On March 23, 2010, President Obama signed into law the widely publicized Patient Protection and Affordable Care Act (PPACA), Pub. L. 111–148, 124 Stat. 119. Section 10104(j)(2) of this legislation replaces the prior version § 3730(e)(4) of the False Claims Act (FCA), 31 U.S.C. § 3729, et seq., with new language significantly changing one of the most powerful jurisdictional challenges facing qui tam relators under the FCA's "Public Disclosure Bar." These changes are likely to result in a significant increase in the number of qui tam complaints and the number of qui tam complaints that survive motions to dismiss brought under the FCA's Public Disclosure Bar.
The stricken version of 31 U.S.C. § 3730(e)(4)(A) contained a jurisdictional prohibition on qui tam actions that were based on “publicly disclosed” information, unless the qui tam relator qualified under the "original source" exception to the Public Disclosure Bar. The PPACA expands the scope of the original source exception and shifts the Public Disclosure Bar from a jurisdictional prohibition to a more flexible standard, with discretionary power held by the government. Under § 10104(j)(2) of the PPACA, the government now has the ability to control whether a qui tam complaint is dismissed based on the Public Disclosure Bar. Section 10104(j)(2) provides:
Section (4)(A). The court shall dismiss an action or claim under this section, unless opposed by the Government, if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed
(i) in a Federal criminal, civil or administrative hearing in which the Government or its agent is a party;
(ii) in a Congressional, Government Accountability Office, or other Federal report, hearing, audit or investigation; or
(iii) from the news media,
unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.
The PPACA also narrows the definition of what constitutes publicly disclosed information and expands the scope of the original source exception. The new language expands the definition of an original source by removing the requirement that a qui tam relator have "direct" knowledge of the facts underlying the allegations. It is now sufficient for a qui tam relator to simply have "knowledge that is independent of and materially adds to the publicly disclosed allegations . . . ." Under the new law, a qui tam relator's allegations can now be based on indirect or secondhand information, provided those allegations add to whatever information is already contained in the public domain.
In addition, the amendment in the PPACA provides that a public disclosure resulting from a government report, hearing, audit or investigation must be from a federal government source in order to bar a qui tam relator's claim. Public disclosures in state or local government reports or proceedings will no longer trigger the jurisdictional bar.
Despite their inclusion in a health care statute, these FCA amendments are not limited to qui tam cases involving federal health care programs. These amendments will affect the Public Disclosure Bar for every qui tam defendant.
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