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United States ex rel. Hartpence v. Kinetic Concepts, Inc.

United States Court of Appeals for the Ninth Circuit

March 17, 2015, Argued and Submitted En Banc, San Francisco, California; July 7, 2015, Filed

No. 12-55396, No. 12-56117

Opinion

 [*1122]  BEA, Circuit Judge:

If a whistleblower informs the government that it has been bilked by a provider of goods and services, and that scheme is unmasked to the public, under what conditions can that same whistleblower recover part of what the guilty provider is forced to reimburse the government? We hold today that ] there are two, and only two, requirements in order for a whistleblower to be an "original source" who may recover under the False Claims Act: (1) Before filing his action, the whistleblower must voluntarily inform the government of the facts which underlie the allegations of his complaint; and (2) he must have direct and independent knowledge of the allegations underlying his complaint. Abrogating our earlier precedent, we conclude that it does not matter whether he also played a role in the public disclosure of the allegations that  [*1123]  are part of his suit. We also hold that the district court erred in its application of the rule that [**4]  a whistleblower must be the first to file an action seeking reimbursement on behalf of the government based on the fraudulent scheme.

OVERVIEW

] The False Claims Act ("FCA"), 31 U.S.C. §§ 3729-3733, prohibits knowingly submitting to the federal government a false or fraudulent claim for payment.2 As one enforcement mechanism, the FCA authorizes private parties, known as "relators," to bring civil qui tam suits on the government's behalf against entities who have allegedly defrauded the government. 31 U.S.C. § 3730(b)(1). In these suits, the relators seek reimbursement of the defrauded amounts on the government's behalf. Where, as here, the government declines to intervene in the suit, the relator stands to receive between 25% and 30% of any recovery. Id. § 3730(d)(2).

However, ] the FCA also includes several provisions that deprive federal [**5]  courts of subject-matter jurisdiction over certain qui tam actions. These cases concern two such provisions, the "public disclosure" bar and the "first-to-file" bar. The public disclosure bar precludes qui tam suits where there has been a public disclosure of the fraud, unless the relator qualifies as an "original source" of the information. Id. § 3730(e)(4). The first-to-file bar precludes civil actions based on complaints which allege the same material facts as an earlier-filed civil complaint. Id. § 3730(b)(5); United States ex rel. Lujan v. Hughes Aircraft Co., 243 F.3d 1181, 1188-90 (9th Cir. 2001).

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792 F.3d 1121 *; 2015 U.S. App. LEXIS 11643 **; 40 I.E.R. Cas. (BNA) 483

UNITED STATES EX REL. STEVEN J. HARTPENCE, Plaintiff-Appellant, v. KINETIC CONCEPTS, INC.; KCI-USA, INC., Defendants-Appellees.UNITED STATES EX REL. GERALDINE GODECKE, Plaintiff-Appellant, v. KINETIC CONCEPTS, INC.; KCI-USA, INC., Defendants-Appellees.

Subsequent History: Motion granted by, Stay granted by United States ex rel. Godecke v. Kinetic Concepts, Inc., 2018 U.S. Dist. LEXIS 6042 (C.D. Cal., Jan. 8, 2018)

Prior History:  [**1] Appeal from the United States District Court for the Central District of California. D.C. No. 2:08-cv-01885-GHK-AGR, D.C. No. 2:08-cv-06403-GHK-AGR. George H. King, Chief District Judge, Presiding.

United States ex rel. Godecke v. Kinetic Concepts, Inc., 2012 U.S. Dist. LEXIS 190695 (C.D. Cal., Jan. 30, 2012)United States ex rel. Hartpence v. Kinetic Concepts, Inc., 2012 U.S. Dist. LEXIS 190690 (C.D. Cal., Jan. 30, 2012)

CORE TERMS

allegations, original source, district court, public disclosure, first-to-file, qui tam, complaints, therapy, contracts, wound, independent knowledge, reimbursement, whistleblower, publicly, qualify, modifier, material fact, fraudulent, radar, statutory language, hand-in-the-public-disclosure, submitting, intervene, Aircraft, misusing, overrule, costs

Labor & Employment Law, False Claims Act, Scope & Definitions, Original Source, Qui Tam Actions, Civil Procedure, Subject Matter Jurisdiction, Jurisdiction Over Actions, General Overview, Jurisdictional Bar, Governments, Courts, Judicial Precedent, Retaliation, Statutory Application, False Claims Act, Public Health & Welfare Law, Providers, Reimbursement, Appeals, Standards of Review, De Novo Review, Legislation, Interpretation, Clearly Erroneous Review, Questions of Fact & Law, Evidence, Presumptions, Particular Presumptions, Regularity