Cause of Action v. Chicago Transit Authority
2016 U.S. App. LEXIS 3628
| 7th Cir. | 2016Background
- Cause of Action, a qui tam relator, sued CTA under the FCA alleging inflated VRM data to obtain greater UAFP grants.
- The district court dismissed for lack of jurisdiction under the public-disclosure bar, finding public disclosures prior to filing.
- Public sources included an FTA Letter reviewing CTA's VRM reporting and Illinois audit materials (Technical Report and Audit Report).
- The FTA defined revenue service and noted deadhead miles; CTA cooperated and was told to revise 2011 VRM data but not prior years.
- Cause of Action attached the Technical Report, Audit Report, and an affidavit; the United States declined to intervene.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does § 3730(e)(4) bar the suit as publicly disclosed? | Cause of Action argues disclosures were not public or not substantially similar. | CTA contends disclosures public and suit falls within bar. | Yes; public-disclosure bar precludes the action. |
| Was the FTA Letter a public disclosure of the allegations? | FTA letter may reflect government investigation, not publicized allegations. | FTA Letter publicly disclosed core fraudulent elements to CTA and public authorities. | Yes; FTA Letter placed the critical elements in the public domain. |
| Are Cause of Action's allegations substantially similar to the publicly disclosed ones? | Cause of Action adds new theory beyond what Audit/FTA disclosed. | Allegations mirror the Audit Report and are not substantially new. | Yes; allegations are substantially similar to the Audit Report and thus barred. |
| Is Cause of Action an original source with independent knowledge added to the public disclosure? | Cause of Action provided information to DOJ before filing, claiming independent knowledge. | Knowledge was not independent or material; it largely relied on disclosed materials. | No; not an original source; information did not materially add to the public disclosure. |
Key Cases Cited
- United States ex rel. Feingold v. AdminaStar Fed., Inc., 324 F.3d 492 (7th Cir. 2003) (public-disclosure analysis; government possession suffices)
- Bank of Farmington v. United States, 166 F.3d 853 (7th Cir. 1999) (public-domain meaning includes government possession of information)
- Glaser v. Wound Care Consultants, Inc., 570 F.3d 907 (7th Cir. 2009) (substantial similarity test for public disclosures)
- Absher v. Momence Meadows Nursing Ctr., Inc., 764 F.3d 699 (7th Cir. 2014) (distinguishes scope of disclosure and scienter in public-disclosure bar)
- Heath v. Wisconsin Bell, Inc., 760 F.3d 688 (7th Cir. 2014) (independent investigation required to avoid public-disclosure bar (fact pattern differs))