The Fifth Circuit Draws a Public-Disclosure Roadmap

A clearly irate Fifth Circuit Court of Appeals reversed summary judgment granted on behalf of Shell Exploration and Development Company, for the second time, and remanded with an order that the case be assigned to a new judge.

In United States ex rel. Little v. Shell Exploration the Fifth Circuit, for the second time, reversed the trial court’s grant of summary judgment based upon a finding that the whistleblower’s claims were based upon public disclosures.

On the first reversal the appellate court directed the trial court to consider, not just whether the public disclosures were similar to the whistleblower’s allegations, but whether the whistleblower “‘could have produced the substance of the complaint merely by synthesizing the public disclosures’ description of’ the scheme’.”{{1}}

The second time around, the Fifth Circuit noted that the trial court did not cite the previous opinion and did not appear to follow it, either:

The district court did not apply the more exacting legal standards we required on remand [and] failed to address the specific questions we remanded for it to address.{{2}}

Shell, in public comments to a proposed rule, suggested to the Minerals Management Service (MMS) that the rule should be changed in a manner consistent with the behavior alleged in the FCA complaint. MMS rejected Shell’s comment. Shell argued that those public comments constituted public disclosure. The appellate court rejected the argument, finding that Shell’s lawful public comments in the regulatory process did not constitute notice that Shell intended to act unlawfully should its comments be rejected.

Shell also went through the administrative process to challenge several Minerals Management Service decisions, several lawsuits about related, but not identical, matters, and a government investigation that was never public disseminated. The Fifth Circuit found that the first two were insufficiently similar to the pending matter to support summary judgment, and that the third – though a government investigation – was not a public disclosure.

With this decision the Fifth Circuit set a very high standard for a FCA defendant to raise a public disclosure defense. It did not actually announce a new rule, but it went into such detail in its critique of the trial court and in its de novo review of the case that it created a whistleblower-friendly roadmap that other courts will surely be invited to follow.

Health Care Takeaway

The public disclosure bar of the FCA offers differing levels of protection, and the steps a health care provider can take to offer full disclosure of mistakes and taking advantage of the bar differ extensively depending upon where the provider is located. The new case from the Fifth Circuit means providers in providers in Mississippi, Texas, and Louisiana will need to approach self-reporting and disclosures with a great deal more caution and detail than providers in other jurisdictions.

For additional discussion of recent legal developments related to the public disclosure bar, please see Self-Disclosure, the Public Disclosure Bar and the FCA – Uncertainty, Circuit by Circuit.

Should you have any questions regarding the False Claims Act or defense against whistleblower actions, please contact: