Public interest group advocating for homeowners does not qualify as an “original source” under the FCA, federal court rules

Public interest group advocating for homeowners does not qualify as an “original source” under the FCA, federal court rules

Insurance
May 19, 2015

An Ohio federal district court ruled earlier this week that a non-profit law firm was not an “original source” and thus could not bring claims as a relator under the False Claims Act (FCA).  The non-profit law firm, Advocates for Basic Legal Equality, Inc. (ABLE), contended that U.S. Bank, N.A. defrauded the federal government by submitting insurance claims for foreclosed properties which had mortgages insured by the Federal Housing Administration (FHA).  ABLE argued that U.S. Bank failed to satisfy regulatory requirements that it mitigate its losses before it sought insurance coverage under the FHA program.  The court granted U.S. Bank’s motion to dismiss for lack of subject matter jurisdiction because the issues described in the lawsuit had been a matter of extensive public discussion in the wake of the foreclosure crisis, and because ABLE was not an “original source” of information about the alleged misconduct.  The court observed that “ABLE is not the model whistleblowing insider contemplated by the FCA.”  Because ABLE had relied on information provided by others to provide a factual basis for its complaint, ABLE could not serve as a relator under the FCA.

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