www.velaw.com/resources/resource_detail.asp?rid=3231951 -
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Published on: 12/11/2006
Last Visited: 3/8/2007
Reporter, Adam Robison, Houston, 713.758.3475 or arobison@velaw.com.
2. SUPREME COURT HEARS ORAL ARGUMENTS ON FALSE CLAIMS ACT CASE INVOLVING ORIGINAL SOURCE EXCEPTION TO PUBLIC DISCLOSURE BAR -On December 5, 2006, the United States Supreme Court heard oral arguments on a False Claims Act case (Rockwell Intern'l Corp. v. U.S., U.S., No. 05-1272) regarding the "original source" exception to the public disclosure jurisdictional bar.The FCA bars a cause of action brought by a relator, when the allegations or transactions upon which the action is based, has been publicly disclosed unless the relator is an original source.A relator is an original source if he or she has "direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing an action under this section which is based on the information."At issue before the court is, among other things, how extensive the information provided by the relator must be and whether the information provided by the relator must be the eventual basis of the government's intervening complaint.Petitioners Rockwell International Corp., et al. (Rockwell) argued that the Relator did not meet the requisite standard of an original source, because he did not have direct and independent knowledge of the specific fraud-the knowing storage of pondcrete on outdoor pads in violation of the RCRA-of which Rockwell was ultimately found liable.Petitioners pointed out that the Relator was not working for Rockwell at the time the fraudulent act occurred.The Relator's counsel countered that the Relator is "the paradigm, not a parasitic relator," because he had "knowledge firsthand from his six years at Rockwell of a pattern of criminal conduct and a pattern of Rockwell concealing that information."The Relator's counsel also argued that the Relator did have evidence of the fraudulent act, but conceded that the evidence had not been used at trial.Justice Antonin Scalia also questioned whether the Relator had met the voluntary disclosure prong, as he did not provide the evidence to the government.The government, agreeing that the Relator was an ideal relator, recommended that the Court adopt a broad policy to avoid construing the statute in a manner that would create a disincentive to cooperation between plaintiffs.To this end, the government contended that the term "allegations," as used by the statute, refers to a relator's allegations in his or her complaint, and that the statute only requires the relator to have direct and independent knowledge of such allegations.The outcome of the case will likely have substantial effects on the healthcare industry, as health-care related cases constituted more than 70 percent of federal government False Claims Act recoveries in 2006, according to the U.S. Department of Justice.A transcript of the oral arguments for Rockwell International Corp. v. United States, is available at http://www.supremecourtus.gov/oral arguments/argument transcripts/05-1272.pdf.Reporter, Adam Robison, Houston, 713.758.3475 or arobison@velaw.com.
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Adam Robison
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