Case Asserting Millions in Pandemic-Payout Fraud Is Revived

Thursday, July 16, 2026

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Ninth Circuit:

Case Asserting Millions in Pandemic-Payout Fraud Is Revived

Opinion Rejects View That All Websites Amount to ‘News Media’ for Purposes of Public Disclosure Bar to False Claims Act, Says Information Posted to Defendant’s Services-Related Page Does Not Qualify

By Kimber Cooley, associate editor

The Ninth U.S. Circuit Court of Appeals held yesterday that a California lender’s services-related website does not qualify as a “news media” source for purposes of a bar to qui tam actions, brought under a federal statutory scheme authorizing whistleblower lawsuits aimed at rooting out fraud against the government, if the information underlying the claims was previously publicly disclosed.

At issue is the False Claims Act (“FCA”), found at 31 U.S.C. §3729 et seq., which authorizes a private party to bring a qui tam civil action accusing an individual or entity of defrauding the government unless the information underlying the claims was publicly disclosed in the “news media” or an earlier “Federal report.” If the government declines to intervene, the plaintiff may recover up to 30% of any damages awarded.

Yesterday’s opinion, authored by District Court Judge Mark C. Scarsi of the Central District of California, sitting by designation, addresses what qualifies as a “news media” source, saying:

“We are keenly aware that the media landscape is ever changing, and members of the public consume the news from novel and varied sources. In determining whether a particular source qualifies…, courts should consider the extent to which members of the public would reasonably describe the source as ‘news media’ in everyday speech.”

Adding that, “in this modern digital age, many people consume the news from social media, newsletters, or podcasts,” he declared that “[i]f a reasonable news consumer would hold the source in question to the same standards of factual accuracy and journalistic integrity as those distributed through legacy media, that would weigh in favor of treating it as ‘news media’ within the meaning of [the FCA].”

Circuit Judges Michelle T. Friedland and Eric D. Miller joined in the decision.

FCA Claims

Los Angeles-based Relator LLC filed a complaint against San Diego-area mortgage broker CalCon Mutual Mortgage Inc. and its founder, Joshua K. Erskine, in August 2022, asserting claims under the FCA and accusing the defendants of having accepted $4.96 million in Paycheck Protection Program (“PPP”) funds from the government during the COVID-19 pandemic based on fraudulent statements in the company’s application.

Relator’s operative complaint alleges that the defendant was categorically ineligible to receive funds due to an exclusion applicable to financial lenders and falsely certified that the funds were necessary to support its operations during the pandemic. The government declined to intervene in the action.

In February 2025, District Court Judge Linda Lopez of the Southern District of California granted the defendants’ motion to dismiss the operative complaint for failure to state a claim, saying that the information underlying the claims was disclosed on the PandemicOversight.gov website, which published information about the issuance and forgiveness of CalCon’s PPP loan as well as the fact that the defendant selected an industry code describing itself as a lender.

Scarsi noted that the parties agree that the government webpage qualifies as a federal report but concluded that the lawsuit added new material information not found on that site. Turning to the defendants’ assertion on appeal that the new allegations were publicly disclosed on the CalCon website, the jurist declared:

“Private companies use their websites to post all sorts of information; the mere fact that information is publicly available on the internet does not mean that a website necessarily qualifies as ‘news media’ under the FCA.”

Undefined Term

Noting that “[t]he FCA does not define the term ‘news media,’ ” Scarsi looked to dictionary definitions in place in 1986, when the section was enacted and remarked:

“Reading these definitions together, we understand ‘news media’ to refer to methods of communication that are used to convey information about recent events that may be of interest to the general public or that would otherwise be commonly found in a newspaper, news broadcast, or other news source.”

He continued: “[The term] cannot reasonably encompass every website on the internet. Many websites contain information that has nothing to do with recent events and that would not likely be included in newspapers and broadcasts. For example, a restaurant may use its website to post its dinner menu, a gym may list its monthly membership rate and the exercise classes it offers, and a retail store may post the products it has in stock that are available for purchase.”

The jurist acknowledged that “some websites have mixed purposes” and said:

“In such situations, courts must consider various factors to determine whether, on balance, the website fits under the meaning of ‘news media.’ First, courts should evaluate whether the primary purpose of the website is to disseminate information about recent events and educate the public….Second, courts should consider whether the entity overseeing the website primarily publishes information about itself or about third parties.”

Scarsi recognized that “even though the New York Times sometimes reports on itself, we doubt anyone would seriously argue that the New York Times is not news media” but opined that “a website that mostly contains information about the publisher of the website itself is unlikely to qualify as ‘news media.’ ”

Not News Media

Applying those principles, he declared:

“[W]e are not persuaded that CalCon’s website, which is one of the few sources Relator specifically cites in the amended complaint, qualifies as ‘news media’ under the FCA. While CalCon likely would prefer that its website reach a broad audience of potential and current borrowers, the amended complaint contains no allegations indicating that the website’s intended audience extends beyond CalCon’s normal business activities.”

He agreed with Lopez’s finding that Relator failed to plead a facially plausible claim that CalCon falsely inflated its number of employees in its application, where it extrapolated the likely number of workers based on the size of the building housing the headquarters without considering other offices or remote options. However, he opined:

“The district court erred in dismissing Relator’s complaint without leave to amend. We REVERSE and REMAND for further proceedings consistent with this opinion.”

The case is Relator LLC v. Erskine, 25-2073.

According to state records, Realtor LLC is run by California attorneys Anoush Hakimi and Peter Shahriari of the Encino-based law firm bearing both lawyers’ last names. On Monday, the Ninth Circuit held that a judge erred in denying one of the firm’s clients attorney fees due to the fact that the party secured only injunctive relief in a lawsuit brought under the Americans With Disabilities Act.

However, the court noted that, on remand, the judge is entitled to consider a reduction in the amount of fees based on a “lack of diligence” on the part of the lawyers in drafting the request, which appeared to be a copy-and-paste recycling of a motion filed by the firm in another case.