After the success of our PPP cases, CMS’s recent publication of Medicaid billing data, and the DOJ’s announcement of the data miner FOCUS initiative, we are getting a lot of inquiries from data miners about being relators in False Claims Act cases.
Interestingly, some are asking whether they can even be data miners under the FCA’s public disclosure bar, while others are declaring that the public disclosure bar does not apply to them because of the sophistication of their data mining techniques.
So which is true? Probably neither! Let’s examine.
The False Claims Act Aims to Reward People who make Meaningful Contributions
First, a brief history lesson. The False Claims Act was passed during the Civil War when the Union was buying supplies but receiving junk, like rotting meat and sawdust instead of gunpowder. The intent was that not only should the government get its money back, but it would receive three times what it paid and reward individuals who blew the whistle on the fraudulent suppliers.
During World War II, some people abused the statute by filing cases that were already known to the government, such as by reading something in the newspaper about a company defrauding the government and then filing a False Claims Act lawsuit about it. The statute did expressly prohibit this, and so in 1943, the Government Knowledge Bar was added. From then on, if the information was already in the hands of the government, relators were not entitled to a share of the recovery.
This backfired, however, because nobody knows what the government knows or doesn’t know, and so it discouraged even insiders from bringing lawsuits. So, in 1986, Congress amended the statute yet again. It rescinded the Government Knowledge Bar and replaced it with a Public Disclosure Bar. On the one hand, this was a little broader—it now excluded cases based on information disclosed in the news media or certain types of government reports. But it had two important differences that made the False Claims Act appealing for insiders again.
First, it did not matter if the government was already aware of the claims, it only mattered if the facts were public knowledge. Second, the provision included an “original source” exception for people who knew and reported more than what had been publicly disclosed. So even if a fraud was widely reported in the newspaper, someone working for the company with smoking gun evidence still had reason to bring a False Claims Act case, to everyone’s benefit (except the defendant’s).
But even this was too narrow, as sometimes facts were hidden in SEC reports or local news articles. For much of this time, there wasn’t even an internet that made this kind of information readily available, and even when there was, it wasn’t as if the government was scouring the news media for potential cases. A company could quietly and discretely publish something saying they were committing fraud, and if the government did not pick up on it, this could actually shield them from False Claims Act litigation. Considering the intent was to protect the government, not to protect defendants, this needed to be corrected.
The statute was amended again in 2010 to broaden who qualified as an original source and to give the government veto power if it wanted a whistleblower to be able to pursue claims notwithstanding the public disclosure. In other words, if the government wanted a claim to proceed, it could, regardless of where the information the suit was based on came from or where it was published.
The Amended Public Disclosure Bar Opens the Door for Data Miners
We blog a lot about data miners because we represent quite a few at this point. Some people in the False Claims Act world ask me how is it that data miners are even eligible to be relators under the public disclosure bar, and the answer is simple: if the government wants to pursue a case, or wants a data miner to pursue a case, the veto enables it to do so.
For that reason, it is always okay to file the FCA case and hope that the government intervenes in the case, even if everything you know comes from publicly available information. If it does not, and if it does not veto the public disclosure bar, then the case may be dismissed.
The more surprising thing is that many data miners who knock on our door think they are an original source of the information in their complaint, usually because it was difficult to uncover the fraudulent scheme. So let’s take a look at what it actually means to be an original source.
An “original source” under the False Claims Act means someone who voluntarily disclosed their case to the government before there was a public disclosure, or someone who “who has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and who has voluntarily provided the information to the Government before filing an action under this section.”
It is this second provision that most data miners try to hang their hats on. They argue that their labor and skill in putting together the case qualifies them as an original source.
Usually, this is not an accurate understanding of the public disclosure bar. It certainly can be true. For example, if the fraud is not apparent from the public data, and it takes a specialized expertise to realize that it is a fraud, then you may be an original source. For example, if a brain surgeon notices that a physician has billed a lot of a certain procedure, but never bills the prerequisite procedure, that expertise as a brain surgeon is the kind of “material addition” of knowledge that may satisfy the original source exception.
Or if some of the information is public, but a key piece of the puzzle comes from something that is not “news media” or a government report, then you may be an original source. For example, some courts have held that Secretary of State filings are not public disclosures since they are state, rather than federal, documents. Some courts have held that only certain types of websites are news media, while others have held that all of the internet constitutes news media (and, thus, those same Secretary of State documents are public disclosures because they are available online).
But, generally, just being really good at data mining so that you find obscure cases or lots of supporting evidence does not qualify you as an original source because, at the end of the day, the facts upon which your lawsuit is based are still coming from public sources.
What Does this Mean for Data Miners?
As we note above, you should still file your case, even if you’re not an original source. Particularly if you think you have something novel. For one, it is less likely that you will be barred by the first to file rule. For another, it is less likely that the government is already investigating that case. And lastly, as we note above, the government can decide whether to intervene or veto a public disclosure bar, and you may still be entitled to a reward.
You may still fall under the 0%-10% relator’s share for cases based on publicly disclosed information, as is the case for most PPP data miners, but the government (sometimes) tends to reward data miners who bring cases that are not likely to have otherwise been uncovered. This can depend on the nature of the case, the venue, and the result.
Where we have not filed data mined cases is, for example, when the news has said “such and such company applied for a PPP loan when it was not eligible.” This harkens back to the days of World War II – if you are not actually helping the government, because everyone and their mother already knows about the fraud, then arguably you should not file that case. Some people still might, and they might be rewarded for it, but it comes with some risk.
Evaluating Whether Your Data-Mined Case Is Worth Pursuing
If you believe your data analysis has identified potential fraud involving government programs, it is important to evaluate the strength of your claim before filing. An experienced False Claims Act attorney can assess issues such as the public disclosure bar, original source requirements, first-to-file concerns, and the likelihood of government intervention.
Contact our whistleblower attorneys today for a confidential consultation. We can review your findings, explain your options, and help determine whether your data-mined case may qualify for a False Claims Act reward.