A unanimous panel of the U.S. Court of Appeals for the Eleventh Circuit (Eleventh Circuit) recently affirmed two grants of summary judgment in favor of defendant Lincare, Inc. d/b/a Diabetic Experts of America (collectively, “Diabetic Experts”) by the U.S. District Court for the Southern District of Florida (District Court). Diabetic Experts provided diabetic supplies to Medicare patients, some of whom had previously ordered medical supplies from Diabetic Experts for chronic obstructive pulmonary disease (COPD). To promote sales, staff at Diabetic Experts would place calls to individuals who had previously ordered COPD-related equipment regarding a need for diabetic supplies.
In a question of first impression, the Eleventh Circuit recently examined whether a relator’s secondhand knowledge of his employer’s billing practices was sufficient to make him an original source relative to the FCA’s public disclosure bar. Following several other circuits, the Eleventh Circuit answered that question by concluding that such knowledge would not render a relator an original source.
The FCA continues to be the federal government’s primary civil enforcement tool for investigating allegations that healthcare providers or government contractors defrauded the federal government. In the coming weeks, we will take a closer look at recent legal developments involving the FCA. This week, we examine recent court decisions that have required a relator only to plead a reliable indicia of the submission of false claims to satisfy Rule 9(b).
Relators in a pair of cases from the Middle District of Florida succeeded in satisfying Rule 9(b) under a relaxed pleading standard. In U.S. ex rel. Space Coast Medical Associates, LLP, 94 F. Supp. 3d 1250 (M.D. Fla. Feb. 6, 2015), the district court held relators had pleaded “sufficient indicia of reliability that claims were submitted” by alleging “particularized knowledge of the Defendants’ billing process and of alleged fraudulent bills,” as well as “individual Medicare patients who received treatment.”
The FCA continues to be the federal government’s primary civil enforcement tool for investigating allegations that healthcare providers or government contractors defrauded the federal government. In the coming weeks, we will take a closer look at recent legal developments involving the FCA. This week, we examine the FCA’s public disclosure bar and recent cases considering whether disclosures are sufficient to bar FCA claims.
Courts have continued to clarify the requirements for a relator to be considered an original source, and thus exempted from the public disclosure bar, under the FCA’s pre-PPACA and post-PPACA versions. In these cases, courts have typically focused on the requirements that a relator have “direct and independent knowledge of the information on which the allegations are based” (pre-PPACA) and “knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions” (post-PPACA).
The Eleventh Circuit affirmed the district court’s dismissal of a relator’s qui tam lawsuit under the FCA’s public disclosure bar and, in doing so, concluded that the ACA’s amendments to the public disclosure bar created grounds for dismissal for failure to state a claim, rather than for lack of jurisdiction. In U.S. ex rel. Osheroff v. Humana, Inc., the relator alleged that various Florida-based clinics and health insurers violated the FCA through the provision of various services to patients as kickbacks designed to induce and influence the patients’ healthcare decision-making. Defendants pointed to allegations in state court litigation and news media as publicly disclosing the allegations upon which the relator based his qui tam lawsuit, and the district court agreed.