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DID THE 2010 AMENDMENTS TO THE FALSE CLAIMS ACT ELIMINATE THE JURISDICTIONAL ASPECT OF THE PUBLIC DISCLOSURE BAR?

On the surface, the changes to the False Claims Act's public disclosure bar that were enacted through the Patient Protection and Affordable Care Act of 2010 (PPACA), P.L. 111-148, title X, §10104(j)(2), 124 Stat. 119 (2010), 31 U.S.C. § 3730(e)(4), clearly took the jurisdictional component of the public disclosure bar out of the statute.  Simply stated, the provision changed from reading "No court shall have jurisdiction over an action" to "A court shall dismiss an action, unless opposed by the government …."  Cf. 31 U.S.C. § 3730(e)(4)(A) (2009) with 31 U.S.C. § 3730(e)(4)(A) (2013).  Despite this seemingly clear difference in the language, however, courts have been less than clear in their interpretations of the significance of the change.  As discussed below, there are important consequences that flow from a determination that the public disclosure bar either is or is not jurisdictional in nature.

Patient Protection and Affordable Care Act Amendments to the False Claims Act

Most recently, the court in Prather v. AT&T Inc., 2013 U.S. Dist. LEXIS 158483 (N.D. Cal. Nov. 5, 2013) squarely held that the PPACA amendments to the False Claims Act "amended the public disclosure bar of the FCA by modifying the definitions of "public disclosure" and "original source" and by making the public disclosure an affirmative defense rather than a jurisdictional bar."  Id. at *10 (emphasis added).  See also United States ex rel. Kraxberger v. Kan. City Power & Light Co., 2013 U.S. Dist. LEXIS 101013 (W.D. Mo. July 19, 2013) ("Patient Protection and Affordable Care Act ("PPACA") of 2010, amended the Public Disclosure Provision to make it an affirmative defense").  The impact of that holding in that case is discussed below, but it is one of the more straightforward recognitions that the public disclosure bar is no longer an element of subject matter jurisdiction. Read here about The False Claims Act Public Disclosure Bar and the Meaning of News Media.

Several other courts, however, have reached different conclusions, holding that the Congressional dictate for courts to dismiss an action was substantially equivalent to a lack of jurisdiction or remained a jurisdictional element.  See, e.g., United States ex rel. Beauchamp v. Academi Training Ctr., Inc., 933 F. Supp. 2d 825, 838-839 (E.D. Va. 2013) ("clear that the public disclosure bar remains jurisdictional because it commands district courts to dismiss actions subject to the public disclosure bar, unless the Government specifically opposes the application of the bar" and "context makes clear that the public disclosure bar remains jurisdictional, as the public disclosure bar has long been interpreted as jurisdictional and is contained in a subsection entitled "certain actions barred."); United States ex rel. Osheroff v. Humana, Inc., 2013 U.S. Dist. LEXIS 13259, 11-12 (S.D. Fla. Jan. 31, 2013) (denying a motion for reconsideration and holding that "[t]he history of the FCA and Cooper establish that district courts do not have jurisdiction to entertain qui tam suits where the relator's complaint is based upon or substantially similar to information that, because of the manner in which it was disseminated, could have brought the defendant's alleged wrongdoing to the Government's attention.") (emphasis added); United States ex rel. Sanchez v. Abuabara, 2012 U.S. Dist. LEXIS 76969 (S.D. Fla. June 4, 2012) (Congress's recent amendments to the Public Disclosure Bar under PPACA "eliminated an absolute jurisdictional bar in favor of a jurisdictional bar that can be lifted by government discretion").

The notion that a true subject matter jurisdiction defect can be waived by the government is, to this writer's knowledge, an unprecedented conclusion.  Additionally, giving unfettered discretion to the executive branch (which is "the Government" with the option to waive the public disclosure bar) has potential Constitutional implications under a separation of powers analysis since federal court jurisdiction is generally governed by the Constitution or Congress.  On a more practical scale, it is incongruous, to say the least, that the government - by definition a party in every FCA case - has the power to impose jurisdiction on the federal courts.

The implications of the bar being jurisdictional or not are extremely significant.  First, there are statute of limitations and retroactivity issues that are impacted.  This was the upshot of the ruling in Beauchamp, supra.  Second, the timing of when an issue must be raised is impacted, since subject matter jurisdiction can be raised at any point in a proceeding, and cannot be waived.  Little v. Shell Exploration & Prod. Co., 690 F.3d 282, 285 (5th Cir. 2012)(" a legitimate question about jurisdiction must be answered no matter when it is first asked").  Indeed, a court is required to consider its subject matter jurisdiction sua sponte. E.g., Rockwell Int'l Corp. v. United States, 549 U.S. 457, 470 (2007) (Court must decide whether jurisdictional requirement is met); Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 571 (2004) ("If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action."); Fed. R. Civ. P. 12(h)(3).

Who has the burden of establishing the applicability of the public disclosure bar?

Additionally, the question of who has the burden of establishing the applicability of the public disclosure bar varies depending on whether it is a matter of subject matter jurisdiction (burden on plaintiff to establish jurisdiction) or an affirmative defense (defendant's burden), and there is a different standard at play in terms of presuming plaintiff's allegations to be true on a motion to dismiss.  E.g., United States ex rel. Zizic v. Q2Administrators, LLC, 728 F.3d 228, 234 (3d Cir. 2013) (plaintiff bears burden of persuasion of establishing jurisdiction and his jurisdictional allegations are not entitled to a presumption of truthfulness); United States ex rel. Newell v. City of St. Paul, 728 F.3d 791, 795 (8th Cir.  2013)(party invoking federal jurisdiction has burden of establishing court's FCA jurisdiction).

It is this writer's opinion that Congress would not have lightly eliminated the term jurisdiction unless it intended to remove the jurisdictional element attached to the bar, and that the government would not have been given the prerogative to waive the issue if Congress intended it to remain as an element of subject matter jurisdiction.  Hopefully courts will follow the lead of the court in Prather and squarely reject the notion that the public disclosure bar continues to have jurisdictional significance.

Read here about How Should False Claims Act Damages be Calculated

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