Non-specific published reports about fraudulent billing practices within an industry will not bar a whistleblower or qui tam relator's standing for claims filed before March 23, 2010. In United States ex. rel. Baltazar v. Warden, a chiropractor filed a qui tam lawsuit under the False Claims Act claiming that her former employer routinely upcoded in order to gain higher reimbursement. At the trial court level, the employer successfully moved to dismiss because a number of government reports identified "fraud" in billing by chiropractors. Such pervasive “fraud” within the chiropractic industry, according the defendant, meant the relator could not be an “original source” of the information as required by the False Claims Act's qui tam provisions. The trial court agreed, and dismissed the claim.
The Seventh Circuit Court of Appeals reversed, holding that general government reports will not prevent the plaintiff from being considered the original source of information alleged in the complaint. The plaintiff provided specific information linking her employer to fraudulent billing practices sufficient to withstand a motion to dismiss her qui tam lawsuit.
In reaching its conclusion, the Seventh Circuit carefully distinguished a similar case in which a published report documenting fraudulent billing practice served to bar all related qui tam suits. In that case, a General Accounting Office (“GAO”) audit found all 125 teaching hospitals “regularly” billed Medicare for non-covered services provided by medical residents. Because the GAO’s report found the fraudulent billing was “normal, if not universal” among all teaching hospitals and the relator provided no additional information, the qui tam suit was dismissed based on the public disclosure bar.
The requirements to sustain a qui tam were revised significantly as part of the health reform law (PPACA) effective March 23, 2010. However, the existence of public reports such as congressional, GAO, or other federal reports, remains relevant to a whistleblower's ability to withstand a motion to dismiss. This case provides useful guidance in determining what types of government reports qualify as "public disclosures" in this context.
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