Sunday, May 20, 2012

D.C. Circuit Overturns Long Held Requirement That False Claims Act Relator Make Disclosure to Goverment Before Public Disclosure of Same Allegations

Whistleblowers Protection Blog recently wrote about the the District of Columbia Court of Appeals overturning its earlier ruling in U.S. ex rel Findley v. FPC-Boron Employees Club, 105 F.3d 675 (D.C. Cir. 1997).  In that case, the D.C. Circuit had held that to be "an 'original source' [in a False Claims Act case] a whistleblower must make his or her disclosure to the government before there is any public disclosure of the same allegation."  In U.S. ex rel Davis v. District of Columbia, No. 11-7039, May 15, 2012), the D.C. Circuit relied on the Supreme Court's ruling in Rockwell International Corp. v. United States, 549 U.S. 457 (2007), to reject the view, found in Findley, that a "relator could provide nothing new after a public disclosure."  Noting that the False Claims Act has been changed to further clarify who can be an original source (see 31 USC 3730(e)(4)(B)), the Court held "[a]pplying the 1986 version of the Act, we will no longer require a relator provide information to the government prior to any public disclosure of allegations substantially similar to the relator's and will instead enforce the text's deadline of 'before filing an action.'" 

Davis is a odd case and with an unsympathetic relator.  In the other part of the case, the Court sustained the District Court's ruling that the relator, Davis, was not entitled to treble damages and that the relator had failed to allege any actual damage to the United States.  Davis had been an accountant to the District of Columbia Public Schools ("DCPS") and his firm prepared Medicaid reimbursement claims made by DCPS to Medicaid for 1995 - 1997.  Apparently, DCPS replaced the realtor's firm with another in 1998, and the other firm submitted the DCPS Medicaid reimbursement for 1998.  According to Davis, however, DCPS submitted it claims without the required documentation since "only [Davis] had the required documentation supporting the claim and he never gave it back to DCPS."  DCPS subsequently received a Medicaid reimbursement of over 10 million , but most of that amount had to be returned to Medicaid after an auditor found that the DCPS 1998 claim had "not been adequately documented."  Four years after the Auditor's Report on the 1998 claim, Davis filed a qui tam against DCPS and the District of Columbia alleging that they had improperly submitted the 1998 Medicaid reimbursement claims without proper documentation -- thus the issue about whether he could be an original source.

Davis, the Court observed, did not allege in his suit that any of the claimed services were not provided to the DCPS or that any costs were exaggerated --in short, he did not allege that the government has suffered any damage as a result of the alleged lack of documentation.  In fact, "[b]ecause all agree that the services paid for were provided, the maintenance of documents to prove that they were has no independent monetary value.  This is the rare case in which there is no allegation that what the government received was worth less than what it believed it had purchased. . . . . The government got what it paid for and there are no damages."  The Court noted that Davis may still be entitled to "share" in any statutory penalties assessed against the District.

In view of the lack of damages, this case sounds like a great waste of time for everyone, and it appears to be an strange vehicle for the Court to change it position that a relator can still be an original source even if the relator approaches the government after disclosure.  The relator's conduct in Davis certainly does not justify such a change.

A. Brian Albritton
May 20, 2012

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