The U.S. District Court for the District of Massachusetts recently denied an insurer's motion to dismiss a False Claims Act suit based on subject matter and scienter arguments. United States, ex rel. Dawn Barrett v. Cigna Corporation, et al., No. 03-12382 (D. Mass.).

In 2003, Dawn Barrett brought suit against the insurer for its alleged violation of the False Claims Act. According to Barrett, the insurer forced applicants for long-term disability benefits to file for Social Security Disability Insurance (“SSDI”) benefits, despite knowledge that some of the applicants did not qualify for SSDI.

The insurer filed its second motion to dismiss or, alternatively, for summary judgment in August of 2008, arguing that: (1) the court lacked subject matter jurisdiction because the material allegations on which the complaint is based were publicly disclosed prior to the filing of the suit, and Barrett was therefore not an “original source” of the information; and (2) the Social Security Administration had knowledge of (and acquiesced to) the insurer's practice of directing long-term disability claimants to file for SSDI benefits and, therefore, Barrett would be unable to show that the insurer acted with scienter, as required in any qui tam claim.

The Court denied the motion to dismiss without written explanation. According to the latest status update filed with the court, the parties are in the process of conferring regarding mediation and/or settlement.