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United States ex rel. ABLE v. U.S. Bank, N.A.

This case presented an important and recurring issue concerning the “public disclosure bar” of the False Claims Act (FCA). That provision bars an FCA qui tam action if official documents or the news media publicly disclosed “substantially the same allegations or transactions” before the case was filed. Courts of appeals disagree over the level of specificity at which a disclosure must be “substantially the same” as the alleged fraud to trigger the bar.

Here, petitioner Advocates for Basic Legal Equality, Inc. (ABLE), a non-profit organization devoted to advocating for the interests of low-income individuals, brought an FCA qui tam action against respondent U.S. Bank. ABLE alleged that the bank made false claims for government payments under the mortgage insurance program administered by the Federal Housing Administration (FHA). ABLE claimed that, in submitting insurance claims for losses incurred in foreclosing on FHA-insured loans, U.S. Bank falsely certified that it had complied with pre-foreclosure requirements, unique to the FHA program, that are intended to mitigate the government’s losses.

The Sixth Circuit held that the action was barred by public disclosures in two documents, neither of which alleged that U.S. Bank (or any bank) had violated the FHA’s special loss-mitigation requirements, much less that U.S. Bank misrepresented compliance with those or any other FHA program requirements. The Sixth Circuit’s restrictive approach blocks lawsuits based on allegations that identify specific frauds not previously disclosed to the public, and it disrupts the FCA’s effort to strike a balance between encouraging private persons to root out fraud and stifling parasitic lawsuits.

Public Citizen is served as co-counsel for ABLE seeking review in the U.S. Supreme Court. The petition for certiorari asked whether, under the public disclosure bar, a qui tam action may proceed when it is based on specific allegations of fraud that were not the subject of prior public disclosures and that add substantial material information to the public disclosures, and when the publicly disclosed allegations “encompass” the qui tam allegations only if both sets of allegations are characterized at a very high level of generality.

The Court requested the views of the United States as to whether to grant the petition. Following the change in administrations, the government submitted a brief stating that the petition should be denied. On May 22, 2017, the Court denied the petition.