The U.S. District Court for the Western District of Tennessee recently held that self-reporting unlawful activity to government officials does not trigger the public disclosure bar. In Unites States ex rel. Cox III v. Smith & Nephew, Inc. the corporate defendant had disclosed the potentially unlawful activity to a government agency before the whistleblower filed suit. The defendant later moved to dismiss, claiming that its self-reporting constituted a public disclosure. The court denied the motion, and the whistleblower was permitted to proceed. With this ruling, the Western District of Tennessee joined the U.S. Court of Appeals for the First Circuit in holding that self-reporting to government officials is not the type of public disclosure that will nullify a whistleblower action.
The U.S. Court of Appeals for the Seventh Circuit has taken the very opposite position. But the Western District of Tennessee concluded that the Seventh Circuit was “an outlier” on the issue and characterized its view as “untenable.”
Before a company self-reports, it should seek legal counsel.
