The decision in a case pending before the Seventh Circuit could affect the ability of plaintiffs to bring suit under the False Claims Act (FCA) in cases where the government already possesses information concerning the alleged fraud. The FCA allows private citizens to bring lawsuits alleging that health care providers have submitted false claims for reimbursement under Medicare or other federal programs. In FCA claims brought by private plaintiffs, known as qui tam actions, the plaintiff receives a share of the recovery, often in the range of 20 percent. A qui tam action is thus a close cousin to the more common class action, in that both encourage private citizens to bring contingent litigation on behalf of absent parties, but in a qui tam case the absent party is the federal government.
The FCA includes provisions to discourage or prohibit suits that are redundant or without merit, including the “public disclosure bar,” which prohibits a private plaintiff from bringing a qui tam suit based on facts that are already known, i.e., have been “disclosed,” to the federal government through existing reports, investigations or other sources. The Seventh Circuit, which is now at the forefront in developing the public disclosure bar doctrine, has recently issued a series of decisions refining the definition of what constitutes a public disclosure sufficient to prohibit a private plaintiff from bringing a qui tam action based on circumstances already known to the government.
In a qui tam case being defended by the firm, the plaintiffs acknowledge that the government already had some knowledge of the alleged fraud before the plaintiffs filed suit, but they argue that their case is not precluded by the public disclosure bar because plaintiffs have offered factual detail beyond what the government had known before. The FCA, however, precludes qui tam actions in cases where the government already has enough information to be on the trail of the potential fraud, and in that circumstance, even if additional factual detail is provided that is insufficient for the plaintiffs to avoid the public disclosure bar. The result in this case will likely further define the meaning of the public disclosure bar, and the use of the FCA in the Midwest and nationwide.