Health Care Reform and Qui Tam Litigation

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One of the more surprising provisions of the manager’s amendment to the Senate Patient Protection and Affordable Care Act is an amendment to the “original source” requirement of the qui tam provisions of the Civil False Claims Act. The amendment is particularly surprising since it is stuck in the middle of Title I, the insurance reform provisions of the bill.

31 U.S.C. sec. 3730(e)(4)(A) currently provides that “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.” This provision has been relied on to dismiss many cases brought by qui tam relators in which information had become public before the action was filed and in which the relator was determined not to be an “original source.” The amendment provides that “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 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.”

The amendment, therefore 1) allows the government to proceed with a case based on public disclosure even though the case did was not originally brought by the AG (which is arguably true under current law), 2) and removes state court litigation and federal court litigation to which the government was not a party from the list of public disclosures.

The current legislation, 31 U.S.C. sec. 3730(e)(4)(B) further defines “original source,” to mean “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.” The amendment would redefine “original source” to mean “an individual who either (i) prior to a public disclosure under section (c)(4)(A), has voluntarily disclosed to the Government the information on which the allegations or transactions in a claim are based, or (ii) 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.”

The “direct” and “independent” knowledge requirements have led to a great deal of litigation under the current law. It would seem to me that the questions asked by the amendment are more straightforward: 1) did the relator disclose information to the government on which the claim was based prior to the pubic disclosure, or 2) was information voluntarily provided that in fact was independent of the disclosed information and materially added to the public knowledge. It is to be hoped that this amendment clears up some of the confusion that attends the current law.



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