The Qui Tam Blog

The public disclosure bar generally precludes qui tam relators from bringing actions based upon publicly disclosed information unless the relator is an original source of the information. Before the passage in 2010 of the Patient Protection and Affordable Care Act (“Affordable Care Act”), the False Claims Act (“FCA”) specifically prohibited private suits “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.” In Schindler Elevator Corporation v. United States ex rel. Kirk, the Supreme Court held that a federal agency’s written response to a Freedom of Information Act (“FOIA”) request constitutes a “report” within the meaning of the FCA’s public disclosure bar.

Relator Daniel Kirk, a Vietnam veteran, was employed by Schindler Elevator Corporation (“Schindler”) from 1978 until 2003. He filed an action against Schindler in 2005, alleging that Schindler had submitted false claims for payment under its Government contracts because the company had falsely certified compliance with the Vietnam Era Veterans’ Readjustment Assistance Act of 1972. Kirk supported his allegations with information his wife had received from the Department of Labor (“DOL”) in response to three FOIA requests.

The Supreme Court held that the DOL’s written responses to the FOIA requests were “reports” within the meaning of the FCA’s public disclosure bar. (Note: The Supreme Court considered the version of the public disclosure bar in existence at the time Kirk’s suit was filed, prior to amendment by the Affordable Care Act.) It remanded the case to the United States Court of Appeals for the Second Circuit to determine whether Kirk’s suit was “based upon . . . allegations or transactions” disclosed in those reports.

Signed into law on March 23, 2010, the Patient Protection and Affordable Care Act (the “Affordable Care Act”) narrowed the bar against bringing suits based on public disclosure by restricting the public disclosure bar to only information publically disclosed at the Federal level – not at the State or Local level.

The Affordable Care Act, however, broadened the definition of an “original source” to include, not only a relator with direct and independent knowledge of the information on which the allegations were based and that voluntarily provided that information to the government before filing suit, but also a relator who provides knowledge to the government before filing suit that is “independent of and materially adds to the publically disclosed allegations or transactions.”

The Affordable Care Act amends the Anti-Kickback Statute to provide that items or services resulting from an Anti-Kickback Statue violation are false for purposes of the FCA, disposing of the need to rely on a false certification theory of FCA liability.

Additionally, the Affordable Care Act settles the circuit split regarding the definition of “willfulness” in the Anti-Kickback Statute. Some courts required the government to prove that a defendant knew that the Anti-Kickback Statute prohibited the conduct at issue, while other courts disagreed. The new law, however, makes it clear that the Anti-Kickback Statute does not require the government to prove actual knowledge of a “known legal duty” that was being violated.

 By: Joel Androphy, Rachel Grier, and Stephanie Gutheinz         

A district court in the Southern District of Texas recently held that nothing in the text of the FCA or its legislative history prevents employment-related retaliation claims from being arbitrated under a valid and enforceable arbitration agreement.  Under the Federal Arbitration Act, a valid agreement to arbitrate certain disputes is valid and enforceable unless Congress has precluded arbitration of the statutory right at issue.  The relator argued that the FCA precludes arbitration of retaliation claims because arbitration of such claims would allow defendants to immunize themselves against relator-initiated claims of FCA violations, undermining the purpose of the FCA to protect whistleblowers.  The relator further argued that such arbitration proceedings could constitute public disclosures, thereby unfairly triggering the public disclosure bar.  The court reasoned, however, that relators can avoid this issue by filing their retaliation claims with or after the qui tam claims.  The case is United States ex rel. Cassaday v. KBR, Inc.

 By: Joel Androphy, Rachel Grier, and Scott Braden

Whistleblowers should be mindful that disclosures in foreign periodicals can be considered public if the periodicals are regularly read by an international community. In a recent opinion, a U.S. District Court decided that an article in a foreign scientific journal was a public disclosure, given the international nature of the scientific community. The court reasoned that the foreign publication of a scientific article does not make it “any less accessible to the American public than if it were published in a scientific journal located in the United States.  The court also clarified that not all foreign publications are public disclosures, such as an ordinary article in a Greek newspaper. In these instances, there is no public disclosure when an article is published in a different language in a foreign publication not regularly read by an international community. The case is USA ex rel. Radcliffe v. Purdue Pharma L.P., a court in the Western District of Virginia.