Recent Case Highlights Importance of Where Whistleblowers Get Info

The whistleblower is a special breed motivated as much by a strong sense of right and wrong as a love for money. Having said that, it should be noted that the federal False Claims Act (FCA) provides hefty financial rewards to so called qui tam relators, namely a substantial percentage of the damages the federal government recovers as a result of the wrongdoing these relators unearth. But what happens when the whistleblower’s case is based on information that’s already been publicly disclosed? A recent Maryland federal court ruling sheds light on that important question.

The Whistleblower Case

Imagine discovering that the device implanted in your chest just two weeks earlier had been recalled by the FDA. And then imagine how you’d feel if you found out that the hospital that performed the procedure on you knew the device was defective. That’s essentially what caused the whistleblower, a privately insured patient, to file the qui tam lawsuit that produced the Maryland court ruling. The argument: Billing federal health care programs for procedures involving devices known to be defective violated the FCA. The government intervened and the case settled for a cool $27 million. That would normally be life-changing news for the whistleblower who got the case started. Accordingly, the patient claimed she should get a 20 percent share. But the federal court disagreed and awarded her only a nominal share of 0.5 percent.

The FCA Public Disclosure Bar

Whistleblowers who bring successful FCA qui tam suits are normally entitled to receive 15 to 25 percent of what the government recovers. However, the so-called “public-disclosure bar” bans a qui tam relator from bringing an FCA lawsuit based on fraud that’s already been disclosed through certain public channels, unless the relator is an “original source” of the information. The FCA defines “original source” as “an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government” before filing suit. The government contended that the patient in this case shouldn’t get any share of the award because the information she supplied was “substantially similar” to information that had already been publicly disclosed. We could have moved to dismiss her claim under the public disclosure bar at any time, it argued. The problem is that it didn’t actually seek dismissal. So, what it could have done was speculative and irrelevant, the court reasoned. As a result, the patient was able to avoid the bar and command at least some portion of the $27 million to the extent she contributed at least something original to the case. Her attorney provided a list of all the original information the relator contributed, but the court found that almost all of it was derived from public sources other than a few bits of information that were neither decisive nor crucial to the case. Even so, the court felt that the patient deserved credit for bringing the case to the government’s attention. Arguably, it was her qui tam lawsuit that got the government to launch the case. As a result, the court awarded her $135,000, or 0.5 percent of the recovery as a nominal share. United States ex rel. Burke v. St. Jude Med., Inc., 2021 U.S. Dist. LEXIS 247381, 2021 WL 6135202