United States: Sixth Circuit Affirms that Broad Public Disclosure of Misconduct May Bar More Specific Allegations of Fraud Under False Claims Act's Public Disclosure Bar

In U.S. ex rel. Advocates for Basic Legal Equality, Inc. v. U.S. Bank, 816 F.3d 428 (2016), the Sixth Circuit affirmed the dismissal of a False Claims Act ("FCA") suit against U.S. Bank based on the FCA's public disclosure bar. In reaching its decision, the Sixth Circuit held that the bar applied to a subset of broader misconduct than had previously been publicly disclosed, and that the few specific examples of alleged misconduct offered by Relator to qualify as an original source did not "materially add to" the prior public disclosures, and thus did not suffice to save the complaint from dismissal. Relator subsequently filed a petition for a writ of certiorari to the United States Supreme Court challenging the public disclosures that the Sixth Circuit held triggered the bar as insufficiently tailored to the fraud alleged in the complaint for the bar to apply. That petition remains pending.


U.S. Bank participated in a mortgage insurance program, backed by the Federal Housing Administration ("FHA"), that encouraged banks to lend money to high-risk borrowers. To participate in the program, U.S. Bank had to certify that it would meet certain requirements, and each time it requested an insurance payment, U.S. Bank had to certify that it had satisfied those requirements. One such requirement mandated that U.S. Bank would engage in loss mitigation measures, such as attempting to arrange a face-to-face meeting with the defaulting borrower, before foreclosing.

Relator alleged that U.S. Bank engaged in a practice of initiating foreclosure proceedings on FHA-insured mortgages without complying with the servicing and loss mitigation regulations of the Department of Housing and Urban Development ("HUD"), although it submitted annual certifications to HUD containing a general statement that it was compliant with all HUD-FHA regulations. The relator alleged that this conduct resulted in $2.3 billion in false claims for FHA insurance benefits.

Sixth Circuit's Holding

The FCA's public disclosure bar directs courts to dismiss qui tam actions where "substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed" unless the qui tam plaintiff is an original source of the allegations. 31 U.S.C. § 3730(e)(4)(A). Only certain types of disclosures trigger this bar, namely, disclosures "in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party," "in a congressional, Government Accountability Office, or other Federal report, hearing, audit, or investigation," or "from the news media." Id.

Here, the Sixth Circuit held that Relator's claims were barred because the conduct it alleged had already been publicly disclosed. The sources that the court cited as prior public disclosures included (i) a 2011 consent order between U.S. Bank and the OCC requiring U.S. Bank to implement a wide variety of reforms, including loss mitigation and foreclosure prevention efforts for delinquent loans; (ii) a 2011 foreclosure practices review by three federal agencies, which noted that various banks, including U.S. Bank, had failed to take a variety of loss mitigation measures; and (iii) a 2011 news article discussing the consent order, which explained that U.S. Bank had engaged in a pattern of misconduct and negligence.

The court found that these disclosures were sufficient to trigger the public disclosure bar because they put the government on notice of the possibility of fraud. They disclosed the allegation that U.S. Bank had failed to engage in appropriate loss mitigation measures and that it committed fraud when it made false certifications about those efforts. The court also rejected the argument that, because neither the consent order nor the foreclosure practices review dealt with loss mitigation related specifically to federally insured mortgages, there was no prior public disclosure. Those prior disclosures broadly applied to any type of mortgage, thus encompassing federally insured mortgages. Otherwise, the court reasoned, "one could always—or at least nearly always—evade the public disclosure required by focusing the allegations in a second action on sub-classes of potential claims covered by the initial action." Advocates for Basic Legal Equality, Inc., 816 F.3d at 432. In short, the court held that the broader disclosure encompassed Relator's narrower allegations.

Having concluded that Relator's allegations were publicly disclosed, the court then addressed Relator's claim that it was an original source of the allegations. To qualify as an original source, a relator must have information that "materially adds to" the public disclosure. 31 U.S.C. § 3730(e)(4)(B). Materiality, here, "requires the claimant to show it had information 'of such a nature that knowledge of the item would affect a person's decision-making,' is 'significant,' or is 'essential.'" Advocates for Basic Legal Equality, Inc., 816 F.3d at 431. Relator argued that it met this standard for three foreclosures that purportedly demonstrated that U.S. Bank failed to engage in appropriate loss mitigation measures. The court rejected this, concluding that these incidents did not add to the thousands of prior problematic foreclosures already disclosed in the public record. Moreover, Relator failed to show that these three incidents in any way affected the government's decision-making as to U.S. Bank, as the government had already tried to remedy U.S. Bank's foreclosure practices in the 2011 consent decree.

In the process of reaching its decision, the Sixth Circuit joined at least five other circuits in concluding that the post-2010 version of the public disclosure bar "is no longer jurisdictional."

Implications of the Court's Ruling

This decision represents a principled application of the post-2010 public disclosure bar that will be useful to FCA defendants in challenging relators' efforts to bring claims based on conduct that has already been made public.

Relator filed a certiorari petition in July 2016 seeking to overturn the Sixth Circuit's decision. The petition asks the Supreme Court to address the specificity at which a court should assess whether a prior public disclosure states substantially the same fraud that is alleged in a complaint. In October 2016, the Court invited the Acting Solicitor General to file a brief in the case expressing the views of the United States. The petition remains pending.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.