Three national healthcare associations want the U.S. Supreme Court to close the door on False Claims Act whistle-blowers who get their dirt by dredging state and local reports and audits.
Lawsuits shouldn't use public sources: groups
The False Claims Act promises whistle-blowers a cut of any damages or settlement payments their lawsuits yield for the government. But the law includes a provision known as the “public disclosure bar” intended to block parasitic complaints that are based on allegations drawn from the public realm of government and media reports.
The American Hospital Association, American Health Care Association, Pharmaceutical Research and Manufacturers of America and U.S. Chamber of Commerce jointly filed an amicus brief this month arguing that the language isn't restricted to federal sources. The 4th U.S. Circuit Court of Appeals in Richmond, Va., ruled last year that the law only means to stop lawsuits that are based on federal reports, audits and investigations. The Supreme Court agreed in June to review the decision.
The associations argue in their brief that the 4th Circuit's interpretation puts their members at the mercy of “opportunistic” lawsuits because businesses and organizations that receive federal funds are subject to frequent reviews by state and local agencies that assess compliance with “complicated (and often confusing) statutory and regulatory requirements.”
The brief argues that a particularly nonsensical vulnerability would arise from Medicaid compliance surveys carried out by state inspectors and from Medicaid fraud control units, which collect and investigate complaints of fraud and abuse and pass them along to the federal government. “The 4th Circuit's construction of the public disclosure bar would lead to the anomalous result that a formal report prepared by a state Medicaid official and then widely disseminated would not trigger the public disclosure bar, while a one-paragraph article in a little-read weekly newspaper of limited circulation would,” the brief said.
But Jeb White, president of Taxpayers Against Fraud, said it's unrealistic to suggest the federal government is aware of the contents of every report issued by a state or local agency. “We need private citizens to ferret out the fraud that's culled within those reports,” said White, whose organization encourages the use of the False Claims Act.
White plans to file a brief on the group's behalf, which is lobbying Congress to amend the law to prevent targets of whistle-blower lawsuits from using public disclosure as a defense, instead leaving it up to the government to decide whether the whistle-blower has anything new.
The underlying case was brought by a secretary for the Graham County (N.C.) Soil and Water Conservation District, who alleged shenanigans involving federal disaster-assistance contracts. She reported concerns to state and federal officials in 1995, triggering several investigations, and in 2001 filed a False Claims Act lawsuit. The district court declined to consider it because her contentions were disclosed in a county-requested audit and a report by what is now known as the North Carolina Environment and Natural Resources Department.
Both sides believe their position is supported by the plain meaning of the statute's definition of public disclosure, which includes “a congressional, administrative, or Government Accounting Office (sic) report, hearing, audit, or investigation, or from the news media.” The 4th Circuit concluded, and Taxpayers Against Fraud agrees, that the federal character of “congressional” and “Government Accountability Office” should be applied to everything in the clause.
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