USA v. USCC Wireless Investment, Inc.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 1, 2024 Decided February 11, 2025

No. 23-7044

UNITED STATES OF AMERICA, EX REL. MARK J. O’CONNOR

AND SARA F. LEIBMAN,

AND

MARK J. O’CONNOR AND SARA F. LEIBMAN,

APPELLANTS

v.

USCC WIRELESS INVESTMENT, INC., ET AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 1:20-cv-02071)

Daniel Woofter argued the cause for appellants. With him

on the briefs were Sara M. Lord and Benjamin J. Vernia.

Andrew S. Tulumello argued the cause for appellees. With

him on the brief were Shai Berman, Frank R. Volpe, and Robert

J. Conlan.

Before: WILKINS, KATSAS and RAO, Circuit Judges.

Opinion for the Court filed by Circuit Judge RAO.

2

RAO, Circuit Judge: This False Claims Act suit alleges that

U.S. Cellular and other entities committed fraud in Federal

Communications Commission wireless spectrum auctions. The

alleged fraud involved using sham small businesses to obtain

and retain bidding discounts worth millions of dollars. The

district court dismissed the qui tam action because a previous

lawsuit had raised substantially the same allegations, triggering

the Act’s public disclosure bar, and the relators bringing the

action were not original sources of the information. Although

relators have provided some new details about the fraud, they

have not overcome the stringent requirements of the public

disclosure bar. We therefore affirm.

I.

The False Claims Act (“FCA”) imposes liability on

persons who defraud the federal government. Act of Mar. 2,

1863, ch. 67, 12 Stat. 696 (codified as amended at 31 U.S.C.

§ 3729 et seq.). While the government has primary

responsibility for enforcing the FCA, if the government

declines to proceed with a claim, individuals, referred to as

relators, may act as “ad hoc deputies” to pursue the fraud on

behalf of the government in exchange for a share of any

recovery. United States ex rel. Cimino v. IBM Corp., 3 F.4th

412, 415 (D.C. Cir. 2021) (cleaned up); see also 31 U.S.C.

§ 3730(b)(2), (b)(4)(B). The bounty for a prevailing relator,

which can be up to 30 percent of the proceeds of the action or

settlement, provides an incentive for individuals to come

forward with allegations of fraud against the government. See

31 U.S.C. § 3730(d).

Congress, however, limited the circumstances in which a

relator may bring suit and share in the government’s recovery.

The FCA’s public disclosure bar provides that a relator whose

3

allegations are “substantially the same” as information that has

already been publicly disclosed cannot maintain a qui tam

action unless he “is an original source of the information.” Id.

§ 3730(e)(4)(A). The public disclosure bar helps protect

against the risk that qui tam suits will lead to “parasitic

exploitation of the public coffers.” United States ex rel.

Springfield Terminal Ry. Co. v. Quinn, 14 F.3d 645, 649 (D.C.

Cir. 1994). The bar helps achieve “the golden mean” reflected

in the FCA, which provides “adequate incentives for whistle-

blowing insiders with genuinely valuable information” but

blocks “opportunistic plaintiffs who have no significant

information to contribute of their own.” Id.

A.

This qui tam action involves alleged fraud in FCC

spectrum auctions. The FCC licenses and administers the

wireless spectrum for commercial use and distributes spectrum

licenses through public auctions. As relevant here, Congress

requires the FCC to promote “disseminati[on] [of] licenses

among a wide variety of applicants, including small

businesses.” 47 U.S.C. § 309(j)(3)(B). To implement this

statutory goal, the FCC established a program that provides

qualifying small businesses, i.e., designated entities, with

bidding credits that effectively discount the cost of their

licenses. Implementation of Section 309(j) of the

Communications Act – Competitive Bidding, Second Report &

Order, 9 FCC Rcd. 2348, 2388–91 (1994). Eligibility for

bidding credits turns on an entity’s revenue. 47 C.F.R.

§ 1.2110(b), (c), (f).

Given the high barriers to entry in the telecommunications

market, the FCC also encourages larger companies to invest in

and support designated entities. Large firms may not bid on

licenses for designated entities, but they can “become partners

4

with or make investments in designated entities so as to gain an

interest in” designated entities’ licenses. Implementation of

Section 309(j) of the Communications Act – Competitive

Bidding, Fifth Report & Order, 9 FCC Rcd. 5532, 5547 (1994).

Nevertheless, “bidding credits can only be used by genuine

small businesses—not by small sham companies that are

managed by or affiliated with big businesses.” SNR Wireless

Licenseco, LLC v. FCC, 868 F.3d 1021, 1026 (D.C. Cir. 2017).

The FCC scrutinizes designated entities to ensure that large

companies are not improperly benefitting from bidding credits

by exercising de facto control over small businesses. See 47

C.F.R. § 1.2110(b)(1), (c)(2)(i), (c)(5).

B.

In this qui tam action, the relators maintain the government

was defrauded because the FCC awarded millions of dollars in

bidding credits to designated entities that in fact were

controlled by U.S. Cellular, a large mobile phone service

provider with annual revenues in the billions. Relators sued

U.S. Cellular, several of its related entities, three designated

entities, and Allison DiNardo, the owner of the designated

entities.1 Between 2006 and 2008, DiNardo registered three

entities, Carroll, Barat, and King Street, as “very small

businesses” in FCC auctions and applied for the corresponding

25 percent bidding credit. According to the complaint, these

1

The qui tam action was brought against United States Cellular

Corporation, USCC Wireless Investment, Inc., and Telephone and

Data Systems, Inc. (together, “U.S. Cellular”); King Street Wireless,

L.P., and King Street Wireless, Inc. (together, “King Street”); Carroll

Wireless, L.P., and Carroll PCS, Inc. (together, “Carroll”); Barat

Wireless, L.P., and Barat Wireless, Inc. (together, “Barat”); and

DiNardo. We refer to these entities collectively as “Defendants.”

5

designated entities obtained discounted licenses and received

nearly $165 million in bidding credits.

In 2008, the law firm Lampert, O’Connor & Johnston,

P.C., filed a qui tam action alleging that the same defendants

here conspired to register sham designated entities to obtain

and hold discounted spectrum licenses for U.S. Cellular’s

use—thereby allowing U.S. Cellular to exploit bidding credits

intended for small businesses. According to the law firm,

defendants represented that Carroll and Barat were organized

to develop and operate spectrum licenses and provide

telecommunications services, yet the designated entities

engaged in no business activity, had no assets, and generated

no revenue. The law firm further alleged that U.S. Cellular

controlled the discounted licenses for Carroll and Barat from

the moment they were issued but failed to return the bidding

credits as required by federal law. At the time the suit was filed,

King Street had not obtained its spectrum licenses. The

government investigated the allegations against King Street

and declined to intervene in the suit. The FCC eventually

granted the King Street licenses. The law firm then voluntarily

dismissed the qui tam action.

This case originated in 2015, when Sara Leibman and

Mark O’Connor—the latter of whom was a named partner at

Lampert, O’Connor & Johnston, P.C., and represented the firm

in the 2008 qui tam action—filed a complaint in federal court

in Oklahoma, asserting FCA claims against the same

defendants as in the 2008 action. In particular, relators alleged

Defendants conspired to use sham designated entities to obtain

and retain discounted spectrum licenses and made false

statements and representations to the government in this effort.

The relators further claimed that U.S. Cellular exercised de

facto control over these entities, disqualifying them from

receiving bidding credits, and that King Street unlawfully

6

transferred its licensed spectrum to U.S. Cellular while

concealing the transfer from the government.

Relators primarily focused on fraudulent activity

involving King Street. They discovered that King Street never

provided wireless services to the public. It did not apply for or

receive telephone numbers, had no retail stores or customers,

and lacked the network capabilities necessary to offer

telecommunications services. Instead, according to relators,

U.S. Cellular used King Street’s licenses to provide U.S.

Cellular branded service to customers. King Street, meanwhile,

filed false annual reports and construction notices with the FCC

to conceal that it was holding its discounted licenses for U.S.

Cellular.

Relators also conducted field tests that supposedly

revealed U.S. Cellular had incorporated King Street’s spectrum

into its network. They learned of a network sharing agreement

(the “2011 NSA”) that, relators say, effectively transferred

King Street’s spectrum rights for many of its licenses to U.S.

Cellular. Relators alleged the agreement established an

“attributable material relationship” between King Street and

U.S. Cellular, violating FCC rules and disqualifying King

Street as a designated entity. The government declined to

intervene in relators’ suit.

The case was transferred to the District of Columbia,2 and

the district court found relators’ complaint asserted

2

Relators filed a second, related action in the Western District of

Oklahoma, which was similarly transferred to the District of

Columbia. United States ex rel. O’Connor v. U.S. Cellular Corp.,

No. 20-cv-2070, Dkt. No. 128 (D.D.C. July 30, 2020). We heard oral

argument in both cases on the same day. United States ex rel.

O’Connor v. U.S. Cellular Corp., No. 23-7041 (D.C. Cir. Apr. 1,

2024).

7

“substantially the same” allegations as the 2008 qui tam action.

This triggered the FCA’s public disclosure bar, and because

relators did not meet the criteria for the original source

exception, the district court dismissed the action. United States

ex rel. O’Connor v. U.S. Cellular Corp., 2023 WL 2598678, at

*4–7 (D.D.C. Mar. 22, 2023).

Relators timely appealed, and this court has jurisdiction.

28 U.S.C. § 1291. We review de novo a district court’s grant of

a motion to dismiss under Federal Rule of Civil Procedure

12(b)(6). United States ex rel. Williams v. Martin-Baker

Aircraft Co., 389 F.3d 1251, 1259 (D.C. Cir. 2004). When

determining whether a complaint fails to state a claim, “we

accept the operative complaint’s well-pleaded factual

allegations as true and draw all reasonable inferences in the

[relators’] favor.”3 North American Butterfly Ass’n v. Wolf, 977

F.3d 1244, 1249 (D.C. Cir. 2020).

II.

Relators attempt to save their qui tam action by arguing

that the public disclosure bar does not apply, either because

their allegations were not “substantially the same” as those in

the 2008 qui tam action or because they qualify for the original

source exception. We reject both arguments.

3

Although the FCA is an anti-fraud statute and requires relators to

meet the heightened “particularity” pleading standard of Federal

Rule of Civil Procedure 9(b), United States ex rel. Totten v.

Bombardier Corp., 286 F.3d 542, 551–52 (D.C. Cir. 2002), that

standard is not at issue in this case because Defendants do not

challenge the sufficiency of relators’ substantive allegations on

appeal.

8

A.

We begin by considering whether relators’ allegations are

“substantially the same” as those disclosed in the 2008 qui tam

action and thus trigger the public disclosure bar. The claims

here turn on alleged transactions that postdate 2010, and so are

governed by the public disclosure bar as amended in 2010,

which provides:

The court shall dismiss an action or

claim … unless opposed by the Government, if

substantially the same allegations or

transactions as alleged in the action or claim

were publicly disclosed … [in the enumerated

channels], unless … the person bringing the

action is an original source of the information.

31 U.S.C. § 3730(e)(4)(A).

The 2010 amendments included two changes relevant to

this case. First, the public disclosure bar was previously a

jurisdictional limit but is now an affirmative defense. When the

bar applies, a court must “dismiss [the] action.” Id.; compare

31 U.S.C. § 3730(e)(4)(A) (1986) (providing that “[n]o court

[would] have jurisdiction over an action” for which there had

already been a public disclosure). Unless Congress “clearly

states” that a statutory limitation is jurisdictional, “courts

should treat the restriction as nonjurisdictional.” Arbaugh v.

Y&H Corp., 546 U.S. 500, 515–16 (2006). In the 2010

amendments, Congress removed the jurisdictional language in

the public disclosure bar. United States ex rel. Shea v. Cellco

Partnership, 863 F.3d 923, 933 (D.C. Cir. 2017). Moreover,

the government may oppose a court’s dismissal, which

reinforces that the bar is no longer jurisdictional. Otherwise,

“the government [could] cure a jurisdictional defect simply by

opposing a motion to dismiss.” United States ex rel. Osheroff

9

v. Humana, Inc., 776 F.3d 805, 811 (11th Cir. 2015). The

public disclosure bar now operates as an affirmative defense.4

Second, Congress clarified the standard for applying the

public disclosure bar. Prior to the amendment, the public

disclosure bar deprived courts of jurisdiction over actions

“based upon the public disclosure of allegations or

transactions.” 31 U.S.C. § 3730(e)(4)(A) (1986) (emphasis

added). Interpreting the pre-2010 language, this circuit held

that a suit was “based upon publicly disclosed allegations or

transactions when the allegations in the complaint [were]

substantially similar to those in the public domain.” United

States ex rel. Oliver v. Philip Morris USA Inc., 826 F.3d 466,

472 (D.C. Cir. 2016) (cleaned up) (emphasis added). Other

circuits used terms such as “substantially similar,”

“substantially the same,” and “substantial identity” when

applying the public disclosure bar. See United States ex rel.

Holloway v. Heartland Hospice, Inc., 960 F.3d 836, 849–50 &

nn.8–9 (6th Cir. 2020) (collecting and discussing cases). In the

2010 amendments, Congress mirrored these judicial

formulations, requiring dismissal of a qui tam action “if

substantially the same allegations or transactions … were

publicly disclosed.” 31 U.S.C. § 3730(e)(4)(A) (emphasis

added).

Congress’s amendment of the public disclosure bar is best

understood as codifying the interpretation of this circuit and

others that focused on whether the allegations of fraud in a qui

tam action were “substantially similar” to or “substantially the

same” as publicly disclosed allegations and transactions. See

United States ex rel. May v. Purdue Pharma L.P., 737 F.3d

4

We note this is the unanimous view of our sister circuits that have

considered the issue. See, e.g., United States ex rel. Reed v. KeyPoint

Gov’t Sols., 923 F.3d 729, 737 n.1 (10th Cir. 2019) (collecting cases).

10

908, 917 (4th Cir. 2013) (“[T]he amended version [of the

public disclosure bar] … focuses on the similarity of the

allegations of fraud.”); see also United States ex rel. Reed v.

KeyPoint Gov’t Sols., 923 F.3d 729, 743 (10th Cir. 2019)

(“That the substantially-the-same standard adopted in the 2010

amendment resembles the standard we already used is no

accident; the amendment expressly incorporates the

‘substantially similar’ standard in accordance with the

interpretation of this circuit and most other circuits.”) (cleaned

up). Because the FCA amendments incorporate judicial

interpretations, we can reasonably continue to rely on our pre-

2010 cases applying the public disclosure bar.5

B.

Under the “substantially the same” standard, the critical

inquiry is whether “the government … ha[d] enough

information to investigate the case … or [whether] the

information could at least have alerted law-enforcement

authorities to the likelihood of wrongdoing.” United States ex

5

Other circuits have also concluded that “pre-2010-amendment

cases guide [the] substantially-the-same inquiry.” Reed, 923 F.3d at

744; see also Silbersher v. Valeant Pharms. Int’l, Inc., 89 F.4th 1154,

1167 (9th Cir. 2024) (“Congress re-enacted its prior law in clearer

terms by replacing ‘based upon’ with ‘substantially the same as,’

leaving our precedent interpreting that phrase undisturbed.”); United

States ex rel. Silver v. Omnicare, Inc., 903 F.3d 78, 83–84 n.6 (3d

Cir. 2018); Bellevue v. Universal Health Servs. of Hartgrove, Inc.,

867 F.3d 712, 718 (7th Cir. 2017). By contrast, the Sixth Circuit has

held that “substantially the same” requires a higher degree of

similarity than “based upon.” Holloway, 960 F.3d at 850–51. We

need not resolve whether or how the two standards differ because

relators conceded in the proceedings below that our cases

interpreting the public disclosure bar before the 2010 amendments

remain instructive.

11

rel. Davis v. District of Columbia, 679 F.3d 832, 836 (D.C. Cir.

2012) (cleaned up). “[T]he government has enough

information to investigate the case” when either “the allegation

of fraud” or “its underlying factual elements” have been

publicly disclosed. United States ex rel. Doe v. Staples, Inc.,

773 F.3d 83, 86 (D.C. Cir. 2014) (cleaned up). The public

disclosure bar applies if the fraud was publicly disclosed, or if

both the misrepresentation and the truth were in the public

domain. Id.

Because the public disclosure bar is an affirmative defense

and Defendants have raised it in a pre-answer motion under

Federal Rule of Civil Procedure 12(b), Defendants must show

that “the facts that give rise to the defense are clear from the

face of the complaint.” See de Csepel v. Republic of Hungary,

714 F.3d 591, 608 (D.C. Cir. 2013) (cleaned up). Defendants

argue the public disclosure bar applies to this case because the

2008 qui tam action publicly disclosed “substantially the same”

allegations, namely the same fraudulent scheme (obtaining

discounted bidding credits) at the same FCC auctions,

perpetrated by the same defendants.

In response, relators claim that their current allegations are

not “substantially the same” as the disclosures from 2008,

because this suit alleges post-licensing fraud focused on the

retention of bidding credits and the incorporation of the

designated entities’ spectrum into the U.S. Cellular network.

Relators also insist they have marshalled new evidence,

including an engineering study, employee interviews, and the

2011 NSA, that exposes this fraudulent scheme. Furthermore,

relators argue that they have advanced a new allegation that

U.S. Cellular’s control over King Street’s spectrum violates the

FCC’s attributable material relationship rule, an allegation that

is not substantially the same as the pre-licensing fraud

12

involving U.S. Cellular’s control over the designated entities

during the spectrum auctions.

Relators’ complaint includes some additional facts, but

ultimately describes a fraud that is merely a continuation of,

and therefore substantially the same as, the scheme disclosed

in the 2008 qui tam action. In the 2008 action, relators alleged

that Carroll, Barat, and King Street served as fronts for U.S.

Cellular to obtain spectrum licenses at a discount and that the

designated entities were under the de facto control of U.S.

Cellular. In their present complaint, relators reiterate these

same allegations, adding only some details about how

Defendants have continued the fraud since the spectrum

auctions. But the pertinent elements of the fraud were all

alleged in the 2008 qui tam action: the misrepresentation that

Carroll, Barat, and King Street were genuine designated

entities; the truth that they were fronts for U.S. Cellular; and

the allegation that Defendants committed fraud in the FCC

auctions to benefit from valuable bidding credits. The 2008 qui

tam action alerted the government to the same fraud alleged in

this action.

This qui tam action simply elaborates on how Defendants

attempted to conceal the fraud and maintain its benefits. But “a

qui tam action cannot be sustained where both elements of the

fraudulent transaction … are already public, even if the relator

comes forward with additional evidence incriminating the

defendant.” Doe, 773 F.3d at 86 (cleaned up). Filling in details

about an already disclosed fraud is not enough to overcome the

public disclosure bar. United States ex rel. Settlemire v. District

of Columbia, 198 F.3d 913, 919 (D.C. Cir. 1999). We agree

with the district court that the 2008 qui tam action publicly

disclosed that the “same defendants intended to acquire the

same discounts at the same auctions via the same scheme of

13

using front companies to fraudulently pose as small

businesses.” O’Connor, 2023 WL 2598678, at *5 (cleaned up).

Although relators offer some additional details about

actions Defendants took to preserve their bidding credits and

spectrum, the underlying fraud is “substantially the same” as

that alleged in the 2008 qui tam action. Therefore, the public

disclosure bar applies.

III.

Relators also argue they qualify as “original sources” and

therefore fit within the exception to the public disclosure bar.

Even if relators’ claims were previously publicly disclosed,

they may bring a qui tam action if they were “original

source[s]” identifying the alleged fraud. 31 U.S.C.

§ 3730(e)(4)(A). In the 2010 amendments to the FCA,

Congress narrowed the definition of original source. Before the

amendments, a relator qualified as an original source by simply

possessing “direct and independent knowledge of the

information on which the allegations are based.” 31 U.S.C.

§ 3730(e)(4)(B) (1986). The timing of the relator’s claim was

immaterial. Now, a relator can be an original source only if:

(1) “prior to a public disclosure … [he] has voluntarily

disclosed to the Government the information on which

allegations or transactions in a claim are based”; or (2) he “has

knowledge that is independent of and materially adds to the

publicly disclosed allegations or transactions, and … has

voluntarily provided the information to the Government before

filing an action.” 31 U.S.C. § 3730(e)(4)(B). Relators here are

not original sources under either definition.

Because qualifying as an original source is an exception to

the public disclosure bar, relators will generally bear the burden

of demonstrating it applies. The original source exception

benefits relators by permitting their claims to go forward even

14

if the public disclosure bar is triggered. Relators are also best

situated to know the facts relevant to whether they qualify as

original sources. See Smith v. United States, 568 U.S. 106, 112

(2013) (“Where the facts with regard to an issue lie peculiarly

in the knowledge of a party, that party is best situated to bear

the burden of proof.”) (cleaned up).

A.

Relators maintain that O’Connor is an original source

under the first definition because his law firm shared the 2008

qui tam action with the government before its public disclosure.

O’Connor cannot be an original source for the 2008 qui

tam action, however, because that action was filed by his law

firm. The 2008 pleadings stated: “Lampert, O’Connor &

Johnston, P.C. brings this action … on behalf of itself and the

Government.” It is a fundamental principle of corporate law

that a professional corporation is a legal entity distinct from its

shareholders. See O’NEAL, THOMPSON & WELLS, 1 CLOSE

CORPORATIONS AND LLCS: LAW AND PRACTICE § 2.9 (3d ed.

2024). Although O’Connor was a partner at the law firm and

involved in filing the complaint, he cannot attribute the firm’s

suit to himself. Cf. United States ex rel. Precision Co. v. Koch

Indus., Inc., 971 F.2d 548, 554 (10th Cir. 1992) (holding a

corporation cannot serve as the original source of information

gathered by its shareholders before its formation). The 2008 qui

tam action was brought by the law firm, and O’Connor cannot

step into the firm’s shoes to qualify as an original source.

For the first time in their reply brief, relators also claim

that O’Connor personally communicated with the government

about the allegations of fraud in the 2008 qui tam action before

its unsealing. This argument, however, has been forfeited

because it was not presented in the opening brief. In their

opening brief, relators suggested O’Connor was an original

15

source of the 2008 qui tam action because he “served” and later

“dismissed” the complaint. Defendants naturally responded by

focusing on whether the 2008 qui tam action, which was filed

by O’Connor’s law firm and did not mention O’Connor

personally, could be attributed to him. Only in their reply brief

did relators specifically assert that O’Connor independently

communicated with the government about the allegations as

early as 2007. This argument comes too late. Relators cannot

preserve their claim that O’Connor is an original source by

providing a “skeletal” argument in their opening brief and

waiting to develop their full argument in reply. Al-Tamimi v.

Adelson, 916 F.3d 1, 6 (D.C. Cir. 2019) (cleaned up).

O’Connor cannot claim to be an original source based on

the disclosures of his law firm, and any argument that he

individually provided information to the government has been

forfeited. Relators therefore do not qualify as original sources

under the first definition of section 3730(e)(4)(B) by

voluntarily disclosing allegations of fraud prior to the unsealing

of the 2008 qui tam action.

B.

Relators also argue that they qualify as original sources

under the second definition by having “knowledge that is

independent of and materially adds to the publicly disclosed

allegations or transactions” and by voluntarily providing that

information to the government. 31 U.S.C. § 3730(e)(4)(B).

Relators maintain that their independent investigations

materially added to the disclosures in the 2008 qui tam action

by providing information about post-licensing fraud. For

example, relators proved through spectrum analyses that after

King Street obtained the licenses referenced in the 2008 qui

tam action, U.S. Cellular secretly incorporated King Street’s

licensed spectrum, which contradicted King Street’s FCC

16

certifications and exposed unlawful activity. Relators also

discovered that King Street never operated as a legitimate

telecommunications provider. According to relators, their

efforts instigated a government investigation that uncovered

the 2011 NSA, further demonstrating Defendants’ post-

licensing fraud. Relators argue they influenced the

government’s decisionmaking and filled gaps in the

government’s understanding of the fraud.

Even assuming relators provided some new information

that is “independent of” the 2008 qui tam action, we must

consider whether this information “materially adds” to what

was publicly disclosed.6 Id.

This circuit has not previously considered what counts as

a material addition for the purpose of the original source

exception. We begin with the text and structure of the statute.

As the Supreme Court has recognized when interpreting other

sections of the FCA, the term “material” has a well-established

common law meaning: Something is material if it is likely to

influence a reasonable person’s behavior. See Universal Health

Servs., Inc. v. United States ex rel. Escobar, 579 U.S. 176, 193

(2016) (discussing common law definitions of “material” in

6

Whether the original source exception applies because information

“materially adds” to public disclosures must be a separate inquiry

from whether relators have brought forward allegations that are

“substantially the same,” which triggers application of the public

disclosure bar. While the precise line between these concepts may be

difficult to draw, they “must remain conceptually distinct; otherwise,

the original source exception would be rendered nugatory.” United

States ex rel. Winkelman v. CVS Caremark Corp., 827 F.3d 201,

211–12 (1st Cir. 2016); see also United States ex rel. Maur v. Hage-

Korban, 981 F.3d 516, 525 (6th Cir. 2020) (endorsing Winkelman’s

reasoning because the alternative “would leave an exception that

excepts nothing”).

17

tort and contract). Information is material if “knowledge of [it]

would affect a person’s decision-making” or if it is

“significant” or “essential.” Material (adj.), BLACK’S LAW

DICTIONARY (10th ed. 2014). This definition comports with the

liability section of the FCA, which defines “material” as

“having a natural tendency to influence, or be capable of

influencing, the payment or receipt of money or property.”7 31

U.S.C. § 3729(b)(4). As the Supreme Court has emphasized,

“[t]he materiality standard [in section 3729(b)(4)] is

demanding” and is not met “where noncompliance is minor or

insubstantial.” Escobar, 579 U.S. at 194. Interpreting the term

“material” consistently across the FCA, we conclude that

minor or insubstantial additions to publicly disclosed

information will not qualify a relator as an “original source.”

A relator therefore “materially adds” to public disclosures

by contributing information that “is sufficiently significant or

essential” to influence the government’s decision to prosecute

fraud.8 United States ex rel. Winkelman v. CVS Caremark

Corp., 827 F.3d 201, 211 (1st Cir. 2016); see also Reed, 923

7

The Supreme Court has interpreted “material” in other federal

statutes in a similar way. See, e.g., Kungys v. United States, 485 U.S.

759, 770 (1988) (construing “material” in an immigration statute to

mean information that “has a natural tendency to influence, or was

capable of influencing, the decision of the decisionmaking body to

which it was addressed”) (cleaned up); Neder v. United States, 527

U.S. 1, 20–25 (1999) (same for federal mail fraud, bank fraud, and

wire fraud statutes); see also id. at 22 (explaining “the common law

could not have conceived of ‘fraud’ without proof of materiality”).

8

In addition to the cases already cited, this interpretation is consistent

with the interpretation of “materially adds” in other circuits. See, e.g.,

United States ex rel. Advocates for Basic Legal Equality., Inc. v. U.S.

Bank, N.A., 816 F.3d 428, 431 (6th Cir. 2016); United States ex rel.

Moore & Co., P.A. v. Majestic Blue Fisheries, LLC, 812 F.3d 294,

306–07 (3d Cir. 2016).

18

F.3d at 757 (holding that “materially adds” requires relators to

“disclose[] new information that is sufficiently significant or

important that it would be capable of influencing the behavior

of the recipient—i.e., the government”) (cleaned up). This

interpretation is consistent with the careful balance Congress

struck in the FCA to ensure that the government remains “in

the driver’s seat to pursue and punish false claims according to

its priorities.” United States v. Honeywell Int’l Inc., 47 F.4th

805, 818 (D.C. Cir. 2022). Reading “material” to require

significant or essential additional information also comports

with Congress’s narrowing of the original source exception in

2010.

Determining whether a relator’s contribution materially

adds to a public disclosure is a case-dependent inquiry. “[A]

relator who merely adds detail or color to previously disclosed

elements of an alleged scheme is not materially adding to the

public disclosures.” Reed, 923 F.3d at 757 (cleaned up). Simply

elaborating on public disclosures is insufficient to meet the

“materially adds” standard because marginal details are not

likely to influence the government’s decision to prosecute.

Relators do not qualify for the original source exception to

the public disclosure bar because their information—which we

take as true—does not materially add to the disclosures made

in the 2008 qui tam action. The 2008 action provided

substantial information about U.S. Cellular’s alleged control

over Carroll, Barat, and King Street. That complaint alleged the

designated entities were sham companies under the de facto

control of U.S. Cellular and existed solely to obtain the 25

percent bidding credit on FCC licenses that were ultimately for

U.S. Cellular’s use. Relators’ allegations in this case merely

confirm U.S. Cellular’s continued control over the designated

entities and its use of their licenses. While some information

may be new, it is not so significant or essential that it would

19

influence the government’s decision to prosecute, because the

2008 action already disclosed the allegations of Defendants’

fraud. Rather than “blaz[ing] a new trail,” relators merely

“add[ed] a few more breadcrumbs on an existing trail.” Id. at

763. Providing some additional color about the fraudulent

scheme does not make relators an original source.

Relators’ contention that they affected the government’s

decisionmaking by prompting an investigation does not alter

our conclusion. Relators say they provided evidence of post-

licensing fraud that led the government to conduct a second

investigation. This investigation uncovered the 2011 NSA,

which relators claim established an attributable material

relationship between King Street and U.S. Cellular that

violated FCC rules and disqualified King Street from bidding

credits. On relators’ account, the fact of the government’s

investigation proves their new information materially added to

what the government knew. We disagree.

The government has broad discretion in deciding how to

respond to allegations in a qui tam suit, and such decisions may

be based on a range of factors independent of the relators’

specific disclosures. See Swift v. United States, 318 F.3d 250,

253 (D.C. Cir. 2003). The FCA requires relators to serve the

government a copy of the complaint and all material evidence,

which remains sealed for 60 days. See 31 U.S.C. § 3730(b)(2).

During this seal period, the government may investigate, or

take whatever action it sees fit, to determine whether it wants

to proceed with an enforcement action or intervene in the qui

tam suit. See id. The fact that the government undertook some

due diligence in response to new information does not

necessarily show that relators’ information was material. The

government has significant latitude in how it exercises its

enforcement authority under the FCA, and the mere fact of a

government investigation cannot support the conclusion that

20

relators’ information was essential or influenced the

government.

Because relators’ allegations failed to materially add to the

public disclosures, relators do not qualify for the original

source exception to the public disclosure bar.9

***

This qui tam action must be dismissed because the frauds

Leibman and O’Connor allege were publicly disclosed in an

earlier lawsuit, and they are not original sources of the

information. We therefore affirm the judgment of the district

court.

So ordered.

9

The district court did not abuse its discretion in dismissing with

prejudice. Relators did not make a formal motion to amend, and in

these circumstances it is not an abuse of discretion for a district court

not to grant “such leave sua sponte.” Kowal v. MCI Commc’ns Corp.,

16 F.3d 1271, 1280 (D.C. Cir. 1994).