the federal False Claims Act.

The court said that a portion of a suit brought by a Los Angeles woman against the California Department of Rehabilitation was based on information that had already been disclosed in a report published by the California State Auditor. Although the FCA’s qui tam provisions allow private citizens to file a lawsuit in the name of the U.S. government when a government contractor has committed fraud, if there has been a public disclosure of the information the whistleblower must be an “original source.” To qualify as an original source, a person must have direct and independent knowledge of the information on which the fraud allegations are based.

Other circuits have held that state audits are not included in the Act’s definition of public disclosure, saying only federal audits were meant.

The Metropolitan News-Enterprise for December 14, 2006 covered the story.

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