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).
On August 8, 2017, the Seventh Circuit affirmed the dismissal of an FCA suit alleging that a psychiatric hospital (“Hartgrove”) submitted claims to Medicaid despite maintaining a higher patient census than Hartgrove was licensed to maintain, providing some important clarification on the scope of the public disclosure bar. (more…)
Last week, the Fifth Circuit affirmed a defense verdict and the earlier dismissal of several False Claims Act claims related to the alleged off-label use and Medicare reimbursement of medical stents. The decision includes several significant rulings for FCA defendants, particularly in the Fifth Circuit. First, the court affirmed the dismissal of an anti-kickback claim because the relator had “[n]o particulars [to] show that the unidentified doctors who received the ill-defined benefits caused the hospital to use Abbott stents” and thus “never link[ed] the alleged carrots to the purchase and use of the stents at either of the hospitals.” Slip op. 6. The need to plead details showing such a “link” – or causation – is important. (more…)
A recent decision by the U.S. Court of Appeals for the Ninth Circuit affirms the real challenges the public disclosure bar can pose to whistleblowers. In Amphastar Pharms. Inc. v. Aventis Pharma SA, No. 5:09-cv-00023-MJG-OP, 2017 WL 1947890 (C.D. Cal. May 11, 2017), the U.S. Court of Appeals for the Ninth Circuit affirmed a California federal judge’s dismissal of a False Claims Act suit by Amphastar Pharmaceuticals, Inc. (“Amphastar”) alleging the government overpaid for a blood thinner that was improperly patented, finding that the allegations were already public. (more…)
In a recent opinion by Judge Wilkins, the D.C. Circuit affirmed the dismissal of a qui tam action against Phillip Morris, United States ex rel Oliver v. Phillip Morris USA, Inc., No. 15-7049 (D.C. Cir. June 21, 2016), with two key holdings that will help FCA defendants in future cases. Specifically, the Court adopted an expansive reading of the FCA’s public disclosure bar and a stringent “original source” requirement.
On February 26, 2016, the Seventh Circuit refused to revive a public interest group’s False Claims Act suit alleging that the Chicago Transit Authority (CTA) misreported transit data to gain additional federal grant allocations. The three-judge panel upheld the district court’s dismissal of the suit, which accused the CTA of over-reporting bus mileage to secure up to $55 million in inflated grant allocations. The district court found that the group’s accusations had already been publicized in a state performance audit report and federal agency letter, and the Seventh Circuit agreed that the relator, public interest group Cause of Action, failed to establish subject-matter jurisdiction under the FCA’s public-disclosure bar, which limits jurisdiction over qui tam actions based on allegations that already have been disclosed publicly through certain sources unless the relator is an “original source” of the information. See Cause of Action v. Chicago Transit Authority, No. 15-1143 (7th Cir. Feb. 29, 2016).
A district court recently took a broad view of the public disclosure bar in holding that where previously unsealed qui tam suits take a scattershot approach to broad industry allegations of misconduct, even companies not named in those suits can successfully invoke the public disclosure bar during later litigation.
In United States ex rel. Ambrosecchia v. Paddock Labs., LLC, No. 12-cv-2164 (E.D. Mo. Sept. 23, 2015), the relator alleged that defendants violated the FCA by making fraudulent misrepresentations to CMS about FDA approval dates for drugs and providing false Drug Efficacy Study Implementation (“DESI”) codes indicting defendants’ products were safe and effective, which the federal healthcare programs then relied upon to pay for drugs ineligible for reimbursement. The defendants moved to dismiss, arguing that the claims were substantially the same as those in a suit filed prior to the relator’s, and therefore the public disclosure bar applied. The relator attacked the application of the public disclosure bar both procedurally and substantively.
A federal district court in California has denied a qui tam relator’s attempt to share in the proceeds of a $323 million FCA settlement, holding that he was not the “original source” of the information that led to the settlement because he learned most of it secondhand from a former co-worker.
On August 20, 2015, the District of New Jersey granted in part and denied in part defendants’ motion to dismiss allegations that by making comparative claims regarding an on-label use of a drug, the defendant prevented physicians from making informed decisions about whether resulting prescriptions were eligible for Medicare or Medicaid reimbursement. See United States ex rel. Dickson v. Bristol-Myers Squibb Co., No. 13-1039 (D.N.J. Aug. 20, 2015). The case highlights relators’ ever-broader use of the FCA to target sales and marketing activities of pharmaceutical manufacturers.
Posted by Scott Stein and Paul Belonick
On July 7, 2015, the Ninth Circuit Court of Appeals announced its decision in two consolidated False Claims Act cases, U.S. ex rel. Hartpence v. Kinetic Concepts, Inc. (12-55396) and U.S. ex rel. Godecke v. Kinetic Concepts, Inc. (12-56117), and expressly abrogated the Ninth Circuit requirement that the relator have had a “hand in the [public] disclosure” to qualify as an original source, first announced by the Circuit in U.S. ex rel. Wang v. FMC Corp., 975 F. 2d 1412 (9th Cir. 1992).