United States of America, Ex Rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v. The Prudential Insurance Company

OPINION OF THE COURT

SLOVITER, Chief Judge.

This appeal from the district court’s dismissal of a complaint for lack of subject matter jurisdiction requires us to interpret the jurisdictional bar provisions of the False Claims Act, 31 U.S.C. §§ 3729-3733 (1988) (FCA). The law firm of Stinson, *1151Lyons, Gerlin & Bustamante, P.A. (Stinson) filed this action on behalf of the United States against Prudential Insurance Company alleging that Prudential defrauded the Government by avoiding its statutory responsibility to pay certain insurance claims as the primary insurer. The district court dismissed the complaint on the ground that it lacked subject matter jurisdiction because the action was based solely on information or allegations that had been publicly disclosed in previous litigation. We have jurisdiction over Stinson’s timely appeal under 28 U.S.C. § 1291 (1988).

I.

Facts and Procedural History

Stinson learned of Prudential’s allegedly fraudulent activity during its representation of T. Armlon Leonard in 1983 in connection with injuries sustained by Leonard in an automobile accident. Leonard, who was 67 years old at the time of the accident, was covered by a group insurance plan provided by his employer and carried by Provident Life and Accident Insurance Company (Provident).

In the course of processing Leonard’s claim against Provident, Stinson formed a suspicion that Provident’s claim processing practice was in violation of federal law, specifically the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), Pub.L. No. 97-248, § 116(b), 96 Stat. 324, 353 (1982), in which Congress shifted primary liability for benefit claims of people covered both by Medicare and employer group health plans (working seniors) from Medicare to the private group plan. Stinson believed that, notwithstanding TEFRA, Provident was avoiding its responsibility by allowing Medicare to continue to pay as the primary insurer the benefit claims of Arm-lon and other working seniors.

Provident filed suit against Leonard in the Circuit Court for Dade County, Florida, seeking a declaratory judgment establishing the legality of its claim procedure. Provident Life & Accident Ins. Co. v. Leonard, No. 85-10113 CA(15) (Fla. Dade County Cir.Ct.) (the “Leonard litigation”). Through discovery in the Leonard litigation, Stinson obtained two internal Provident memoranda, admittedly hearsay, which Stinson reads as suggesting that other insurance companies had similar claim processing practices.

The first document contained the results of a Provident telephone survey of the claim processing practices of other insurance companies with respect to working seniors. Next to the name “Arthur M. Wood, Vice President, Prudential Insurance Company” appears the handwritten notation, “Left message — Same as us.” App. at 81. The notation is unsigned, and there is no indication who asked the question or who prepared the document. The second document, a Provident memorandum entitled “Policy Issue Medicare Reimbursement” which recommended that Provident change its claim processing procedure, repeated the same notation, “Prudential — Same as us,” under the heading “Input,” apparently on the basis of the earlier memorandum. App. 400. According to Stinson’s affidavit, it filed these memoran-da with the Florida court on October 6, 1986, eleven days after obtaining them from Provident.

In early 1988, a year and a half later, Stinson brought an action on behalf of the United States against Provident under the qui tam provisions of the False Claims Act (FCA). See United States ex rel. Stinson, et al. v. Provident Life & Accident Ins. Co., 721 F.Supp. 1247 (S.D.Fla.1989). Thereafter, Stinson filed identical actions against Prudential and the other insurance companies allegedly implicated by the Provident memoranda. See United States ex rel. Stinson et al. v. Provident Life & Accident Ins. Co., CIV 1-89-331 (E.D.Tenn.); United States ex rel. Stinson et al. v. Blue Cross Blue Shield of Ga., Inc., 755 F.Supp. 1040 (S.D.Ga.1990); United States ex rel. Stinson et al. v. Pilot Life Ins. Co., C-90-29-G (M.D.N.C.); United States ex rel. Stinson et al. v. Pan American Life Ins. Co., No. 90-411 (E.D.La.). In each case, Stinson argued that the insurance company defrauded the government by allowing Medicare to pay as primary insurer for claims of working seniors.

*1152As required by the FCA, 31 U.S.C. § 3730(b)(2), Stinson disclosed the information on which the claim against Prudential was based to the United States. The Government declined to intervene, and Stin-son proceeded with the action. Prudential moved for dismissal under Rule 12(b)(1) asserting that the law firm did not qualify as a proper qui tam plaintiff.1

The district court dismissed the complaint, finding that it did not have subject matter jurisdiction. United States ex rel. Stinson, et al. v. Prudential Ins. Co., 736 F.Supp. 614 (D.N.J.1990). The district court relied on the FCA’s jurisdictional bar contained in 31 U.S.C. § 3730(e)(4)(A), which precludes suits based on, inter alia, the “public disclosure” of allegations or transactions in a civil “hearing,” unless the qui tam plaintiff is an “original source” of the information.

The district court held that Stinson’s qui tam action was based solely on the Provident memoranda which had been publicly disclosed for purposes of the jurisdictional bar of the FCA when they were obtained by Stinson through civil discovery. Stinson, 736 F.Supp. at 618-19, 622. The court held that Stinson was not an “original source” because its suit was based exclusively on the information contained in the Provident memoranda, and thus its knowledge of Prudential’s allegedly fraudulent practice was neither direct nor independent of the public disclosure. Id. at 622-23. We have plenary review of the district court’s dismissal of the complaint for lack of subject matter jurisdiction. See York Bank & Trust Co. v. Federal Sav. and Loan Ins. Corp., 851 F.2d 637, 638 (3d Cir.1988), cert. denied, 488 U.S. 1005, 109 S.Ct. 785, 102 L.Ed.2d 777 (1989).

II.

The False Claims Act and Its History

A.

The Act

The FCA provides penalties for persons who knowingly submit fraudulent claims to the Government. Civil actions may be brought by the Government or, in certain circumstances, by a private plaintiff (qui tam plaintiff)2 on behalf of the Government. Before proceeding with the suit, the qui tam plaintiff must disclose the information on which the claim is based to the Government, and the Government has sixty days to intervene. 31 U.S.C. § 3730(b). If the Government does not intervene, the qui tam plaintiff may proceed with the action unless the information on which the claim is based triggers one of the jurisdictional bars contained in section 3730(e). Id. § 3730(e).

The issue in this appeal is whether Stin-son's suit is barred by section 3730(e)(4)3 which provides:

*1153(4)(A) No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, or investigation, or from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.
(B) For purposes of this paragraph, “original source” means an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing an action under this section which is based on the information.

31 U.S.C. § 3730(e)(4)(A)-(B) (emphasis added).

Stinson argues that the district court erred as a matter of law in holding that jurisdiction was barred. It contends that (1) its receipt of the Provident memoranda in civil discovery was not a public disclosure in a civil hearing for purposes of section 3730(e)(4); (2) the jurisdictional bar applies only to public disclosures made by the government; and (3) even if the memo-randa were publicly disclosed, Stinson was an original source to information other than that contained in the Provident memo-randa. Before turning to the language of the amended FCA, we consider the history of the Act to understand the need for and purpose of the 1986 amendment.

B.

Earlier Versions

The False Claims Act was adopted in 1863 in response to rampant fraud by Civil War defense contractors. The original Act provided for criminal and civil penalties, including payment of double the amount of damages suffered by the government and a $2,000 forfeiture. The Act contained a broad qui tam provision allowing any person to prosecute a claim on behalf of the United States against any person who knowingly submitted a false claim to the Government. See S.Rep. No. 345, 99th Cong., 2d Sess. 8-10, reprinted in 1986 U.S.Code Cong. & Admin.News 5266, 5273-75. If successful, the qui tam plaintiff, or relator, was entitled to half of the damages and forfeitures recovered under the Act.

In the 1940’s, a number of qui tam actions were brought by individuals with no independent knowledge of the fraud, some of whom learned of the fraud through the inspection of government criminal indictments. Id. at 10, U.S.Code Cong. & Admin.News at 5275. In United States ex rel. Marcus v. Hess, 317 U.S. 537, 63 S.Ct. 379, 87 L.Ed. 443 (1943), the Supreme Court held that under the Act a relator could bring a qui tam action based solely on information derived from a government criminal indictment. In finding that the Act did not require that a qui tam plaintiff contribute new information to the discovery of the fraud, the Court looked to the broad language of the Act (“Suits may be brought and carried on by any person,” id. at 546, 63 S.Ct. at 385), and to the legislative history (“even a district attorney, who would presumably gain all knowledge of a fraud from his official position, might sue as the informer,” id. (citing Cong.Globe, 37th Cong., 3d Sess., 955-56)).

Congress reacted immediately to the Marcus decision by amending the FCA in 1943. The House passed a bill that would have repealed the FCA. The Senate bill, as originally approved by that chamber, barred jurisdiction where a qui tam suit was based on information in the possession of the Government unless the information on which the suit was based was “original with such person.” 89 Cong.Rec. 510,744 (daily ed. Dec. 16, 1943). The Senate version was adopted, but the original source exception was dropped in conference. Thus, the FCA as amended in 1943 denied jurisdiction over qui tam actions that were “based on evidence or information the government had when the action was brought.” 31 U.S.C. § 3730(b)(4) (1982) (superseded).

This language was broadly construed by courts to bar jurisdiction whenever the *1154Government possessed the information on which the claim was brought, even when the information had been provided to the Government by the qui tam plaintiff before the filing of the claim. The decision evoking the most reaction was United States ex rel. Wisconsin v. Dean, 729 F.2d 1100, 1106 (7th Cir.1984), holding that the district court had no jurisdiction over a qui tam action brought by Wisconsin based on information of Medicaid fraud the state had uncovered because the state had reported the Medicaid fraud to the federal government as required under the Act. See also United States v. Aster, 275 F.2d 281 (3d Cir.), cert. denied, 364 U.S. 894, 81 S.Ct. 223, 5 L.Ed.2d 188 (1960). The National Association of Attorneys General promptly adopted a resolution strongly urging Congress “to rectify the unfortunate result” of that decision which was viewed as unnecessary inhibiting the detection and prosecution of fraud on the government. S.Rep. No. 345, 99th Cong., 2d Sess. 13, reprinted in 1986 U.S.Code Cong. & Admin.News 5278.

C.

The 1986 Amendment

In reaction to these restrictive interpretations and in light of the belief that the Government lacked the resources to adequately address the growing problem of fraud upon the Government, Congress amended the FCA in 1986 in order to “encourage more private enforcement suits.” Id. at 23-24, 1986 U.S.Code Cong. & Admin.News 5288-89. To revitalize the qui tam provisions, the amendment provided incentives for private enforcement, including increased monetary awards, adopted a lower burden of proof, and allowed the qui tam plaintiff to remain a party in the action even if the Government intervenes.

The bill that eventuated in the 1986 amendments underwent substantial revisions during its legislative path. This provides ample opportunity to search the legislative history and find some support somewhere for almost any construction of the many ambiguous terms in the final version. We look instead to what we can glean from the principal intent, which was to have the qui tam suit provision operate somewhere between the almost unrestrained permissiveness represented by the Marcus decision, see id., and the restrictiveness of the post-1943 cases, which precluded suit even by original sources. See Oparil, The Coming Impact of the Amended False Claims Act, 22 Akron L.Rev. 525, 549 (1989) (“Clearly, the purpose of the amendment was to retain the 1943 Amendment’s bias against parasitic lawsuits.”); Brody, Recent Developments in the Area of “Qui Tam”, 592, 595 Fed.Bar & News J. (Dec. 1990) (“One of the principal goals of barring qui tam actions based on public disclosures is to prevent the ‘parasitical’ or ‘copycat’ lawsuit.”). False Claims Act Implementation: Hearing Before the Sub-comm. on Admin. Law and Gov. Relations of the House Comm, on the Judiciary, 101st Cong., 2d Sess. 3 (1990) [hereinafter 1990 Implementation Hearing] (1986 amendment “sought to resolve the tension between ... encouraging people to come forward with information and ... preventing parasitic lawsuits”) (statement of Sen. Grassley).

One theme recurring through the legislative history in 1985 is the intent to encourage persons with first-hand knowledge of fraudulent misconduct to report fraud. Congress sought to stop the “conspiracy of silence” among employees of corporations engaging in fraud. See S.Rep. No. 345, 99th Cong. 2d Sess. 6, reprinted in 1986 U.S.Code Cong. & Admin.News 5271. The Senate Report stresses that in order to detect fraud it was necessary to enlist the “cooperation of individuals who are either close observers or otherwise involved in the fraudulent activity.” Id. at 4, U.S.Code Cong. & Admin.News 5269. We will therefore proceed to examine the statutory language at issue in light of this general intent underlying passage of the 1986 amendment.

III.

Discussion

A.

What Kind of “Hearing”?

We begin with an analysis of Stinson’s claim that the reference in the statu*1155tory jurisdictional bar to a civil “hearing” is not broad enough to encompass a civil “proceeding” or civil litigation. If Stinson is correct, we need make no further inquiry because the only bar of section 3730(e)(4)(A) conceivably relevant here is that applicable if the information on which the qui tam action is brought was publicly disclosed in a civil hearing. See United States ex rel. Leblanc v. Raytheon Co., 913 F.2d 17, 20 (1st Cir.1990) (the jurisdictional bar of § 3730(e)(4)(A) is triggered only where information or allegation was disclosed “in a criminal, civil or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit ... ”), cert. denied, — U.S. -, 111 S.Ct. 1312, 113 L.Ed.2d 246 (1991); United States ex rel. Williams v. NEC Cory., 931 F.2d 1493, 1499 (11th Cir.1991) (same).

The statute does not define the words “civil hearing.” “Hearing” is defined by Black’s Law Dictionary as a “[proceeding of relative formality (though generally less formal than a trial), generally public, with definite issues of fact or of law to be tried, in which witnesses are heard and parties proceeded against have right to be heard.” Black’s Law Dictionary, at 649 (5th ed.1979). Drawing on this definition, Stinson argues that civil hearing should be defined as “some sort of live, relatively formal proceeding before a decisionmaking body, with question of law or fact to be tried.” At least one district court has agreed with Stinson. See United States ex rel. Stinson v. Blue Cross Blue Shield, 755 F.Supp.1040, 1050 (S.D.Ga.,1990) (“hearing” cannot be read to include discovery requests); see also United States ex rel. Stinson v. Provident Life & Acc. Ins. Co., 721 F.Supp. at 1256 (“It seems that Congress was very specific in choosing the appropriate wording of the statute given the problematic history of qui tam jurisdictional issues.”) (dictum).

Stinson’s definition of hearing is unpersuasive because, inter alia, it would exclude the very public disclosure at issue in Marcus, i.e., disclosure of information in a criminal indictment. Only if the criminal “hearing” to which subsection (e)(4)(A) refers is broad enough to cover the full range of proceedings in the course of civil, criminal, or administrative litigation would the type of lawsuit represented by Marcus and deemed parasitic by Congress be barred.

Stinson seeks to avoid this anomalous result by suggesting that because “[cjrimi-nal indictments are filed as a result of a grand jury investigation and hearings,” the language in section 3730(e)(4)(A) referring to “ ‘public disclosures ... in a criminal ... hearing’ would preclude qui tam jurisdiction based on allegations or information contained in criminal indictments.” Appellant’s Reply Brief at 16. This argument is unconvincing because it is predicated on grand jury proceedings, which themselves are not public. Thus, unless the indictment is encompassed within the term “criminal ... hearing,” the result in Marcus will stand and suit can be brought on information from an indictment.

Moreover, it is unlikely that Congress sought to draw a distinction for purposes of a qui tam action between knowledge learned by a potential relator through an indictment and through an information which, in contrast to an indictment, is not preceded by a grand jury proceeding. See Fed.R.Crim.P. 7. We decline to adopt a definition of hearing that is inconsistent with the legislative purpose. “In determining the meaning of a statute, we look not only to the particular statutory language, but to the design of the statute as a whole and its object and policy.” Crandon v. United States, 494 U.S. 152, -, 110 S.Ct. 997, 1001, 108 L.Ed.2d 132 (1990);

We note also that in other civil contexts the term “hearing” does not necessarily take the form of a live, formal proceeding. Fed.R.Civ.P. 56(d), for instance, refers to “the hearing of the motion” for summary judgment, but we have held that “hearing” in Rule 56 does not require that an oral hearing be held before judgment is entered. See Anchorage Assoc. v. V.I. Bd. of Tax Review, 922 F.2d 168, 176 (3d Cir.1990).

We read section 3730(e)(4) as designed to preclude qui tam suits based on information that would have been equally available to strangers to the fraud transaction had *1156they chosen to look for it as it was to the relator. Information gleaned in litigation and on file in the clerk’s office falls in this category. The language precluding suits based on information in hearings must be read in conjunction with the other sources in pari materia, such as a Government Accounting Office report, hearing, audit, or investigation. There would have been no reason to bar qui tam suits by persons who learned the information through reading a Government report purchased from the Government Printing Office or available in a public library but permit such suits if the information was learned through reading court records. We believe, instead, that “in the course of a civil, criminal, or administrative hearing” should be interpreted broadly to include allegations and information disclosed in connection with civil, criminal, or administrative litigation.

Stinson argues that this broad construction of “hearing” renders subsection (e)(3) redundant. Section 3730(e)(3) provides: “[i]n no event may a person bring [a qui tam action] which is based upon allegations or transactions which are the subject of a civil suit or an administrative civil money penalty proceeding in which the Government is already a party.” 31 U.S.C. § 3730(e)(3). Stinson contends that if “civil hearing” is read to include civil proceedings encompassing discovery and the filing of a complaint with the court, there was no reason for Congress to include a specific section dealing with cases in which the government was a party. According to Stinson, those cases would be subsumed in subsection (e)(4). This construction should be avoided, Stinson contends, because “[a] statute should be construed so that effect is given to all its provisions, so that no part will be inoperative or superfluous, void or insignificant.” 2A Sutherland, Statutory Construction § 46.06, at 104 (4th ed. 1984) (footnotes omitted); see United States v. Menasche, 348 U.S. 528, 538-39, 75 S.Ct. 513, 519-20, 99 L.Ed. 615 (1955) (In statutory construction, courts must “ ‘give effect, if possible, to every clause and word of a statute,’ ... rather than to emasculate an entire section.”)

Although there is some initial plausibility in Stinson’s argument, closer analysis shows that Stinson misapprehends the reach of subsection (e)(3). Subsection (e)(3) precludes private plaintiffs from bringing suits based on information or allegations that are the subject of a suit in which the government is a party, but it, unlike subsection (e)(4), applies that preclusion even if the private plaintiff was the original source of the information (“In no event may a person bring an action ... ”). Thus, had the government filed a false claims action against Prudential, Stinson’s qui tam action against Prudential would be barred ab initio. Therefore, we cannot agree with Stinson that interpreting the ambiguous term “hearing” in subsection (e)(4) to encompass the full scope of litigation makes subsection (e)(3) redundant. The subsections are obviously addressed to different situations. The fact that there may be some overlap is inconsequential.

Stinson also asserts that our reading of “hearing” is at odds with the legislative history. An earlier version of section 3730(e)(4) would have barred jurisdiction over actions based on “specific evidence or specific information the Government disclosed as a basis for allegations made in a prior administrative, civil, or criminal proceeding.” S. 1562, 99th Cong. 1st Sess. § 2 at 3 (1985) (emphasis added). In a later version of the bill, the term “proceeding” was replaced with “hearing.” As a general rule, “[w]here Congress includes limiting language in an earlier version of a bill but deletes it prior to enactment, it may be presumed that the limitation was not intended.” See Russello v. United States, 464 U.S. 16, 23-24, 104 S.Ct. 296, 300-301, 78 L.Ed.2d 17 (1983).

This tenet of statutory construction is not inviolable, and its application in this case is not warranted. First, the legislative history does not reveal what Congress intended by the substitution, and the substitution of “hearing” for “proceeding” was part of a revision which expanded the jurisdictional bar by deleting the requirement that the disclosure be made by the government. For similar reasons, we cannot give any significance to Congress’s use *1157of the different terms “civil suit” and “administrative ... proceeding” in subsection (e)(3). The plain fact is we have no explanation and it is just as plausible in this context to read “suit,” “proceeding,” and “hearing” interchangeably as it is to define “hearing” in the crabbed way Stinson posits. Second, defining “hearing” narrowly would lead to arbitrary results. For example, a court would have jurisdiction over a suit based on information first learned by a lawyer at a deposition over which a judge presided (which may occur in some multiparty litigation because the parties have been unable to cooperate) but jurisdiction would be barred if the disclosure occurred when the judge was not present. Finally, and most persuasively, there is no indication that in dropping the term “hearing” Congress intended to allow the types of suits represented in Marcus. As Justice Jackson wrote in his dissent in Marcus,

All laws are to be given a sensible construction; and a literal application of a statute, which would lead to absurd consequences, should be avoided whenever a reasonable application can be given to it, consistent with the legislative purpose.

United States ex rel. Marcus v. Hess, 317 U.S. at 557, 63 S.Ct. at 390 (Jackson, J. dissenting) (quoting United States v. Katz, 271 U.S. 354, 357, 46 S.Ct. 513, 514, 70 L.Ed. 986 (1926)).

We therefore construe a civil “hearing” as used in subsection (e)(4)(A) to encompass the full range of proceedings in a civil lawsuit such as that represented by the Leonard litigation. That, of course, does not alone dispose of the jurisdictional bar issue; we must next decide whether Stin-son’s qui tam action was based on a “public disclosure” of allegations in that litigation.

B.

Were the Provident Memoranda “Publicly Disclosed”?

Stinson’s principal argument on appeal challenges the district court’s conclusion that the Provident memoranda which refer to Prudential were publicly disclosed when they were produced by Provident to Stinson during discovery in the Leonard litigation. Stinson cites Seattle Times Co. v. Rhinehart, 467 U.S. 20, 104 S.Ct. 2199, 81 L.Ed.2d 17 (1984), for the general proposition that discovery is not a public component of litigation.

Seattle Times involved claims of defamation and invasion of privacy brought by a religious organization and its spiritual leader against the Seattle Times newspaper. The Washington state court entered a protective order pursuant to the state analog to Rule 26(c) of the Federal Rules of Civil Procedure4 prohibiting the newspaper from disseminating or using information it discovered from the religious group regarding membership and donations, except in ways necessary to prepare its defense. The Seattle Times challenged the protective order as violative of its First Amendment rights. The Court commented that discovery is “a matter of legislative grace,” id. at 32,104 S.Ct. at 2207, and that “[s]uch proceedings were not open to the public at common law,” id. at 33, 104 S.Ct. at 2208. It rejected the newspaper’s contention that a protective order entered after a showing of good cause offends the First Amendment.

There is an ongoing debate over whether the public should have access to discovery and settlement negotiations. See, e.g., Miller, Private Lives or Public Access, 77 ABA Journal 64 (August 1991). The issue whether there is a “right” to public access to discovery material produced in connection with litigation, such as that considered in Seattle Times, is not implicated here. Instead, here we focus on the characterization of the discovery once it has been produced, and whether a person who acquires such material has received it through a “public disclosure” for purposes of the FCA.

*1158A protective order will be granted only after the court is satisfied that good cause exists for issuance of the order. See Smith v. BIC Corp., 869 F.2d 194, 199 (3d Cir.1989); Cipollone v. Liggett Group, Inc., 822 F.2d 335, 343 (3d Cir.), cert. denied, 484 U.S. 976, 108 S.Ct. 487, 98 L.Ed.2d 485 (1987). Once the court has determined that there is no reason to shield discovery by a protective order, the arguments in favor of a more restrictive access to discovery materials become irrelevant.

We must assume from the absence of a protective order that the information disclosed in discovery is potentially accessible to the public. Indeed, several courts of appeals have so held, relying on the “good cause” requirement of Rule 26(c). See In re “Agent Orange”Product Liability Litigation, 821 F.2d 139, 145 (2d Cir.), cert. denied, Dow Chemical Co. v. Ryan, 484 U.S. 953, 108 S.Ct. 344, 98 L.Ed.2d 370 (1987) (“[I]f good cause is not shown, the discovery materials in question should not receive judicial protection and therefore would be open to the public for inspection.”); Public Citizen v. Liggett Group, Inc., 858 F.2d 775 (1st Cir.1988) (“Unless the public has a presumptive right of access to discovery materials, the party seeking to protect the materials would have no need for a judicial order since the public would not be allowed to examine the materials in any event.”), cert. denied, 488 U.S. 1030, 109 S.Ct. 838, 102 L.Ed.2d 970 (1989); American Telephone & Telegraph Co. v. Grady, 594 F.2d 594, 596 (7th Cir.1978) (“As a general proposition, pretrial discovery must take place in the public unless compelling reasons exist for denying the public access to the proceedings. F.R.Civ.P. 26(c).”), cert. denied, 440 U.S. 971, 99 S.Ct. 1533, 59 L.Ed.2d 787 (1979).

In this case, we need not consider whether information subject to a protective order which is either advertently or inadvertently disclosed could be considered to be received pursuant to a “public disclosure.” There was no reason to shield from public access the information referring to Prudential appearing in the Provident discovery, and Stinson does not suggest any. Therefore, disclosure of discovery material to a party who is not under any court imposed limitation as to its use is a public disclosure under the FCA.5

Nonetheless, Stinson draws a distinction for purposes of the FCA statute based on whether or not the discovery was filed with the court. Compare Public Citizen v. Liggett Group, Inc., 858 F.2d 775 (1st Cir.1988) (effect of nonfiling was to deny the public the right it would otherwise have had to inspect freely the discovery materials in this case) with Avirgan v. Hull, 118 F.R.D. 252, 255-56 (D.D.C.1987) (holding, in reliance on “the presumption inherent in Rule 26(c) ... [that] discovery should be open,” that, absent a showing of good cause, press and public had right to attend deposition of third-party deponent).

We do not think that it is significant, for purposes of interpreting the “public disclosure” provision of the FCA, whether the discovery has in fact been filed. Due to the large volume of discovery materials, many district courts have adopted local rules which provide that discovery materials should not be filed with the court except by order of the court.6 Such local rules do not generally preclude access by interested persons to nonfiled material. In fact, the Local Rules of some district *1159courts provide that the court may order the filing of discovery materials at the request of any person who has an interest in reviewing the materials.7

Fed.R.Civ.P. 5(d) continues to require filing of discovery material in the absence of a court order excusing filing.8 The Advisory Notes to Rule 5 explain that in 1978 the Committee considered adopting a rule that discovery materials would not be filed unless the court ordered their filing, but retained the rule requiring filing because “such materials are sometimes of interest to those who may have no access to them except by a requirement of filing, such as members of a class, litigants similarly situated, or the public generally.” Fed. R.Civ.P. 5(d) advisory committee note to 1980 amendment; see In re Agent Orange Product Liability Litigation, 821 F.2d 139, 146 (2d Cir.1987).

Moreover, a distinction based on actual filing vel non would in many instances make application of the “public disclosure” provision depend upon the form of discovery. It is not uncommon for parties in districts which do not have a local rule precluding filing of discovery to file answers to interrogatories but not documents disclosed in response to a request to produce under Fed.R.Civ.P. 34. Thus, in those districts, had Stinson drafted interrogatories to Provident requesting it to set forth all references in its files to the claim practice followed by other insurance companies, the information disclosed in answer to those interrogatories when filed would be information publicly disclosed whereas the same information contained in documents produced in lieu of answers to interrogatories, see Fed.R.Civ.P. 33(c), would not be publicly disclosed. We decline to base an interpretation of the statute on the happenstance of the manner of discovery or the local rule pursuant to which discovery is made.

Stinson argues that we should not rely on the Federal Rules of Civil Procedure because the Provident memoranda were discovered under the Florida Rules of Civil Procedure, which do not require the filing of discovery materials. See Fla.R.Civ.P. 1.350(d) (“Unless required by the court, a party shall not file any of the documents or things produced with the response.”). We would be reluctant to base our analysis of the meaning of a federal statute on differences in the discovery rules of the various states. The definition of terms in a federal statute is a federal issue. As we noted above, we look not to whether the specific documents must be or have been filed but whether there is a recognition that they can be filed and hence available for public access. In this regard the Florida Rule is no different than some of the local district court rules discussed above. Stinson’s argument based on the purported lack of accessibility to discovery under the Florida procedure is most effectively belied by the procedure actually used in this case. For reasons unexplained in this record, Stinson in fact filed the two Provident documents referring to Prudential with the Florida court clerk eleven days after it received them from Provident. The information they contained was fully available to any interested person. Stinson’s qui tam suit against Prudential was not filed until more than two years later.

To recapitulate, the presumption under Rule 5(d) of public access to civil discovery that is not subject to a protective order leads us to conclude that information received as a result of such discovery should *1160be deemed based on a “public disclosure” for purposes of the FCA jurisdictional bar.9 It follows that the jurisdictional bar of section 3730(e)(4)(A) for actions based on the “public disclosure” of allegations or transactions in a “civil hearing” is applicable because Stinson acquired the information upon which it based its qui tam complaint through the material produced by Provident in discovery. We must therefore decide whether Stinson’s suit is saved because Stinson is “an original source of the information.”

C.

Is Stinson an “Original Source"?

The savings clause for suits brought by “original sources” was a significant feature of the 1986 amendment because, as we noted above, that amendment was precipitated by cases such as the Seventh Circuit’s 1984 decision in Wisconsin, 729 F.2d at 1106, precluding a qui tam suit by Wisconsin which had itself conducted the investigation of Medicaid fraud. See S.Rep. No. 345 at 13, 1986 U.S.Code Cong. & Admin.News at 5278.

The statute defines “original source” as “an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing an action under this section.” 31 U.S.C. § 3730(e)(2)(B). As the court held in Houck on behalf of the United States v. Folding Admin. Comm., 881 F.2d 494, 505 (7th Cir.1989), a relator who would not have learned of the information absent public disclosure did not have “independent” information within the statutory definition of “original source.” In light of our conclusion that Provident’s production of its memoranda was the public disclosure in this case, it follows that Stinson’s information about the alleged fraudulent activity was not “independent” of the public disclosure.

Stinson argues that its action was not based exclusively on the “nebulous notation” about Prudential contained in the Provident memoranda. It contends that the other information that it possessed through its suit against Provident and its interest in and knowledge of the insurance industry gave it the background necessary to understand the complex scheme by which Prudential allegedly defrauded the government. Undoubtedly, it is not necessary for a relator to have all the relevant information in order to qualify as “independent.” See 1990 Implementation Hearing, at 3 (“A party with knowledge of fraud against the Government ought to be able to maintain a qui tam action as long as he had some of the information in advance of the public disclosure.”) (statement of Sen. Grassley). Nonetheless, the relator must possess substantive information about the particular fraud, rather than merely background information which enables a putative relator to understand the significance of a publicly disclosed transaction or allegation. If the latter were enough to qualify the relator as an “original source," then a cryptographer who translated a ciphered document in a public court record would be an “original source,” an unlikely interpretation of the phrase.

Moreover, Stinson’s argument overlooks the significance of the conjunctive “and” in the statutory phrase “direct and independent” knowledge. See Houck, 881 F.2d at 505; United States ex rel. Dick v. Long Island Lighting Co., 912 F.2d 13, 16 (2d Cir.1990). Among the various definitions of “direct” is “marked by absence of an intervening agency, instrumentality, or influence: immediate.” Webster’s Third New International Dictionary 640 (1976). Stinson’s information about Prudential came through two intermediaries: the unknown Provident employee responsible for the telephone call and notation and the discovery procedure by which the memo-randa were produced. Therefore, Stinson *1161cannot be deemed to have had “direct” knowledge of the manner in which Prudential processed its working seniors’ claims.

This is in accord with the relevant case-law. In United States v. Rockwell Inti Corp., 730 F.Supp. 1031, 1036 (D.Col.1990), the court dismissed a qui tam action brought by the Taxpayers Against Fraud, a nonprofit corporation, which learned about the alleged fraud from a whistleblowing insider, because the corporation had no direct and independent knowledge of the information. On the other hand, in Houck the court found that the relator’s knowledge of the fraud by a committee processing a class action settlement was “direct” because he learned of the information upon which the claim was based “as a result of his involvement in assisting late claimants in recovering money out of the settlement order funds,” 881 F.2d at 505; cf. Provident, 721 F.Supp. at 1258 (relator who “simply stumble[s] across an interesting court file” does not have “direct” information).

The paradigmatic “original source” is a whistleblowing insider. This covers those the Senate Report specifically referred to: “individuals who are close observers or otherwise involved in the fraudulent activity.” S.Rep. No. 345, at 4, reprinted in U.S.Code Cong. & Admin.News 5269. Other relators may also qualify if their information results from their own investigations. However, Stinson did not obtain its information about Prudential as a result of its own investigation into that company. We therefore hold that Stinson’s knowledge of the information was neither “independent” nor “direct,” and it cannot be deemed an “original source.”10

IY.

Conclusion

Stinson vigorously argues that this construction is inconsistent with congressional intent reflected in the 1986 amendment. To the contrary, we believe that the approach that we have taken in interpreting the jurisdictional bar is fully in accord with the congressional intent. We have given a practical, commonsense interpretation to “public disclosure,” one that distinguishes between information hidden in files or disclosed in private and information produced pursuant to the discovery process which is presumptively, absent a court order, available for filing and general use. This interpretation insures that suits decried as copycat or parasitic, such as Marcus, will not clog the courts.

Similarly, our construction of the “original source” exception would allow qui tam suits to be brought by relators, such as the state of Wisconsin, whose independent investigation uncovered the information of fraud on the government. It would also allow suits by insiders, such as employees who come across information of fraud in the course of their employment. See, e.g., United States ex rel. Williams v. NEC Corp., 931 F.2d 1493 (11th Cir.1991) (sustaining suit by government employee without discussion of “original source” exception); United States ex rel. Hagood v. Somona County Water Agency, 929 F.2d 1416 (9th Cir.1991) (same); United States ex rel. Givler v. Smith, 760 F.Supp. 72 (E.D.Pa.1991) (same). Moreover, because section 3730(e)(4) does not bar a qui tam action unless the action is based upon publicly disclosed “allegations or transactions,” nothing contained here would bar suit by someone who learned of the fraud from an insider, if the information had not yet been publicly disclosed.

As we acknowledged candidly at the outset of this opinion, it is difficult to discern the congressional intent with respect to details of the statutory language. We are satisfied that our construction is in accord with the balance Congress intended in its 1986 amendment.

For the reasons set forth above, we will affirm the judgment of the district court dismissing Stinson’s action as jurisdiction-ally barred.

. Prudential also sought dismissal pursuant to Fed.R.Civ.P. 9(b). In light of our disposition of this case, we need not address whether fraud was plead with sufficient particularity.

. As noted in Erickson v. American Institute of Bio. Sciences, 716 F.Supp. 908, 909 n. 1 (E.D.Va.1989), "qui tam " is taken from the Latin expression qui tam pro domino rege quam pro se ipso in hac parte sequitur, meaning "who brings the action for the king as well as for himself.” See W. Blackstone, Commentaries on the Law of England 160 (1768).

. The same statutory section contains other jurisdictional bars, inapplicable here, which provide:

(e) Certain actions barred. — (1) No court shall have jurisdiction over an action brought by a former or present member of the armed forces under subsection (b) of this section against a member of the armed forces arising out of such person's service in the armed forces.
(2)(A) No court shall have jurisdiction over an action brought under subsection (b) against a Member of Congress, a member of the judiciary, or a senior executive branch official if the action is based on evidence or information known to the Government when the action was brought.
(B) For purposes of this paragraph, "senior executive branch official" means any officer or employee listed in section 1 paragraphs (1) through (8) of section 101(f) of the Ethics in Government Act of 1978 (5 U.S.C.App.).
(3) In no event may a person bring an action under subsection (b) which is based upon allegations or transactions which are the subject of a civil suit or an administrative civil money penalty proceeding in which the Government is already a party.

31 U.S.C. § 3730(e)(l)-(3)

. Fed.R.Civ.P. 26(c) provides that "[u]pon motion by a party or by the person from whom discovery is sought, and for good cause shown, the court ... may make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense.”

. We also reject summarily the law firm’s contention that subsection (e)(4)(A) addresses only those public disclosures made by the government. Even if this argument had been properly preserved, which Prudential denies, nothing in the statutory language restricts the term “public disclosure” to those made by the government. An earlier version of the Act would have limited the jurisdictional bar to disclosures made by the government, but this language was deleted in favor of a more expansive bar. In the absence of convincing legislative history or statutory purpose, we cannot ignore the plain and unambiguous words of the statute, which plainly includes disclosures made by a private party. See Smith v. Fidelity Consumer Discount Co., 898 F.2d 907, 910 (3d Cir.1990).

. See, e.g., Federal Local Court Rule 40(a) (W.D.Pa.) ("Pursuant to Rule 5(d) of the Federal Rules of Civil Procedure, depositions, interrogatories, requests for admissions, and answers and responses thereto shall not be filed with the Clerk’s Office except by order of the court.’’).

. See, e.g., Rule 40(e) (W.D.Pa.) ("the court shall order discovery matter filed in the usual course of any case where any person shall file an affidavit with the Clerk that he has a genuine interest in reading the material") (emphasis added); Rule 24(e) (E.D.Pa.) (“The court, on its own motion, on motion by any party or on application by a non-party, may require the filing of the original of any discovery paper or deposition transcript.”) (emphasis added).

. Rule 5(d) provides:

All papers after the complaint required to be served upon a party, together with a certificate of service, shall be filed with the court within a reasonable time after service, but the court may on motion of a party or on its own initiative order that depositions upon oral examination and interrogatories, requests for documents, requests for admission, and answers and responses thereto not be filed unless on order of the court or for use in the proceeding.

. Because we view the "public disclosure" as covering discovery not subject to a protective order, it is plain that Stinson’s qui tam action is "based upon" the allegations or transactions publicly disclosed in a civil hearing. We therefore need not decide whether a public disclosure bars a qui tam suit by someone who acquires the information independently from the public disclosure, but who does not fit within the stringent definition of an original source.

. Our construction of the "original source" exception avoids the conflict of interest issue that could arise by a lawyer arrogating to himself or herself a qui tam action based on information learned in the service of a client.