Eighth Circuit Dismisses Whistleblower's Suit Finding Facts Were Already Publicly Disclosed

by Foley & Lardner LLP
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In an August 7, 2014 opinion, the Eighth Circuit upheld the dismissal of a whistleblower’s suit alleging that a number of pain pump device makers had violated the False Claims Act (FCA) by marketing their pain pumps for harmful off-label uses. United States ex rel. Paulos v. Stryker Corp. et al.,8th Cir., No. 13-2509, 8/7/14. The court unanimously found that the relator’s claims were barred under the FCA’s public disclosure bar and that the relator didn’t qualify as an original source under the FCA. In doing so, the Eighth Circuit adopted the majority view on this issue, in conflict with the Fourth Circuit.

The relator was a surgeon with an orthopedic/sports medicine group practice in Florida. The relator initially filed his complaint in 2011, alleging that the device companies marketed their devices for off-label or unapproved uses, specifically for encouraging the placement of pain pumps directly into patients’ joint spaces after orthopedic procedures. Unlike most pain pump litigants who have raised product liability suits, relator here alleged that this marketing led to payment of false claims by government health programs, including Medicare and Medicaid. The federal government declined to intervene in December 2012 and the complaint was unsealed.

The U.S. District Court for the Western District of Missouri dismissed relator’s complaint in June 2013, concluding that his allegations about the use of the pain pumps in the space within joints were widely publicized before he met with the government and that he wasn’t an “original source” of the publicly disclosed information.

On appeal, the Eighth Circuit affirmed the dismissal: “Finding no meaningful distinction between the public disclosures and [relator’s] claims, we conclude the district court did not err in finding a public disclosure sufficient to meet § 3730(e)(4)(A) [the public disclosure bar of the False Claims Act].”

The appeals court also found the district court correctly concluded that relator was not an original source because his “proposed independent knowledge [could not] be said to ‘materially add[] to the publicly disclosed allegations or transactions.’” In reaching this conclusion, the Eighth Circuit adopted the majority rule dictating that a qui tam suit is based upon a public disclosure whenever the allegations in the suit and in the disclosure are the same, regardless of where the relator obtained his information. This test stands in contrast to the recent narrower reading of the public disclosure provision adopted by the Fourth Circuit, (United States ex rel. Ahumada v. NISH, et al., 4th Cir., No. 13-1672, 6/23/14), which asked whether the relator’s allegations were “actually derived from the public disclosure itself.”

In light of this split among the circuit courts, we will continue to monitor for and blog about any new developments.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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