The US Court of Appeals for the Ninth Circuit has opened the door significantly wider for those who wish to pursue qui tam False Claims Act suits by reversing a dismissal of two such matters. Ruling en banc in United States ex rel. Hartpence v. Kinetic Concepts, Inc., the Ninth Circuit has removed a prior restriction that any prior public disclosure must have originated from the whistleblower as well.
The Ninth Circuit in this matter held that there are “two, and only two” requirements for a whistleblower to qualify as an “original source” based on the language of the statutory text:
“(1) Before filing the action, the whistleblower must voluntarily inform the government of the facts which underlie the allegations of the complaint; and
(2) the whistleblower must have direct and independent knowledge of the allegations underlying the complaint.”
By asserting only these two requirements, the Ninth Circuit abrogated its earlier precedent maintained over 23 years that there is a third requirement to qualify as an original source: that the whistleblower must have played a role in the public disclosure of the allegations that are part of his suit. This change brings the Ninth Circuit in line with many of its sister circuits and underscores that the rewards are available to those who “assume responsibility for prosecuting, on the government’s behalf, fraud claims about which they have direct and independent knowledge”. It will no doubt encourage even more qui tam suits and therefore companies would be wise to make every effort to support and encourage internal reporting mechanisms for whistleblowers. This related article provides information on whistleblower best practices.