Government Declines To Exercise New Authority Over Public Disclosure Motion

One of the most significant changes that the Affordable Care Act made to the FCA was elimination of the jurisdictional nature of the public disclosure bar and vesting in the United States the right to seek to veto any motion to dismiss based on violation of the public disclosure bar. The new post-ACA public disclosure bar provides that the court “shall dismiss” an FCA claim that violates the public disclosure bar “unless opposed by the Government.” 31 U.S.C. sec. 3730(e)(4)(A).

On June 4, a federal district court in Florida denied a defendant’s motion to dismiss on public disclosure grounds, finding that the alleged disclosures were insufficient to trigger the bar. See U.S. ex rel. Sanchez v. Abuabara, No. 10-61673 (S.D. Fla.), slip op. attached. While the decision itself is unremarkable – the court concluded that the alleged disclosures failed to disclose the key elements of relator’s claim that the Defendants induced federal agencies to award the defendants a contract based on false representations regarding their financial solvency and ability to perform the work – it is nevertheless notable because it appears to be the first decision reporting on the government’s exercise of its new veto authority. In the opinion, the Court notes that “[a]t the oral argument held before this Court on June 1, 2012, . . . a representative of the United States Attorney’s Office, confirmed that the government would not oppose a subject matter jurisdiction dismissal if the Public Disclosure Bar was otherwise satisfied.”

Neither the opinion nor other information on the public docket provides further information about how the Government made its decision, or who was involved in making that decision. Indeed, DOJ has not provided any guidance as to the criteria that will guide its decision as to whether to exercise its new authority or how far “up the chain” those decisions will be made. Thus, a defendant considering moving to dismiss on public disclosure grounds under the new FCA must contend not only with the ordinary risk that the motion will be rejected by the Court on the merits, but also the risk that DOJ, through some as-yet-unspecified process based on as-yet-unspecified criteria may unilaterally seek to deprive the Court of the opportunity to decide the motion at all, either before or perhaps even after a ruling by the Court.

One related side note: It appears from the opinion that the parties agreed that the amended (post-ACA) version of the public disclosure bar applied to the relator’s claims because the case was filed after the ACA was enacted. However, it is not clear that the date that the ACA was enacted rather than, for example, the date that the alleged false claims were submitted, is the date that should determine which version of the ACA should apply. We expect the issue of “which version of the FCA” applies to be increasingly litigated as cases are unsealed that involved claims and complaints that straddle the pre- and post-ACA versions of the FCA.