Jul 10, 2015

Ninth Circuit Loosens the False Claims Act Original Source Requirement for Whistleblowers

Written by Allison L. Murphy

Partner


In an en banc decision filed July 7, 2015, the Ninth Circuit reversed the district court’s original dismissal of consolidated qui tam suits brought by whistleblowers, alleging that their former employer, Kinetic Concepts, Inc., had fraudulently claimed reimbursements from Medicare. See US ex rel. Hartpence v. Kinetic Concepts, Inc. (12-55396) and US ex rel. Godecke v. Kinetic Concepts, Inc. (12-56117).

The Court held that there are now only two requirements in order for a whistleblower to be an “original source” who may recover under the False Claims Act (FCA): (1) before filing the action, the whistleblower must voluntarily inform the government of the facts which underlie the allegations of the complaint; and (2) the whistleblower must have direct and independent knowledge of the allegations underlying the complaint.

The Ninth Circuit’s en banc decision in Kinetic Concepts overturned the Ninth Circuit’s earlier precedent on this issue, Wang ex rel. United States v. FMC Corp., 975 F.2d 1412, 1418 (9thCir. 1992), which additionally required a whistleblower to have had a “hand in the public disclosure” of the fraud in order to be considered a qualified original source.

According to the July Kinetic Concepts rulingit no longer matters whether a whistleblower played any role in the public disclosure of their claims, if they meet the two-part test defined above.

The decision announced in Kinetic Concepts is significant as Wang’s three-part test had been the law in the Ninth Circuit for the past 23 years. The decision loosens the Original Source requirement so that a whistleblower is no longer required to have played any role in making the disclosure public. The removal of this requirement makes it easier for whistleblowers to establish original source status in the Ninth Circuit, thereby opening the door to even more FCA actions.