Under the False Claims Act (“FCA”), a plaintiff or “relator” can sue on behalf of the United States against persons or entities who defraud the government. These types of suits are often referred to as qui tam actions. The FCA has a long history dating back to the Civil War. Since its inception, the Act has undergone multiple amendments, the most recent being in 2010 as part of the Patient Protection and Affordable Care Act (“PPACA”).
Earlier this year, the Third Circuit Court of Appeals applied the amended version of the FCA to a qui tam action brought by a law firm. See Moore & Co. v. Majestic Blue Fisheries, LLC, 812 F.3d 294 (3rd Cir. 2016). The law firm Moore & Co., P.A. (“Moore”), alleged in its qui tam action that two Korean nationals and their related LLCs acquired licenses to operate fishing vessels by fraudulently certifying to the U.S. government that the vessels were controlled by U.S. citizens and commanded by U.S. captains. Moore learned of the fraudulent scheme through discovery in a wrongful death action brought by the law firm against the Korean defendants.
The FCA contains a public disclosure bar which prevents a relator from pursuing a claim when the alleged fraud has been publicly disclosed in at least one of the sources identified within the statute. There is an exception to the public disclosure bar, however, if the relator is an original source of certain information underlying the qui tam action. Moore, 812 F.3d at 296. This was the issue in Moore – whether the lower court, in dismissing the qui tam action brought by Moore correctly interpreted the FCA’s public disclosure bar and the “original source” exception as provided for in the 2010 amendments.
Under Moore, the Third Circuit applied the FCA’s 2010 amendments broadening the definition of original source. The amended FCA now includes in the definition of original source those relators “who ha[ve] knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and who has voluntarily provided that information to the government before filing an action under the statute.” The Third Circuit, in explaining how the 2010 amendments broadened the definition of an original source, noted that the amended FCA “has radically changed the ‘hurdle’ for relators.” Id. at 298.
The 2010 amendments did not just change the hurdle for relators – the amendments lowered the hurdle, making it easier for relators to satisfy the FCA’s original source requirements. The court in Moore recognized that Congress expanded the definition of original source so that “a relator no longer must possess ‘direct knowledge’ of the fraud.” Id. at 299. The Moore court points out that the 2010 amendments reflect “Congress’ intent to lower the bar for relators.” Id.
Applying the amended FCA, the Third Circuit in Moore easily found that the Moore law firm alleged information that is independent of, and materially adds to, the publicly disclosed information. Accordingly, the court found Moore an original source under the amended version of the False Claims Act.
Jason Cornell is an attorney who represents whistleblowers with the law firm Clark Fountain LaVista Prather Keen & Littky-Rubin. Clark Fountain represents plaintiffs in various matters throughout the United States. If you have questions regarding the issues addressed in this or other posts, you can reach Jason at firstname.lastname@example.org.