In Schindler Elev. case on remand, Second Circuit dismisses FOIA-tainted claims

by Ben Vernia | July 12th, 2011

Less than two months after the Supreme Court’s decision in Schindler Elev. Corp. v. U.S. ex rel. Kirk, the Second Circuit Court of Appeals, applying the Supreme Court’s decision that FOIA reports can trigger the False Claims Act’s public disclosure bar (i.e., the one prior to its 2010 amendment), dismissed the whistleblower’s “failure to file” claims.

The relator alleged that the company, his former employer, had filed some false veterans’ employment reporting forms, and failed to file others, which were a condition of its federal contracts. The relator’s wife had received documents from the Department of Labor after filing a FOIA request, and these formed the basis of his failure-to-file claims.

On remand, the Second Circuit, in a summary order, found:

  • The FOIA responses, which showed an absence of reports for certain years, “disclosed ‘allegations or transactions’ within the meaning of the public disclosure bar,” disclosing all of the essential elements of the failure-to-file claims;
  • The relators’ failure-to-file claims were “based upon” the publicly disclosed information; and
  • The relator was not an original source of the information.

The Court nevertheless distinguished between the failure-to-file claims and the false filing claims, noting that the company had not argued that the public disclosure bar applied to those claims. Because the relator’s personal knowledge of covered veteran employees who should have been reported, and of the company’s lack of procedures for counting them, “these critical elements of the false reports claims were not in the public domain, [and] there was no public disclosure of the ‘allegations or transactions’ underlying these aspects of Schindler’s alleged fraud.”

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