On June 1, 2015, Judge John F. Walter for the U.S. District Court for the Central District of California ruled that a whistleblower, who was attempting to claim part of a $322 million False Act Claim (FCA) settlement Scan Health Plan (Scan) paid, had failed to demonstrate that he was the original source of information. See United States of America v. Scan Health Plan, CV 09-5013-JFW (JEMx) (C.D. Cal. June 1, 2015).
James Swoben left Scan and went to a state senator with information about overpayments by Medi-Cal (California’s Medicaid program) for patients’ long-term care. The senator referred the information to the State Controller’s Office, which opened an investigation. The Controller’s Office issued a report that was sent to Swoben prior to him filing an FCA complaint in 2009. In August 2010, Scan paid $322 million to settle a U.S. Department of Justice investigation into overpayments. Swoben sought a relator’s share of the settlement.
The federal government opposed Swoben’s request, contending that the allegations in his complaint were substantially the same as those in the Controller’s report and that his claim triggered the FCA’s public disclosure bar. Swoben contended that his complaint was not based on the report because it contained a fraud allegation that Scan received inflated payments under Medicare Part C’s managed care system and inflated patients’ risk adjustment scores.
Judge Walter, in denying Swoben’s partial summary judgment motion, found that the State Controller’s Office report and Swoben’s complaint “allege the same duplicative Medicare and Medi-Cal payments made to Scan, and the complaint’s key allegations repeat and are supported by various conclusions contained in the report.” Slip. Op. at 6. The additional fraud allegations were insufficient to overcome the public disclosure bar because Swoben’s complaint “merely restates various conclusions of the report and is, thus, at least partially based upon the report.” Id. Thus, Swoben had not demonstrated that he was the “original source” of the information.
The “original source” doctrine continues to evolve, with more and more courts being asked to opine about whether a particular issue, previously known to someone, was sufficiently disclosed such that the FCA case is merely “piling on.” Defense counsel and defendants are responsible for this evolution; courts cannot weigh in on the debate without the defense bar continuing to press the issue.