Ninth Circuit Unanimously Overrules Long-Standing “Original Source” Precedent; Makes it Easier to Qualify as an Original Source Under the FCA
For 23 years, the Ninth Circuit required that a relator establish three elements to qualify as an “original source” under the False Claims Act: (1) the relator must have direct and independent knowledge of the information on which her allegations are based; (2) the relator must have voluntarily provided that information to the government before filing her qui tam lawsuit; and (3) the relator must have “had a hand in the public disclosure of the allegations that are part of [her] suit.” Wang ex rel. United States v. FMC Corp., 975 F.2d 1412, 1417-18 (9th Cir. 1992).
On July 7, a unanimous en banc Ninth Circuit decision eliminated the long-standing third requirement and overruled Wang in two consolidated qui tam suits brought by former KCI employees who had alleged that KCI had falsely billed Medicare for reimbursement for the provision of medical equipment. See United States ex rel. Steven J. Hartpence v. Kinetic Concepts, Inc., No. 12-55396 (9th Cir. July 7, 2015); United States ex rel. Geraldine Godecke v. Kinetic Concepts, Inc., No. 12-56117 (9th Cir. July 7, 2015)
Writing for the Court, Judge Bea analyzed the statutory text of the pre-2010 original-source rule and concluded that the third Wang requirement—unlike the first two requirements—has no basis in the text of the FCA. The Court observed that Wang “impermissibly drew on language from 31 U.S.C. § 3730(e)(4)(A) to read a nonexistent, extra-textual third requirement into § 3730(e)(4)(B)” and concluded that the text of the FCA “has two, and only two, requirements” to establish original-source status. The Court also noted that intervening Supreme Court precedent eroded the Wang Court’s rationale for the extra-textual third requirement and other Circuits had largely rejected Wang. The Court therefore reversed the district court’s dismissal of the complaints and remanded for further proceedings.
The Court also analyzed the FCA’s “first-to-file” bar, which deprives a court of jurisdiction to entertain opportunistic qui tam lawsuits based on facts similar to an already-filed lawsuit. The district court had determined that, even if the relators qualified as original sources, the allegations in the second complaint—filed by relator Godecke—were too similar to the allegations in the first complaint—filed by relator Hartpence. The Ninth Circuit disagreed, and reversed, holding that Godecke’s allegations were materially different because they involved a different Medicare program requirement than those at issue in the earlier suit filed by Hartpence.