Schindler Elevator Corp. v. United States ex rel. Kirk, 131 S. Ct. 1885 (2011)

Schindler Elevator Corp. v. United States ex rel. Kirk, 131 S. Ct. 1885 (2011)

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  In Schindler Elevator Corp., the Supreme Court held that, under the pre-PPACA public disclosure bar, a federal agency’s written response to a Freedom of Information Act (“FOIA”) request for records constitutes a “report” within the meaning of the FCA’s public disclosure bar.
  

1. United States ex rel. Osheroff v. Humana, Inc., 776 F.3d 805 (11th Cir. 2015)

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  In Osheroff, the relator alleged that certain clinics provided a variety of free services for patients and health plan members in violation of the Anti-Kickback Statute. The Eleventh Circuit held that “news media” has a “broad sweep” and includes newspaper advertisements and the clinics’ publicly available websites for the purpose of the public disclosure analysis. The court went on to find that the relator was not an original source because his information “did not materially add to the public disclosures, which were already sufficient to give rise to an inference that the clinics were providing illegal remuneration to patients.”
  

1. Rockwell Int’l Corp. v. United States, 549 U.S. 457 (2007).

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  In Rockwell, the Supreme Court held that a qui tam plaintiff alleging environmental crimes by his previous employer was not an “original source” of information as required by the FCA. The relator did not possess “direct and independent knowledge” of the allegations because the actual false claims were not discovered until after his employment ended. The district court accordingly lacked jurisdiction to enter judgment in the plaintiff’s favor, since the plaintiff was not qualified as an original source.
  
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  The Court emphasized that the relator must be the original source of all the allegations in the complaint, including any amendments thereto, rather than the original source of any public disclosures. Second, if the case shifts after the government’s investigation and the allegations change, as they did with Rockwell, the court may lose subject matter jurisdiction (for pre-PPACA cases) over the plaintiff’s claims, causing the plaintiff to be excluded from any potential recovery. Third, the Court’s strict interpretation of “original source” renders the prospect of speculative qui tam complaints by whistleblowers less likely, as relators will not be rewarded with large recoveries for “predicting” certain outcomes of which they lack direct knowledge.
  

1. Graham Cnty. Soil & Water Conservation Dist. v. United States ex rel. Wilson, 130 S. Ct. 1396 (2010).

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  Relator filed an FCA action which was based on county and state reports. The Fourth Circuit had allowed the case to proceed on the theory that the provisions of the public disclosure bar only applied to federal audits, reports and investigations.
  
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  The Supreme Court reversed and held that nothing in the statute or legislative history indicated that the provisions of the public disclosure bar were to be limited to federal sources. Specifically, information in state and local governmental sources could also qualify as public disclosures.
  
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  PPACA explicitly limits the public disclosure bar to federal hearings and federal audits, investigations and reports. Therefore, the result in Graham County will be moot for disclosures taking place after March 23, 2010, the effective date of PPACA.
  

1. United States ex rel. Hockett v. Columbia/HCA Healthcare Corp., 498 F. Supp. 2d 25 (D.D.C. 2007).

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  A relator brought a qui tam suit under the FCA against related Medicare service providers for allegedly inflating costs at certain facilities in order to defraud Medicare.
  
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  The court cited Rockwell to hold that because some of relator’s claims were based upon a public disclosure, the relator was not an original source for purposes of the jurisdictional bar of the public disclosure provision and granted the defendants’ motion to dismiss.
  

1. United States ex rel. Montgomery v. St. Edward Mercy Med. Ctr., No. 4:05-CV-00899, 2007 WL 2904111 (E.D. Ark. Sept. 28, 2007).

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  The relators brought an FCA action and alleged that the defendants submitted false or fraudulent claims to Medicare, Medicaid, TRICARE, and other federal health insurance programs for medically unnecessary surgical procedures.
  
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  In following Rockwell and even expanding its reasoning to the definition of a “public disclosure,” Montgomery noted that if the amended allegations could contain information for which the relator was not an original source, “the relator [would be] free to plead a trivial theory of fraud for which he had some direct and independent knowledge and later amend the complaint to include theories copied from the public domain or from materials in the Government’s possession.” The court granted the defendants’ motions to dismiss plaintiff’s amended complaint for lack of subject matter jurisdiction.
  

6. Defense—First-to-File Bar.

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