Seventh Circuit: Public Disclosure Bar Triggered Only by Truly Duplicative Qui Tam Allegations

Struggling to decipher the False Claims Act’s public disclosure bar, a 2008 district court decision aptly summed up the prevailing sentiment: “The Court sympathizes with anyone litigating under the False Claims Act. Perhaps Congress will elect at some point to give legislative attention to the FCA to resolve some of the still unresolved questions about the Act’s application.” United States ex rel. Montgomery v. St. Edward Mercy Medical Center, 2008 WL 110858 (E.D. Ark. 2008). In 2009 Congress amended the FCA and removed much of the confusion surrounding the much-litigated public disclosure bar.

With no explicit retroactive provision in the 2009 amendments, courts are still wrestling with the old public disclosure bar language.  Undoubtedly, courts have dissected every single word in the old public disclosure bar. In fact, there are over 300+ published and unpublished rulings in well over 150 separate cases concerning the meaning of the “public disclosure” bar. A large percentage of these decisions have marinated on the “based upon” language found in provision.

With the exception of the Fourth Circuit, all of the courts have interpreted “based upon” to mean “substantially similar.” In other words, a qui tam action is “based upon” a public disclosure when the allegations are “substantially similar.” Of particular importance, this interpretation was cemented into the new public disclosure bar when Congress replaced “based upon” with “substantially similar.”

Recently, the Seventh Circuit clarified the “substantially similar” language interpreted into the old public disclosure bar and, by extension, codified into the new public disclosure bar. Specifically, in United States ex rel. Goldberg v. Rush University Medical Center, No. 10-3785 (7th Cir. May 21, 2012), the Court stressed that qui tam allegations are not “substantially similar” to publicly disclosed allegations unless they both disclose a particular fraud by particular defendant.  The Court emphasized that “a very high level of generality is appropriate, because then disclosure of some frauds could end up blocking private challenges to many different kinds of frauds.” Id. at 5.

The Goldberg decision properly encourages insiders to step forward with detailed information. Hopefully the other circuits will embrace this commonsense reading.

For more information about qui tam law and healthcare fraud, contact Nolan & Auerbach, P.A.