American Health Lawyers Association 2015 Fundamentals of Health Law Introduction to the False Claims Act

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  The overall goal of PPACA’s changes to the public disclosure bar is to make it easier for the government and relators to avoid the dismissal of FCA complaints. Whether the changes will be interpreted in this manner remains to be seen.
  
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  The pre-PPACA public disclosure bar (31 U.S.C. § 3730(e)(4)(a)) states:
  

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  Section 10104(j)(2) of PPACA strikes 31 U.S.C. § 3730(e)(4)(a) and replaces it with the following:
  

(i) in a Federal criminal, civil or administrative hearing in which the Government or its agent is a party;

(ii) in a congressional, Governmental Accountability Office, or other Federal report, hearing, audit or investigation; or

(iii) from the news media

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  PPACA introduces several key changes to the public disclosure bar:
  
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  First, the government is now statutorily entitled to be heard on the public disclosure bar. Under the pre-PPACA provision, previous public disclosure of the FCA allegations in one of the statutory categories stripped the court of subject matter jurisdiction over the cause of action. Under PPACA, the jurisdictional bar is removed and the government may weigh in and seek to prevent the dismissal of an FCA cause of action as a result of the public disclosure bar. The statutory language may be read to permit the court to nevertheless dismiss the relator’s complaint in the face of government opposition, and this issue will have to be resolved by the courts.
  
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  Second, under the pre-PPACA bar, the allegations or transactions in the FCA complaint had to be “based upon” publicly disclosed information in order for the jurisdictional bar to be triggered. There was a significant amount of case law interpreting that phrase and the necessary relationship between the complaint and the public disclosures necessary to raise the public disclosure bar. The PPACA eliminates that language, and introduces a new, undefined standard—“substantially the same.”
  
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  Finally, PPACA further restricts the potential sources of publicly disclosed information to federal proceedings in which the government is a party, federal reports, audits, and investigations, and the news media. Under the pre-PPACA public disclosure bar, it was unclear whether reports, audits, hearings and investigations from state and local governmental entities could also qualify to trigger the public disclosure bar. This issue was addressed in Graham County Soil & Water Conservation District v. United States ex rel. Wilson, 130 S. Ct. 1396 (2010), in which the Supreme Court found that a state report was sufficient to trigger the public disclosure bar under the pre-PPACA provision.
  

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  If there has been a public disclosure of information upon which a qui tam complaint is based, the relator may still survive operation of the public disclosure bar if the relator qualifies as an original source of the information.
  
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  The pre-PPACA version of 31 U.S.C. § 3730(e)(4)(b) read:
  

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  Section 10104(j)(2) of PPACA strikes 31 U.S.C. § 3730(e)(4)(b) and replaces it with the following:
  

(i) prior to a public disclosure under subsection (e)(4)(a), has voluntarily disclosed to the Government the information on which allegations or transactions in a claim are based, or

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  The most important change in PPACA on this issue is that a relator may now qualify as an original source under one of two different categories. The first category, which is new, simply requires disclosure of the relator’s information to the government prior to any public disclosure.
  
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  The second category alters the former provision’s “direct and independent knowledge” requirement in favor of a standard of “knowledge that is independent of and materially adds” to publicly disclosed information. Furthermore, the relator’s information must be independent of “the publicly disclosed allegations or transactions” rather than “independent of…the information on which the allegations are based.”
  

3. 
   Financial Reform Act.
   

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  The Financial Reform Act, signed into law on July 21, 2010, redefines “protected conduct” for 31 U.S.C. § 3730(h) claims. FERA narrowed the retaliation cause of action by redefining “protected conduct” as “lawful acts done . . . in furtherance of other efforts to stop 1 or more violations,” thereby protecting only conduct that involves attempts to stop the alleged fraud. Section 1079A of the Financial Reform Act, however, enlarges the retaliation cause of action by redefining “protected conduct” as “lawful acts done . . . in furtherance of [an FCA action] or other efforts to stop 1 or more violations . . . .”
  
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  In addition, § 1079A of the Financial Reform Act revises the scope of persons who may engage in protected conduct to include “associated others.”
  

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  Prior to the Financial Reform Act, the FCA did not specifically set a statute of limitations for anti-retaliation claims. The six-year statute of limitations in the False Claims Act did not govern FCA civil actions for retaliation; rather, in assessing timeliness of an FCA retaliation claim, courts borrowed the most closely analogous state limitations period. Graham Cnty. Soil & Water Conservation Dist. v. United States ex rel. Wilson, 545 U.S. 409, 414 (2005).
  
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  Section 1079A of the Financial Reform Act, however, expressly provides a three year statute of limitations for retaliation suits under 31 U.S.C. § 3730(h) of the FCA.