Opinion ID: 2977566
Heading Depth: 3
Heading Rank: 1

Heading: Dismissal of Poteet’s Complaint

Text: Poteet’s primary argument on appeal is that the district court erred in finding her qui tam action to be jurisdictionally barred by both the FCA’s public disclosure rule and its first-to-file provision. On de novo review, we find the first-to-file rule technically inapplicable to Poteet’s complaint. However, we agree with the district court that Poteet’s complaint is jurisdictionally barred by the public disclosure provision, and accordingly affirm the district court’s dismissal of Poteet’s suit on that basis.
The FCA’s public disclosure provision, 31 U.S.C. § 3730(e)(4)(A), “limits the subject matter jurisdiction of federal courts over qui tam actions based upon previously disclosed information.” Walburn, 431 F.3d at 973; see also Rockwell Int’l Corp. v. United States, 127 S. Ct. 1397, 1405-06 (2007). Specifically, § 3730(e)(4)(A) provides: 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). Section 3730(e)(4)(B) defines “original source” 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 No. 07-5262 United States ex rel. Poteet v. Medtronic Page 10 before filing an action under this section which is based on the information.” 31 U.S.C. § 3730(e)(4)(B). To determine whether § 3730(e)(4)(A)’s jurisdictional bar applies, a court must consider “first whether there has been any public disclosure of fraud, and second whether the allegations in the instant case are ‘based upon’ the previously disclosed fraud.” United States ex rel. Gilligan v. Medtronic, Inc., 403 F.3d 386, 389 (6th Cir. 2005); accord United States ex rel. Bledsoe v. Cmty. Health Sys., Inc., 342 F.3d 634, 645 (6th Cir. 2003) (hereinafter “Bledsoe I”); see also Walburn, 431 F.3d at 974 (“In determining whether the jurisdictional bar of § 3730(e)(4) applies to a relator’s case, we consider: ‘(A) whether there has been a public disclosure; (B) of the allegations or transactions that form the basis of the relator’s complaint; and (C) whether the relator’s action is “based upon” the publicly disclosed allegations or transactions.’” (quoting United States ex rel. Jones v. Horizon Healthcare Corp., 160 F.3d 326, 330 (6th Cir. 1998))). “If the answer is ‘no’ to [either] of these questions, the inquiry ends, and the qui tam action may proceed; however, if the answer to each of the above questions is ‘yes,’ then we must determine whether the relator nonetheless qualifies as an ‘original source’ under § 3730(e)(4)(B), in which case the suit may proceed.” Walburn, 431 F.3d at 974; accord Jones, 160 F.3d at 330.
For a relator’s qui tam action to be barred by a prior “public disclosure” of the underlying fraud, the disclosure must have (1) been public, and (2) revealed the same kind of fraudulent activity against the government as alleged by the relator. See 31 U.S.C. § 3730(e)(4)(A); United States ex rel. Burns v. A.D. Roe Company, Inc., 186 F.3d 717, 723 (6th Cir. 1999). With respect to this first element, the FCA clarifies that a prior disclosure of fraud is public if it appears in “the news media” or is made “in a criminal, civil, or administrative hearing, [or] in a congressional, administrative, or Government Accounting Office report, audit, or investigation.” 31 U.S.C. § 3730(e)(4)(A). “‘Public disclosure’ also includes documents that have been filed with a court, such as discovery No. 07-5262 United States ex rel. Poteet v. Medtronic Page 11 documents, and a plaintiff’s complaint.” McKenzie, 123 F.3d at 939; accord Bledsoe I, 342 F.3d at 645; Burns, 186 F.3d at 725; Jones, 160 F.3d at 331. As for the second element, we have held that a public disclosure reveals fraud if “the information is sufficient to put the government on notice of the likelihood of related fraudulent activity.” Gilligan, 403 F.3d at 386; see Walburn, 431 F.3d at 975 (“[T]he ‘allegations and transactions’ forming the basis of a qui tam have been disclosed ‘when enough information exists in the public domain to expose the fraudulent transaction or the allegation of fraud.’” (quoting Jones, 160 F.3d at 331)); Dingle v. BioPort Corp., 388 F.3d 209, 214 (6th Cir. 2004) (“All that is required is that public disclosures put the government on notice to the possibility of fraud.”). To qualify as a public disclosure of fraud, the disclosure is not required to use the word “fraud” or provide a specific allegation of fraud. See Gilligan, 403 F.3d at 390; Dingle, 388 F.3d at 214 (“The words fraud or allegation need not appear in the disclosure for it to qualify.”); Burns, 186 F.3d at 724 (“[P]ublicly disclosed documents need not use the word ‘fraud,’ but need merely to disclose information which creates ‘an inference of impropriety.’” (quoting Jones, 160 F.3d at 332)). Moreover, the information suggesting fraud need not even come from the same source as long as the different sources “together provide information that leads to a conclusion of fraud.” Gilligan, 403 F.3d at 390; see also Dingle, 388 F.3d at 214 (“The fact that the information comes from different disclosures is irrelevant.”). Following the lead of our sister circuits, we generally have found two types of disclosures sufficient to put the government on notice of fraud. See, e.g., Dingle, 388 F.3d at 212 (“Either a public disclosure which includes an allegation of fraud, or a public disclosure that describes a transaction that includes both the state of the facts as they are plus the misrepresented state of facts must be present to eliminate jurisdiction in a case.”). “First, if the information about both a false state of facts and the true state of facts has been disclosed, we [will] find that there has been an adequate public disclosure because fraud is implied.” Gilligan, 403 F.3d at 389; accord Walburn, 431 F.3d at 975 (“When the ‘misrepresented state of facts and a true state of facts’ have been disclosed, No. 07-5262 United States ex rel. Poteet v. Medtronic Page 12 there is enough information in the public domain to give rise to ‘an inference of impropriety.’” (quoting Jones, 160 F.3d at 332)); see also Jones, 160 F.3d at 331 (adopting the X + Y = Z analysis from the D.C. Circuit’s decision in United States ex rel Springfield Terminal Ry. Co. v. Quinn, 14 F.3d 645 (D.C. Cir. 1994)).5 Second, if there has been a direct allegation of fraud, we will find a public disclosure because such an allegation, regardless of its specificity, is sufficient to put the government on notice of the potential existence of fraud. Gilligan, 403 F.3d at 389; see also Dingle, 388 F.3d at 215. In the instant case, we find the Wiese complaint sufficient to qualify as a public disclosure of fraud which could potentially bar Poteet’s qui tam complaint.6 First, as a filing in a California civil action, the Wiese complaint clearly was a “public” disclosure. See, e.g., McKenzie, 123 F.3d at 939; Bledsoe I, 342 F.3d at 645 (“There is little doubt that [a] complaint, filed in Tennessee state court, qualifies as a public disclosure.”). Moreover, the allegations contained in the Wiese complaint were sufficient to put to the government on notice of potential fraud by MSD and its physician customers. In his complaint, Wiese alleged that he had been terminated because he had “refused his 5 In Springfield, the D.C. Circuit used the following mathematical illustration to demonstrate what information must be publicly disclosed in order for the government to be put on notice of fraud: [I]f X + Y = Z, Z represents the allegation of fraud and X and Y represent its essential elements. In order to disclose a fraudulent transaction publicly, the combination of X and Y must be revealed, from which readers or listeners may infer Z, i.e., the conclusion that fraud has been committed.