United States Ex Rel. Heath v. Wisconsin Bell, Inc.
2014 U.S. App. LEXIS 14608
| 7th Cir. | 2014Background
- Relator Todd Heath, a telecom-billing auditor, sued Wisconsin Bell under the False Claims Act, alleging it overcharged school districts under the E‑Rate Program by failing to offer the lowest corresponding price (LCP).
- Heath found pricing disparities among school districts and later discovered a lower-rate contract (VNS Agreement) between Wisconsin Bell and the Wisconsin Department of Administration (DOA) that some non-school government entities received.
- Heath alleged Wisconsin Bell refused to extend the DOA rates to many schools, causing the government to overpay subsidies; he notified Wisconsin Bell and obtained the VNS Agreement from the DOA website and public records requests.
- The United States declined to intervene after investigation; Heath proceeded as a qui tam relator and filed suit in 2008.
- The district court dismissed for lack of subject-matter jurisdiction under the FCA public-disclosure bar, holding Heath’s claim was based on information publicly disclosed (the DOA website/VNS Agreement) and that he was not an original source.
- The Seventh Circuit reversed, finding Heath’s claims were not “based upon” the public disclosure because his independent, preexisting knowledge of disparate school pricing was the essential component that made the VNS Agreement actionable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the FCA public-disclosure bar precludes Heath's qui tam suit | Heath contends his suit is not barred because he developed independent, nonpublic knowledge of disparate school pricing and merely used the VNS Agreement as corroboration | Wisconsin Bell argues the VNS Agreement was publicly disclosed on the DOA website and Heath’s case is based on that public disclosure, triggering the bar | Reversed dismissal: court held the suit was not "based upon" the public disclosure because Heath supplied independent, materially new information about school pricing |
| Whether Heath qualifies as an "original source" | Heath claims original-source status through prior investigation and direct knowledge of pricing disparities | Wisconsin Bell asserts Heath relied on publicly disclosed contract and thus is not an original source | Court did not need to resolve original-source question because the claims were not "based upon" the public disclosure |
Key Cases Cited
- Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440 (7th Cir. 2009) (standard of appellate review for jurisdictional dismissal)
- Graham Cnty. Soil & Water Conservation Dist. v. United States ex rel. Wilson, 559 U.S. 280 (U.S. 2010) (explaining purpose of FCA public-disclosure bar)
- Glaser v. Wound Care Consultants, Inc., 570 F.3d 907 (7th Cir. 2009) (interpreting "based upon" as ‘‘substantially similar to publicly disclosed allegations’’)
- Leveski v. ITT Educ. Servs., Inc., 719 F.3d 818 (7th Cir. 2013) (cautioning against applying the public-disclosure bar at a high level of generality)
- U.S. ex rel. Goldberg v. Rush Univ. Med. Ctr., 680 F.3d 933 (7th Cir. 2012) (holding relator can avoid the bar by contributing genuinely new and material information)
- U.S. ex rel. Baltazar v. Warden, 635 F.3d 866 (7th Cir. 2011) (government reports did not fully disclose the relator’s actionable allegations)
- United States ex rel. Precision Co. v. Koch Indus., Inc., 971 F.2d 548 (10th Cir. 1992) (noting that an action partly based on public disclosures is still "based upon" them)