Wednesday, October 21, 2015

The FCA's Amended Public Disclosure Bar Does Not Apply to Claims That Arose Before March 2010

Congress added the “public disclosure bar” to the  False Claims Act in 1986. 31 U.S.C. 3730(e)(4). As originally enacted, the public disclosure bar provided that if a relator based their qui tam claims on information that previously had been “publicly disclosed” through designated channels, such as in the press, in an audit, or in a previous lawsuit, then the court lacked subject-matter jurisdiction over the qui tam claims unless the relator could establish his or herself as an "original source" of the information underlying the qui tam complaint.

Congress amended the public disclosure bar, effective March 23, 2010, and while it remained a basis for dismissing a relator’s qui tam claims, Congress omitted any explicit reference to the bar being jurisdictional. As a result, courts have increasingly found that the 2010 amended version of the public disclosure bar is not jurisdictional. See, e.g., U.S. ex rel. Osheroff v. Humana, Inc., et al., 2015 WL 223705 (11th Cir. Jan. 16, 2015); see also False Claims Act Redline,  HelmersMartins, (redlining the pre- and post-amendment versions of the public disclosure bar, 31 U.S.C. 3730(e)(4))

Since the 2010 amendment, courts have grappled with whether the amended version of the public disclosure bar applies to “false” claims that arose before the 2010 amendment but which were contained in qui tam complaints filed after the amendment.  The Court in United States of America ex rel. Wilhelm v. Molina Healthcare of Florida, Inc., recently addressed this precise issue, finding that the amended statute did not apply to false claims that actually arose before the date of the 2010 amendment.  2015 WL 5562313 (S.D. Fla. Sep. 22, 2015).  

In 2012, a relator filed a qui tam complaint against defendant Molina Healthcare of Florida, Inc., and it contained false claims that allegedly arose prior to 2010.  Defendant filed a Rule 12(b)(1) motion to dismiss the qui tam action, asserting that the court lacked jurisdiction because the relator based his claims on publicly disclosed information.  The relator countered that Congress amended the public disclosure bar in 2010 so that it was no longer jurisdictional in nature, rendering the defendant’s 12(b)(1) motion improper.  

The Court held that the relevant conduct for applying  the amended public disclosure bar was when the false claims were actually submitted, not the date when the lawsuit was filed.  Based on the facts alleged in the relator’s qui tam complaint, the pre-2010, jurisdictional version of the public disclosure bar applied.  And, because the jurisdictional version of the public disclosure applied, the court lacked jurisdiction if the relator based his claims on publicly disclosed information, unless he qualified as an original source. 

The Court’s ruling supports what increasingly appears to be the majority position among those courts that have considered the issue: that the jurisdictional, pre-2010 version of the public disclosure bar applies if the challenged conduct occurred before March 23, 2010—even if the relator filed suit post amendment. As a practical matter, applying the public disclosure bar in this manner will allow defendants to continue using Rule 12(b)(1) to challenge the validity of older FCA claims on a motion to dismiss. Given that courts can consider information beyond the pleadings in a 12(b)(1) challenge, defendants may continue to pursue this powerful option when the facts permit. 

Guest Blogger/Author: Scott Terry
Editor: A. Brian Albritton
October 21, 2015

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