Tenth Circuit Offers New Guidance On “Original Source” Exception to the Public Disclosure Bar
The U.S. Court of Appeals for the Tenth Circuit weighed in on the “public disclosure bar” under the False Claims Act (“FCA”) that relators must pass for their qui tam suits to proceed. For the first time, the Court provided guidance on when a relator’s allegations can be deemed to “materially add” to public disclosures related to an alleged false claim, such that the original source exception to the public disclosure bar applies. United States ex rel. Reed v. KeyPoint Gov’t Solutions, No. 17-1379, (10th Cir. Apr. 30, 2019).
Supreme Court Considers Whether to Weigh In on Rule 9(b)’s Particularity Requirement and Constitutionality of the FCA’s Qui Tam Provisions
As we previously reported, in U.S. ex rel. Polukoff v. St. Mark’s Hospital, 895 F.3d 730 (10th Cir. 2018), the Tenth Circuit reversed a district court’s dismissal of qui tam claims, reasoning that the relator’s allegations satisfied Rule 9(b). In so holding, the Tenth Circuit “excuse[d] deficiencies that result from the plaintiff’s inability to obtain information within the defendant’s exclusive control.” Earlier this year, Defendant Intermountain Health Care filed a petition for a writ of certiorari, and the Supreme Court recently requested a response from Relator and the United States.
Tenth Circuit Holds That Claims For Medical Care That Fail To Meet Industry Standards May Be Deemed Objective False
Earlier this month, in U.S. ex rel. Polukoff v. St. Mark’s Hospital et al., No. 17-4014 (Jul. 9, 2018), the Tenth Circuit reversed a lower court’s dismissal of FCA claims, holding that “[i]t is possible for a medical judgment to be ‘false or fraudulent’” under the FCA. As previously reported here, the relator had alleged that a cardiologist performed and billed Medicare and Medicaid for unnecessary heart surgeries known as PFO closures. The District of Utah, in granting defendants’ motion to dismiss, had concluded that claims associated with those procedures, in which the doctor represented that the procedures were medically necessary, could not be deemed objectively false because “liability may not be premised on subjective interpretations of imprecise statutory language such as ‘medically reasonable and necessary.’”
Tenth Circuit Bars Attorney’s Attempt To Step In As A Relator To Save Complaint Barred By First-to-File
Last month, in United States ex rel. Little et al. v. Triumph Gear Systems, Inc., the Tenth Circuit answered in important question about the interplay between Federal Rule of Civil Procedure 15 regarding leave to amend parties, and the FCA’s first-to-file bar. The specific question before the court was whether the FCA’s first-to-file rule precludes a non-party from intervening in a pending qui tam action by seeking leave to amend under Rule 15. The Tenth Circuit held that it does. (more…)
Court Holds That Disputes Over Medical Necessity Fail To Satisfy FCA’s Falsity Standard
In a January 19, 2017 decision, a federal judge in Utah considered whether claims submitted by a physician could be deemed “objectively false” based on alleged non-compliance with industry standards. The court concluded that allegations that a doctor failed to comply with an industry standard for medical care do not satisfy the objective falsity standard and do not render false the physician’s certification that he or she believed that the services “were medically indicated and necessary for the health of the patient.” United States ex rel. Polukoff v. St. Mark’s Hospital et al., No. 2:16-cv-00304-JNP-EJF (D. Utah Jan. 19, 2017).
District Court Grants Stay to Allow the Tenth Circuit to Resolve Important First-to-File Issue
Although a district judge declined an invitation to reconsider his recent opinion in United States ex rel. Little and Motaghed v. Triumph Group, Inc., et al., the court stayed its judgment and certified to the Tenth Circuit an important FCA first-to-file issue.
Conflicting Interpretations of Falsity Preclude Knowledge Under FCA, Tenth Circuit Holds
In a victory for government contractors, the U.S. Court of Appeals for the Tenth Circuit held that vendors and their suppliers cannot knowingly submit false claims under the False Claims Act where the knowing falsity is premised on lack of compliance with government regulations that are subject to differing, good-faith interpretations. The case, U.S. ex rel. Smith v. Boeing, No. 14-3247, 2016 WL3244862 (10th Cir. 2016), involved an appeal by relators, three former Boeing employees, of summary judgment for Boeing and Ducommun, Inc.
Tenth Circuit Affirms Dismissal of Qui Tam Over Relator’s Objection
In an unpublished opinion, a panel of the Tenth Circuit has affirmed the dismissal of a qui tam before it was served on the defendant, over the objection of the relators. United States ex rel. Wickliffe v. EMC Corp., Case No. 09-4082 and 10-4174 (Order and Judgment, April 4, 2012). Relators’ complaint alleged that EMC Corporation knowingly sold defective computers to government agencies and fraudulently concealed information regarding the defect. Before the case was unsealed, the government moved to dismiss the complaint on the basis of a prior settlement with EMC. The district court dismissed the complaint pursuant to 31 U.S.C. 3730(c)(2)(A), which permits the government to dismiss a relator’s suit “notwithstanding the objections” of the relator if the relator is given notice and opportunity for a hearing. Alternatively, the district court held that the complaint was barred by the first-to-file provision, 31 U.S.C. 3730(b)(5).
On appeal, relators challenged the first-to-file dismissal on the grounds that the previously-filed complaint did not satisfy Rule 9(b)’s particularity requirement, and therefore could not act to operate subsequent complaints. The Tenth Circuit, noting that there is a circuit split on the issue of whether “first-filed” complaints must satisfy Rule 9(b), declined to take a firm position on the issue because it concluded that the case could be resolved on other grounds. However, the Panel “admit[ted] to being uneasy” with the position that Rule 9(b) applies, as that “would create a strange judicial dynamic, potentially requiring one district court to determine the sufficiency of a complaint filed in another district court.”
With respect to the dismissal under 3730(c)(2)(A), the Tenth Circuit noted that there also is a circuit split on the level of scrutiny that should be applied when the government moves to dismiss a qui tam suit, with the DC Circuit providing the government a virtually unfettered right to dismiss the action, while the Ninth Circuit requires that the government offer reasons for the dismissal that are rationally related to a legitimate government interest. The Tenth Circuit has adopted the latter, more stringent standard in cases in which the defendant has been served, but the panel declined to decide which test should apply when the government seeks dismissal before the defendant has been served because it found dismissal appropriate under either test, given that the government had already settled with the defendant.