In United States ex rel. Wilhelm v. Molina Healthcare of Florida, No. 12-24298, 2015 WL 5562313 (S.D. Fla. Sept. 22, 2015), the court provided further clarification on two frequently litigated issues of the FCA’s public disclosure bar: (1) whether the date of filing or the date of the alleged FCA violation controls for determining which version of the public disclosure bar applies; and (2) can the allegations from a relator’s previous lawsuit form the basis for dismissal under public disclosure bar? In finding that the relator’s claims were prohibited under the public disclosure bar, the court held that the date of the alleged FCA violation establishes which version of the public disclosure bar applies, and answered the second question in the affirmative.
Defendant was a managed care organization (“MCO”) for the Florida Medicaid program. The relator had an indirect ownership interest in a separate MCO for the Florida Medicaid program. The relator’s MCO was acquired by defendant in 2009. As is the case with many MCOs, defendant was paid on a capitated basis by Florida. Under this arrangement, defendant was paid a fixed amount per member per month regardless of the healthcare services and costs for each member. According to the relator, soon after acquiring the relator’s MCO, defendant began working to have many of its high-cost members disenroll. Defendant purportedly accomplished this by delaying and withholding benefits and by failing to provide adequate and timely care to its high-cost members. In 2010, the relator filed suit against defendant for breach of contract, alleging that defendant’s attempts at disenrolling these members violated the terms of the parties’ purchase agreement. That suit ultimately settled.
In 2012, the relator filed his qui tam action, alleging that the defendant violated the FCA. The relator’s FCA complaint was based on the same allegations as his previous breach of contract action. The defendant moved to dismiss on public disclosure grounds. As an initial matter, the court was tasked with determining whether the pre or post 2010 version of the public disclosure bar applied as the alleged FCA violation took place in 2009, but the qui tam complaint was not filed until 2012. Although both versions of the public disclosure bar are largely similar, the post 2010 version alters the types of records that constitute a public disclosure and arguably removes the statute’s jurisdictional bar. The court rejected the relator’s argument that the version of the public disclosure bar in effect when the claim is filed controls, and relied on Third and Ninth Circuit cases to hold that “the date on which the false claim was made is the relevant date.” Accordingly, the pre-2010 version of the public disclosure bar controlled.
Turning to the merits of the parties public disclosure bar arguments, the court first quickly determined that the relator’s previously filed breach of contract action could form the basis for a public disclosure. The relator argued that despite this public disclosure, his FCA claim should survive because he was the original source of the information as the breach of contract complaint was based on his personal knowledge and experience with the defendant. Here too, the court rejected the relator’s argument concluding that it was clear that the majority of the plaintiff’s knowledge was secondhand. For instance, the relator admitted that his knowledge of the defendant’s claims payment system was derived from the defendant’s previous discovery responses, and that he had learned other information by interviewing people and reviewing documents. The court explained that because the relator’s knowledge was derivative in nature, he was not the original source of the information. Consequently, his FCA claims were dismissed with prejudice.
Although neither of the court’s holdings in Wilhelm break new ground, the court’s thorough and well-reasoned analysis helps reinforce fundamental public disclosure bar principles and serves as another helpful case for the FCA defense bar.