Opinion ID: 4538681
Heading Depth: 4
Heading Rank: 1

Heading: The Pre-Amendment Public-Disclosure Bar

Text: We begin with the pre-amendment public-disclosure bar. Prior to the 2010 amendments, we held that a claim is “based upon” a prior public disclosure when it is “‘supported by’ the previously disclosed information,” Poteet, 552 F.3d at 514 (quoting U.S. ex rel. McKenzie v. Bellsouth Telecomm., Inc., 123 F.3d 935, 940 (6th Cir. 1997))—meaning that a “substantial identity exists between the publicly disclosed allegations or transactions and the qui tam complaint,” id. (quoting Jones, 160 F.3d at 332).7 In applying the substantial-identity test, we held that the relator’s claims are based on prior public disclosures where “essentially the same . . . scheme” was “the primary focus” of each. Id. Qui tam actions are barred if they are “based even partly upon public disclosures.” McKenzie, 123 F.3d at 940 (emphasis added). Heartland asserts, based on McKenzie, that Holloway’s claims are barred because they are at least partly based on the South Carolina complaints. McKenzie was our first opportunity to decide how to interpret the “based upon” language in the public-disclosure bar. In doing so, we declined to adopt the Fourth Circuit’s interpretation of “based upon,” which would have required a relator to personally know about the prior disclosures, and instead adopted the Tenth Circuit’s approach. Id. We stated that, under a plain text analysis, the Tenth Circuit interpreted “based upon” to “include[] any action based even partly upon public disclosures.” Id. (citing United States ex rel. Precision Co. v. Koch Indus., 971 F.2d 548, 552 (10th Cir. 1992)) (emphasis added). The Tenth Circuit reasoned that “Congress chose not to insert the adverb ‘solely,’ and we cannot, because to do so would dramatically alter the statute’s plain meaning.” Id. (quoting Precision, 971 F.2d at 552). After explaining the Tenth Circuit’s textual analysis, we noted that “[t]he Tenth Circuit later clarified its interpretation by explaining that a court ‘must determine whether ‘substantial identity’ exists between the publicly disclosed allegations or transactions 7We have also used the term “substantial likeness.” See Poteet, 552 F.3d at 514. No. 19-3646 U.S. ex rel. Holloway Page 14 and the qui tam complaint.” Id. (quoting U.S. ex rel. Fine v. Advanced Sciences, Inc., 99 F.3d 1000, 1006 (10th Cir. 1996)). We have described the test for “substantial identity” as whether the relator’s complaint and the prior disclosures depict “essentially the same” scheme. Poteet, 552 F.3d at 514. That, in turn, is informed by the principle that qui tam actions will be barred only when “enough information exists in the public domain” to put the government on notice of the fraud alleged. Walburn, 431 F.3d at 975; Poteet, 552 F.3d at 512. The simple reason is that the entire point of qui tam actions is “to prosecute fraud of which the government is unaware.” U.S. ex rel. Dingle v. BioPort Corp., 388 F.3d 209, 215 (6th Cir. 2004). To decide whether the government is already on notice of the fraud alleged, we ask whether the relator “merely ‘adds details’ to what is already known in outline.” U.S. Bank, 816 F.3d at 432 (quoting U.S. ex rel. Bogina v. Medline Indus., Inc., 809 F.3d 365, 370 (7th Cir. 2016)). We can presume that the government is on notice of particular frauds once a general disclosure of fraud has been made. See id. at 431–32; Dingle, 388 F.3d at 215; U.S. ex rel. Gilligan v. Medtronic, Inc., 403 F.3d 386, 391 (6th Cir. 2005). Thus, relators cannot avoid the public-disclosure bar “by focusing [their] allegations . . . on sub-classes of potential claims covered by the initial [disclosure].” U.S. Bank, 816 F.3d at 432. It is not enough to allege new, slightly different, or more detailed factual allegations. Dingle, 388 F.3d at 215; Poteet, 552 F.3d at 514. For instance, in Dingle, we barred a relator’s qui tam action alleging a scheme in which a company supplied the U.S. government with FDA-noncompliant vaccines. 388 F.3d at 215. Prior public disclosures revealed that the FDA had cited the company for unspecified “deviations” from FDA requirements and that there were allegations that the company’s vaccine was not FDA-approved. Id. at 214. Because the prior disclosures were “more general and could have referred to several types of fraud,” the government was on notice of the particular scheme that the relator alleged. Gilligan, 403 F.3d at 391 (citing Dingle, 388 F.3d at 213). The same was true in Gilligan, where the relators alleged that a company caused doctors and hospitals to submit false claims to Medicare for use of its FDA-noncompliant pacemakers with malfunctioning leads. See id. Prior allegations disclosed that the leads were not safe, that there No. 19-3646 U.S. ex rel. Holloway Page 15 was manufacturing fraud, and that there were design deviations. Id. Even though the new allegations concerned a “slightly different type of fraud,” the prior allegations “were sufficiently general, and like the allegations in Dingle, could have encompassed the claim of manufacturing fraud and design deviations surrounding the . . . leads.” Id. “So long as the government is put on notice to the potential presence of fraud, even if the fraud is slightly different than the one alleged in the complaint, the qui tam action” must be dismissed. Dingle, 388 F.3d at 214–15. Heartland contends that that is exactly what we have in this case—Holloway is simply adding new, slightly different, or more detailed allegations to what has already been disclosed in the South Carolina complaints. We agree. Both sets of allegations were levied against the same corporate parent for the same type of fraud. Both accuse Heartland of making false claims for payment from Medicare for hospice patients. Both allege a systemic and patterned practice of altering or omitting information from clinical documents to make these patients appear to be terminally ill. Both allege that staff were fired if they challenged this practice, and that Heartland set a “census,” or required number of patients, for enrollment. We acknowledge, as the district court observed, that Holloway’s complaint “alleges a complex, sophisticated scheme” that targets corporate-wide conduct. Heartland Hospice, 386 F. Supp. 3d at 898 (quotation omitted). But we disagree with the district court’s conclusion that the scheme that Holloway alleges “differ[s] in both degree and in kind from” the South Carolina complaints. Id. at 899. Even if the South Carolina complaints were focused on a single hospice facility, the allegations against Heartland as a whole were sufficiently general and alike to those alleged here such that the government was put on notice of the corporate-wide conduct alleged in this case. We therefore hold that Holloway’s claims are barred by the pre-amendment public-disclosure bar.