A wife and former coworker of an original relator were unable to “pick up the baton” and bring whistleblower claims over the same allegedly false marketing practices the original relator raised in an earlier lawsuit, because the suit triggered the False Claims Act’s (FCA) (31 U.S.C. §3729 et seq.) public disclosure bar. The U.S. Court of Appeals for the Fourth Circuit affirmed the lower court’s dismissal, finding that the bar divested the district court of subject matter jurisdiction over a case against Purdue Pharma L.P. (Purdue) regarding marketing tactics for a pain medication (U.S. ex rel May v. Purdue Pharma L.P., January 29, 2016, Diaz, A.).
Case history. A similar case was originally filed by a former district sales manager for Purdue, who alleged that the company overstated the potency of its pain medication OxyContin. The relator claimed that the company deceived the federal government into paying for OxyContin instead of a less costly option. The court of appeals dismissed the original case due to terms found in his severance package (see Oxycontin whistleblower case will proceed, December 13, 2013). His wife later filed this qui tam action, joined by another former employee who worked under the original relator. One of the attorneys in the current case was also counsel in the original action.
Public disclosure bar. The FCA contains a public disclosure bar, which was amended in 2010. However, this case involved allegations stemming from conduct that occurred between 1996 and 2005, so the appeals court decided that the pre-2010 version of the bar governed in this case. The bar provides that a court does not have jurisdiction over an FCA action based on the public disclosure of allegations, which includes filings in other lawsuits. Two exceptions exist: if the action is brought by the government or the person bringing the action is considered an “original source” of the facts giving rise to the allegations.
The relators in the present case argued that because they did not personally review the filings in the prior lawsuit, their allegations are not derived from a public disclosure. They also argued that although the attorney’s knowledge from the prior case is imputed, the attorney had already learned of the allegations in the prior case from nonpublic sources. The appeals court noted that that the bar is only triggered when a relator has actually derived the allegations from a public disclosure, and that it is possible to learn of fraud independently of the filings in a different lawsuit.
However, in the present case, the court found that it is clear that the relators’ knowledge stemmed from the attorney’s involvement in the previous action and the public disclosure bar is triggered. The court noted that this holding is consistent with the purpose of the bar. The FCA’s financial rewards are intended to encourage whistleblowing when fraud is discovered, but the bar was created to prevent “parasitic” qui tam actions in which relators “feed off previous disclosures of government fraud.”
The case is No. 14-2299.
Attorneys: Mark Tucker Hurt (Mark T. Hurt, Attorney at Law) for the United States of America. Christopher E. Babbitt (WilmerHale LLP) for Purdue Pharma LP and Purdue Pharma, Inc.
Companies: Purdue Pharma LP; Purdue Pharma, Inc.
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