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January 22, 2015

22 January 2015

Eleventh Circuit Issues Important Ruling Regarding Post-PPACA Public Disclosure Bar

Posted by Jonathan Cohn and Annemarie Hillman

Last week, the Eleventh Circuit reached a decision in United States ex rel. Osheroff v. Humana, Inc., No. 13-15278 (11th Cir. 2015), which provides important guidance regarding the scope of the public disclosure bar following its amendment by the Patient Protection and Affordable Care Act (PPACA).

Humana arose from an action filed by a qui tam relator against several health clinics and health insurers in Miami. The complaint alleged that these clinics and insurers either provided, or knew others were providing, a variety of free services – including limo rides and salon services – that were used to incentivize potential clients to use the clinics. According to the relator, these actions violated both the Anti-Kickback Statute and the Civil Monetary Penalties Law, as well as the False Claims Act. After the government declined to intervene, the defendants moved to dismiss the case, and the district court granted the motion on public disclosure grounds.

On review, the Eleventh Circuit affirmed the district court’s decision to dismiss, and in doing so, addressed a number of important issues about the scope of the public disclosure bar following significant amendments made to the PPACA in 2010. First, the Eleventh Circuit held that the public disclosure bar is no longer jurisdictional due to these amendments. Instead, the Court held that the amended statute presents grounds for dismissal for failure to state a claim. This decision contradicts some earlier district court decisions, though it brings the Eleventh Circuit into agreement with the Fourth Circuit in United States ex rel. May v. Purdue Pharma L.P., 737 F.3d 908, 916-917 (4th Cir. 2013), petition for cert. filed, 82 U.S.L.W. 3586 (U.S. March 25, 2014) (No. 13-1162). The Eleventh Circuit based its decision on (among other considerations) the plain language of the amended statute and Congress’s explicit removal of jurisdictional language from the public disclosure bar section of the PPACA.

While it held that the public disclosure argument appropriately was considered under Rule 12(b)(6), the Eleventh Circuit dismissed the relator’s argument that the district court should not have considered documents extrinsic to the complaint. The Court explained that “a district court may consider an extrinsic document even on Rule 12(b)(6) review if it is (1) central to the plaintiff’s claim, and (2) its authenticity is not challenged.” The Eleventh Circuit also clarified that “a district court may consider judicially noticed documents” as well. The types of documents that the Eleventh Circuit held that the district court appropriately considered included newspaper articles, newspaper advertisements, the clinics’ own websites, and the transcript and Special Master’s Report from another case.

The Eleventh Circuit found that the district court had appropriately concluded that the post-PPACA public disclosure bar required dismissal of the relator’s claims. In so holding, the Eleventh Circuit held that “publicly available websites” qualify as “news media.” In making this decision, the Court noted that the Supreme Court had previously stated that the term had a “broad sweep” and that district courts in multiple circuits had found publicly available websites to be included in the category of “news media.” Such a decision may inform later cases about whether other documents commonly cited in public disclosure motions, such as SEC filings, can qualify as public disclosures.

The Eleventh Circuit also took the opportunity to walk back language in previous cases that relators had cited to suggest that prior disclosures do not satisfy the public disclosure bar unless they specifically disclose that the defendants engaged in wrongdoing. The public disclosure bar “itself requires only disclosures of ‘allegations or transactions,” the court explained, “suggesting that allegations of wrongdoing are not required.”

A copy of the Eleventh Circuit’s opinion can be found here.

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