First Circuit Decision Highlights Importance of Recent Public Disclosure Bar Amendments

The False Claims Act litigative battlefield is littered with qui tam actions that failed to clear the 1986 version of the FCA public disclosure bar. Concerned that courts were regularly misreading the provision to bar non-parasitic qui tam actions, Congress amended the public disclosure bar, in 2010, with the goal of limiting the public disclosure bar to instances in which specific, actionable information of fraud had already been disclosed by particular public sources. Going forward, this amended provision provides a greater level of certainty for non-parasitic qui tam relators. Unfortunately, however, the 2010 amendments were not explicitly retroactive, so qui tam actions filed prior to the amendments are still working through the 1986 public disclosure bar minefields.

One recent example involves the decade-long battle between Relator Mark Duxbury and pharmaceutical manufacturer Ortho Biotech Products. In this case, Relator filed a qui tam action in 2003 alleging, among other things, that Ortho Biotech engaged in a nationwide scheme of offering kickbacks to health care providers to encourage them to prescribe its products to government health care beneficiaries. Ultimately, this case made its way to the First Circuit Court of Appeals, which held that the public disclosure bar applied and Relator only qualified for the original source exception for the limited time and location of his employment.

Applying the First Circuit’s reasoning in a subsequent discovery dispute, the lower court ruled that Relator could only obtain discovery for the specific health care providers named in his qui tam action. The court embraced this narrow ruling, even though Relator alleged a nationwide scheme and provided specific examples of providers who succumbed to Defendant’s alleged kickbacks. Relator again appealed the decision to the First Circuit.

Recently, the First Circuit affirmed the lower court’s ruling, while stressing that it was bound to apply the 1986 version of the FCA public disclosure bar.

This qui tam action may have survived under the improved public disclosure bar, for the supposed public disclosure was not likely sufficient to trigger the new public disclosure bar. Even if the public disclosure bar was sufficient, Relator may have reaped the benefits of the expanded original source exception, thereby reaching outside of his limited employment.

Fortunately, nearly 3,000 qui tam actions have been filed since the 1986 public disclosure bar amendments. For these Relators, they will not face the same atextual hurdles that derailed Mr. Duxbury.

More information for whistleblowers is located at the Nolan Auerbach & White website.