Reducing Fraud against the Government: Using FOIA Disclosures in Qui Tam Litigation

Abstract

The False Claims Act prohibits fraud against the government. Unsurprisingly, fraud against the government remains common despite the statute-fraudsters must return billions of dollars in government money each year, and billions more dollars of fraud remain undetected. Through the qui tam provision, the government has enlisted the help of private citizens to discover and prosecute fraud. The program has helped to recover over half of the total recovered fraud over the past two decades. But some courts have threatened this program by holding that information disclosed through the Freedom of Information Act triggers the public disclosure bar of the qui tam provision. This interpretation conflicts with the language of the statute, leads to absurd results, ignores the statutory history, and destroys the incentives for private parties to help uncover fraud. An investigation into models of information secrecy and the efficient markets hypothesis reveals the boundaries of the public disclosure bar as defined in the statute. The language, history, and incentives structure of the statute all lead to the conclusion that some FOIA disclosures do not necessarily trigger the public disclosure bar.

Keywords: False Claims Act, qui tam, fraud, FOIA, efficient markets