Source: http://www.pepperlaw.com/publications/a-radical-overhaul-the-third-circuit-analyzes-the-federal-false-claims-acts-public-disclosure-bar-after-the-patient-protection-and-affordable-care-act-2016-02-12/
Timestamp: 2018-07-15 19:22:41
Document Index: 726891580

Matched Legal Cases: ['§ 3730', '§ 3730', '§ 3730', '§ 3730', '§ 3730', '§ 3730', '§ 3730', '§ 3730']

A Radical Overhaul? The Third Circuit Analyzes the Federal False Claim...
Authors: Michael A. Schwartz and Kate A. Stanley
This article was published on February 18, 2016 in the Appellate, Food & Beverage, and Government Contracts sections of Law360 under the title, "Determining the Scope of FCA's Public Disclosure Bar."
One avenue of early defense is to invoke the so-called “public disclosure bar,” which prevents a person from pursuing an action based on certain publicly disclosed information unless that person qualifies as an “original source” of the information. After all, the purpose of the False Claims Act is to expose allegedly hidden fraud, not to allow a person to profit off of information potentially already known to the government. See, e.g., United States ex rel. Springfield Terminal Ry. v. Quinn, 14 F.3d 645, 649 (D.C. Cir. 1994) (the public disclosure bar attempts to strike a balance between "adequate incentives for whistle-blowing insiders with genuinely valuable information and discouragement of opportunistic plaintiffs who have no significant information to contribute of their own").
In 2010, as part of the Patient Protection and Affordable Care Act (PPACA), Congress weakened the public disclosure bar, expanding the scope of the “original source” exception. And, in February 2016, the U.S. Court of Appeals for the Third Circuit analyzed the new language, which it described as “radically chang[ing]” and “overhaul[ing]” the public disclosure bar, and explained how to apply the revised version. See United States ex rel. Moore & Co., P.A., v. Majestic Blue Fisheries, LLC, No. 14-4292, 2016 U.S. App. LEXIS 1729, at *2-9 (3d Cir. Feb. 2, 2016).
The court explained that, before the changes in the law, “we had required that a relator’s knowledge must be independent not just from information that qualified as a public disclosure under § 3730(e)(4)(A), but also from information readily available in the public domain.” Id. at *23-24 (citing Atkinson, 473 F.3d at 522). Now, however, the new language requires that the “relator’s knowledge must be independent of, and materially add to, not all information readily available in the public domain, but, rather, only information revealed through a public disclosure source in § 3730(e)(4)(A).”3 Id. at *25 (emphasis added). This interpretation expands who qualifies as an original source. Before, an original source had to have information that was not easily accessible in the public domain. After Moore, however, an original source must just have knowledge independent of the information available in the statutorily enumerated sources of public disclosures.
1 In a False Claims Act case, the whistleblower plaintiff is known as a “relator.” “The FCA empowers a person, or ‘relator,’ to sue on behalf of the United States those who [allegedly] defraud the government, and to share in any ultimate recovery.” Moore, 2016 U.S. App. LEXIS 1729 at *2.
2 Before the law was amended in 2010, the public disclosure bar provided: “No court shall have jurisdiction over an action under this section 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, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.” 31 U.S.C. § 3730(e)(4)(A) (2006). Now, it provides: “The court shall dismiss an action or claim under this section, unless opposed by the Government, if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed – (i) in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party; (ii) in a congressional, Government Accountability Office, or other Federal report, hearing, audit or investigation; or (iii) from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.” 31 U.S.C. § 3730(e)(4)(A) (2012).
3 Before the amendments, an “original source” was defined as “‘an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing an action under this section which is based on the information.’” Paranich, 396 F.3d at 332 (quoting 31 U.S.C. § 3730(e)(4)(B)). Now, an original source includes one “who has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and who has voluntarily provided the information to the Government before filing an action under this section.” 31 U.S.C. § 3730(e)(4)(B) (2012).
4 Another issue to consider is that, pre-amendment, the public disclosure bar was jurisdictional: “[n]o court shall have jurisdiction over an action under this section based upon the public disclosure….” See Moore, 2016 U.S. App. 1729, at *9-10 (citing 31 U.S.C. § 3730(e)(4)(A) (2006)). After the 2010 amendment, however, the bar is no longer jurisdictional, and a motion to dismiss based on the public disclosure bar must be made under Federal Rule of Civil Procedure 12(b)(6), not 12(b)(1). Id. at *10-12; 31 U.S.C. § 3730(e)(4)(A) (2012) (“The court shall dismiss an action or claim under this section, unless opposed by the Government, if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed…”) (emphasis added). The effect of this change may include who bears the burden of persuasion and in what context a court may consider information from outside the pleadings. See Moore, 2016 U.S. App. 1729, at *10-11, n.4.