Ninth Circuit, in Solis, Reaffirms Two-Prong Approach to “Original Source” Exception Under Former FCA
The Ninth Circuit recently reversed in part the district court’s dismissal of relator Frank Solis’ claims against his former employers for alleged False Claims Act (“FCA”) violations.
According to Solis, the drug companies employing him violated the FCA by both promoting the off label use of Integrilin (a cardiovascular drug) and paying physicians to prescribe Integrilin and Avelox (an antibiotic), including by buying doctors expensive dinners and excursions to Hawaii. The district court dismissed Solis’ claims for lack of subject matter jurisdiction under the pre-2010 FCA “public disclosure bar” because Solis filed them after the fraud was publically disclosed and so he did not qualify as an “original source” of information. On appeal, the Ninth Circuit determined that the district court applied the “original source” test incorrectly, and remanded Solis’ Integrilin claims with instructions to apply the test as set forth in U.S. ex rel. Hartpence v. Kinetic Concepts, Incorporated, 792 F.3d 1121 (9th Cir. 2015). At the same time, the Ninth Circuit affirmed the dismissal of Solis’ Avelox claims on alternate grounds, noting that although the district court erred when it found that those claims had already been publically disclosed, the claims did not satisfy the pleading standard and should have been dismissed on that alternate basis anyway.
Under Hartpence, the district court was required to determine whether Solis was an “original source” by assessing whether he: (1) “ha[d] direct and independent knowledge of the information on which the allegations [we]re based” and (2) “ha[d] voluntarily provided the information to the Government before filing an action . . . which was based on the information.” See U.S. ex rel. Hartpence v. Kinetic Concepts, Inc., 792 F.3d 1121, 1128 (9th Cir. 2015) (citing 31 U.S.C. § 3730(e)(4)(B) (amended 2010)). Instead, the district court had applied an outdated test from Wang ex rel. United States v. FMC Corporation, which required that in addition to the first two statutory requirements, Solis must also show that he “had a hand in public disclosure of allegations that [we]re part of [his] suit.” 975 F.2d 1412, 1418 (9th Cir. 1992). The district court applied Wang despite the fact that the Ninth Circuit had rejected it in Hartpence, see 792 F.3d at 1127-1129, in light of the Supreme Court’s interpretation of the original source exception in Rockwell International Corporation v. United States. See 549 U.S. 457, 470-73 (2007). Since Hartpence requires a relator to satisfy fewer requirements to establish that the relator is an “original source,” Solis’ burden will be lighter on remand.
Solis is limited to pre-amendment FCA claims in light of the changes Congress made to the “original source” exception in 2010. Under the new version of the statute, a relator is an “original source” if: “(i) prior to a public disclosure under subsection (e)(4)(a), [he] has voluntarily disclosed to the Government the information on which allegations or transactions in a claim are based, or (2) . . . has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and . . . has voluntarily provided the information to the Government before filing an action under this section.” 31 U.S.C. § 3730 (e)(4)(B) (West). In short, a relator either must come forward before public disclosure, or bring something valuable to the table, avoiding the possibility that latecomers will merely piggy back on already publically disclosed frauds. Solis highlights the importance of understanding which version of the FCA applies to allegations whistleblowers raise and of how courts apply the “original source” exception.