Summary
The Eleventh Circuit Court of Appeals affirmed the district court’s dismissal of a qui tam action brought under the False Claims Act against Jay Odom and the Okaloosa County Board of County Commissioners. The court agreed that the plaintiff, Robert Smith, was barred from bringing the suit due to the Act’s public disclosure provision. The allegations that the Destin Executive Airport sponsor made false certifications to the government by allowing a single entity to control all fixed-base operators had already been publicly disclosed in news articles years before the suit was filed. Smith was not deemed an “original source” of the information because his additional details, such as the alleged “strawman scheme,” were merely supplementary and did not “materially add” to the core fraud already disclosed. The court also affirmed the denial of Smith’s motion to amend his complaint, finding the amendment would be futile as it failed to satisfy the “materially adds” requirement for original source status.
Why It Matters
This ruling reinforces the scope and purpose of the False Claims Act’s public disclosure bar. The bar is designed to prevent “copycat lawsuits” and discourage individuals from filing suits based on already-publicized fraud allegations, which would generate less helpful relators and not increase the likelihood of the government recovering fraudulent claims. The decision clarifies that to circumvent the bar, a relator’s knowledge must be genuinely independent of and materially add to the public disclosures, not merely provide background details or contextual information for a scheme already outlined in the media. For entities receiving federal funds, it highlights that alleged grant assurance violations, even if complex, may be shielded from qui tam suits if the core allegations are brought to light through public channels like news media.
Background Facts and Holding
The case involved the Destin Executive Airport, which is sponsored by Okaloosa County. As a recipient of federal grants, the County certified to the government that it would comply with various grant assurances, including one that prevents the sponsor from giving any single fixed-base operator (FBO)—a company providing services like fueling and maintenance—an exclusive right to use the airport.
Prior to 2009, Miracle Strip Aviation was the sole FBO at the airport. A second FBO, Destin Jet, owned by Jay Odom, was added that year. The events leading to the lawsuit began in 2012 when Miracle Strip was acquired by Regal Capital. According to Smith’s complaint, Odom, the owner of Destin Jet, had funded this purchase using “strawmen” owners. Less than a year later, Sterling Diversified, which Odom partly owned, acquired Regal Capital (renamed Regal Air). By March 2014, the County learned Odom owned Regal Air.
In March and May 2014, at least two news outlets reported that a company associated with Destin Jet owner Jay Odom had bought out the competition at Destin Airport, with one article quoting the airport director that Odom’s actions “violated two Federal Aviation Administration grant assurances.” These articles discussed the consolidation of the two FBOs and the resulting grant assurance violations, noting that the airport director felt the declining market made the case “compelling enough to point to a single fixed base operator.”
In 2019, Smith, a commercial pilot, asked the County to allow him to establish a competing FBO at the airport, but his request was denied. He then filed a qui tam action, alleging that the consolidation of the FBOs had created an exclusive right for a single operator, meaning the County had made over forty false statements in grant applications between 2012 and 2019, resulting in over $30 million in funding.
The district court dismissed Smith’s complaint, finding the allegations were publicly disclosed in the 2014 news articles and that Smith was not an original source of the information. On appeal, the Eleventh Circuit agreed, concluding that the news articles and Smith’s complaint centered on the same core scheme: the lack of competition caused by Destin Jet’s acquisition of Regal Air and the resulting violation of the County’s grant assurances. Smith’s additional claims, such as the strawman scheme and the County’s post-publication actions (like denying his 2019 request), were considered mere details that did not “materially add” to the already publicly known allegations of fraud.