In a February 29, 2016, decision, the U.S. Court of Appeals for the Seventh Circuit held that the public disclosure bar precluded a relator, a government watchdog agency, from successfully bringing a False Claims Act (FCA) suit against the Chicago Transit Authority (CTA). Cause of Action v. Chicago Transit Authority, No. 15-1143, 2016 U.S. App. Lexis 3628 (7th Cir., Feb. 29, 2016).

The Seventh Circuit found that the activity underlying the alleged fraud (misreporting transportation data to the Federal Transit Administration (FTA) in an effort to get additional federal funding) was in the public domain for two independent reasons. First, there was governmental disclosure: the government, through FTA itself, knew of the activity, had investigated it, and had issued a report (in the form of a letter to the CTA) on the investigation. Second, the Illinois Auditor General conducted a performance audit of the CTA which uncovered the alleged fraud and issued a report on the same; that audit report was publicly available on the Illinois Auditor General’s website, had been reviewed in a public hearing, and was generally available to the media and the public.

In stating that the governmental disclosure (via the FTA letter) was sufficient for the public disclosure bar to apply, the Seventh Circuit noted that the primary questions were whether the FTA had “actively investigat[ed]” the allegations and  reported on that investigation—not, as Relator claimed, whether the FTA had done anything to recover money from the CTA. Here, it was clear from the FTA letter that the FTA had actively investigated the allegations, and the letter itself served as the report. (more…)