• Patient Protection and Affordable Care Act: False Claims Act Broadens for Qui Tam Relators
  • August 14, 2012
  • Law Firm: Berger Montague P.C. - Philadelphia Office
  • What is the Patient Protection and Affordable Care Act?

    On March 23, 2010, the President signed into law the healthcare overhaul bill, known as the Patient Protection and Affordable Care Act ("PPACA").  The PPACA includes a number of amendments to the False Claims Act.  The most significant amendment to the False Claims Act relates to the "public disclosure bar."  The False Claims Act's public disclosure bar prevents would-be qui tam relators from profiting from disclosures of fraud that have already been exposed, and that have reached the public domain.

    Unlike the old bar, the new public disclosure bar in the PPACA does not consider information disclosed in state and private proceedings to be "publicly disclosed."   Now, information is considered publicly disclosed only if it is disseminated in federal proceedings, reports, hearings, audits, or investigations.

    And with respect to federal criminal, civil or administrative trials and hearings, the government now must actually be a party to the proceedings where the information is disclosed.  (As with the previous version of the statute, any information disclosed through news media is still considered "publicly disclosed."  Thus, actions based on information that is substantially the same as news media reports will continue to be barred.)

    Graham County Soil and Water Conservation District v. U.S. ex rel. Wilson

    Just one week after the PPACA's enactment, the Supreme Court decided Graham County Soil and Water Conservation District v. U.S. ex rel. Wilson,  130 S. Ct. 1396  (March 30, 2010).  The 7-2 Graham majority resolved a circuit-split by holding that whistleblowers cannot file lawsuits based upon information that is publicly available in state and local administrative reports, audits, and investigations.  The PPACA legislatively overrules Graham for all new cases by specifically amending the FCA to bar only those actions based on disclosures from federal sources or the news media.  Reversing what was the law in several circuits and would have been the law of the land, PPACA now grants qui tam relators the power to initiate lawsuits based on information in state and local government publications.  It is not entirely clear yet what happens when the information appears in state and local government publications after PPACA for conduct that occurred pre-PPACA.

    False Claims Act Broadens

    PPACA also broadens what was previously the single exception to the public disclosure bar, called the "original source" exception.  Under the previous version of the Federal False Claims Act, an action based upon information that was "publicly disclosed" was not barred if the person had "direct and independent" knowledge of the information underlying the allegations.   Now, the original source exception covers two types of whistleblowers.  First, a person who disclosed to the government the information on which the allegations or transactions in a claim are based before it was publicly disclosed can still proceed with a lawsuit based under the False Claims Act.  Second, a person who has knowledge that is "independent of and materially adds to" the publicly disclosed allegations or transactions, and who has provided the information to the government before filing a lawsuit under the False Claims Act, is excepted.  While the exact meaning of these terms will likely be the subject of interpretation by the courts, it is clear that they are intended to broaden the "original source" exception.

    Finally, the amendments to the False Claims Act included in PPACA for the first time give the government considerable discretion in deciding whether a case otherwise barred by the public disclosure may still go forward.  Under the previous law, the bar was considered "jurisdictional," which meant that a court was required to dismiss a qui tam case if it fell within the public disclosure bar.  Under the new version, the government may oppose dismissal of the case, even if it falls within the public disclosure bar, and thus permit the qui tam lawsuit to go forward.  This gives the government the ability to assess the circumstances, including how the dismissal of the qui tam relator's case will affect the government's ability to fully prosecute the accused.