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.
In Saldivar v. Fresenius Medical Care Holdings, Inc., No. 15-15497, — F.3d —, 2016 WL 6595937 (11th Cir. Nov. 8, 2016), the relator filed a qui tam action alleging that Fresenius violated the FCA by billing the government for extra medication, or “overfill,” which it had received at no cost and had administered to patients. As an equipment technician at Fresenius, the relator placed orders for the medications at issue and inventoried them. The latter task included calculating the amount of overfill for each medication that was used by the facility. The relator was told that his inventory forms were important because they were the basis for Medicare billing, and company employees talked about the company’s overfill policy in meetings, in one-on-one conversations with managers, and in monthly and quarterly reports. The relator, however, was not himself directly involved in billing for overfill. In his deposition, the relator testified that he did not know if the inventory forms that he completed were provided to the government for billing purposes, and he indicated that he possessed no facts other than what his managers had told him on that issue and what he had seen in company reports.
During the period in question, Fresenius was in communication with the OIG about its overfill practices as a result of a CIA that was in place from 2000 to 2008. During his deposition, a CMS official acknowledged that CMS was aware that Fresenius was administering overfill to patients and billing CMS for it during this time.
In the district court, Fresenius moved for summary judgment, claiming that the relator’s suit was doomed by the public disclosure bar. The district court applied the Eleventh Circuit’s three-part test:
- have the allegations made by the plaintiff been publicly disclosed;
- if so, is the disclosed information the basis of plaintiff’s suit;
- if yes, is the plaintiff an original source of the information?
The district court found that the relator’s allegations had been disclosed to the government through communications between Fresenius and CMS and that the disclosed information formed the basis of the relator’s suit. The district court concluded, however, that the relator was an original source, and therefore, denied Fresenius’s public disclosure bar argument. Notwithstanding this conclusion, the district court granted summary judgment in favor of Fresenius, finding its actions did not meet the FCA’s intent requirement.
On appeal, the Eleventh Circuit examined whether the public disclosure bar robbed it of subject matter jurisdiction. It concluded that the district court had correctly answered the first two parts of the public disclosure bar test in the affirmative. As for the original source question, the Eleventh Circuit noted that the relator had direct and independent knowledge of the administration of overfill, given his role in tracking inventory. With respect to billing for overfill, however, the relator’s knowledge was based solely on information that he was told and had seen, not on firsthand knowledge.
As a result, the Eleventh Circuit examined whether the relator’s secondhand knowledge was sufficient for him to be considered an original source. Following the lead of the Third, Seventh, Eighth and Tenth Circuits, the Eleventh Circuit concluded that it was not. The Eleventh Circuit found that being told about or reading about billing practices gave rise only to indirect knowledge, not the “direct and independent knowledge” required by the FCA for someone to qualify as an original source. Because the relator was not an original source of the information that formed the basis of his complaint, the Eleventh Circuit held that it lacked jurisdiction over the case and affirmed the district court’s grant of summary judgment for Fresenius.
In the context of the public disclosure bar, this ruling reiterates the importance of thoroughly examining the source of the relator’s knowledge about the alleged misconduct relative to any disclosures about that conduct. In many circuits, now including the Eleventh, unless the relator was directly involved in the precise activity at issue, the relator may not be an original source.