In its October 25, 2013, opinion in United States v. Quest Diagnostics, Inc., the US Court of Appeals for the Second Circuit upheld the dismissal of a whistleblower suit by the defendant's former in-house lawyer. The court agreed with the district court that the plaintiff, who pursued a qui tam action under the False Claims Act against his former employer, violated New York state ethical rules on the use of confidential information, and that dismissal and disqualification of the plaintiff was necessary to prevent unethical disclosures against the defendant.

Several former employees of Unilab Corporation joined with the government in a qui tam suit against Unilab and its parent Quest Diagnostics, alleging violations of the federal Anti-Kickback Statute. One of the plaintiffs was Mark Bibi, Unilab's former general counsel. Plaintiffs claimed that defendants, who provide diagnostic medical testing services, were charging discounted prices on non-federal business to induce referrals of Medicaid and Medicare business that they would then bill to the government at substantially inflated prices. Defendants moved to dismiss, arguing that Bibi's participation in the suit violated New York's ethical rules against "side-switching" and making use of confidential information. The district court granted the motion, dismissing the complaint as to all defendants and disqualifying the plaintiffs and their outside counsel from bringing any suit based on the same facts. The court held that the False Claims Act does not preempt state ethical rules governing attorney disclosure, and that Bibi violated the ethical rules by disclosing confidential information beyond what was necessary to prevent the client from committing a crime.

The court also found that the district court did not abuse its discretion in disqualifying the plaintiffs and their outside counsel from bringing another suit. The district court did not overreach by finding that Bibi's unrestricted disclosure of confidential information with the other plaintiffs would prejudice the defendants. Furthermore, the decision did not prevent the government, or any other potential relator, from bringing another suit. The plaintiffs' outside counsel disqualification was also justified, the court reasoned, because confidential information likely revealed to them would give them an unfair and unethical advantage.