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"SurgeonI am a whistleblower False Claims Act attorney, and I write a blog that
discussed developments in the whistleblower law related to the False Claims
Act and how it protects whistleblowers who know about fraud against the
Government.

In May, the Seventh Circuit issued a ruling that addressed two important
concepts under the False Claims Act: “public disclosure” and
“original source.” Congress enacted the False Claims Act back
in the Civil War era, to encourage people who knew about fraud against
the Government to come forward. Recognizing that whistleblowers often
lose their jobs and face retaliation, Congress decided that they needed
incentive to come forward, and so it offered them a percentage of whatever
the Government recovered as a result of what the whistleblower did.

In 31 U.S.C. § 3729, the Congress provided that a whistleblower cannot
recover if the Government already knows about the fraud the whistleblower
is reporting under the False Claims Act:

“The risk that unnecessary ‘me too” private litigation
would divert funds from the Treasury led to a proviso in §3730(e)(4)(A):
suits cannot be “based upon the public disclosure of allegations
or transactions” in public agencies’ official reports unless
the relator is an “original source of the information.”

U.S., ex rel. Goldberg v. Rush University Medical Center, No. 10-3785 (7th Cir. 5/21/12).

The Goldberg court assumed that the relator (the legal term for a “whistleblower”)

“tracks the 1998 GAO report and is blocked by §3730(e)(4)(A).”
The Court then turned to the question of whether the Relator was still
eligible to be a whistleblower because he was an “original source”
of information about the fraud. In other words, the whistleblower still
might have a case if the Government knew about the fraud in general, but
did not know about the fraud the whistleblower was telling them about.

As relators see things, the 1998 GAO report, and the PATH audits more generally,
dealt with bills submitted for services that residents had performed all
by their lonesome. This suit, according to relators, arises from resident’s
services that were supervised, but inadequately – and, perhaps more
importantly, that the hospital certified had been certified.

U.S., ex rel. Goldberg v. Rush University Medical Center, No. 10-3785 (7th
Cir. 5/21/12).

In the Goldberg case, the whistleblowers were alleging
Rush University Hospital Medicare fraud. The relators claimed that Rush University, an Illinois hospital, was
permitting “teaching physicians to supervise multiple operations
simultaneously.” Under Medicare’s rules, “the teaching
physician must be present during all critical portions of the procedure
and immediately available to furnish services during the entire service
or procedure.”
42 C.F.R.§415.172(a)(1). Given that surgeons were supposedly supervising several operations at
once, then even if they were available during the “critical portions”
of the surgery, they clearly were not “immediately available to
furnish services during the entire service or procedures.”

The 7th Circuit Federal Court of Appeals noted that the district court
had interpreted “public disclosure” with a very “high
level of generality.” The trial court’s interpretation was
“inappropriate”, because “then disclosure of some frauds
could end up blocking private challenges to many different kinds of fraud.”
In order to get its money back, the Government has to prove that a particular
entity defrauded it. The Government cannot use a general report about
an entire industry to claim reimbursement from any one entity. A public
report that disclosed that many entities in a private sector were defrauding
the Government “did not disclose a particular fraud by a particular”
person in that entity. The question, then, is whether the relator can
add “anything of value” (id.) to the case about “a particular
fraud by a particular” entity.

Because federal courts often look at cases in other circuits, this case
is not just important to lawyers who represent people who blow the whistle
on Illinois Medicare fraud, but also to lawyers representing whistleblowers
all over the country.