Information on the Internet is not Necessarily a Public Disclosure

August 8th, 2019 by Erik Giannitrapani

On July 16, 2019, a district court in California found that not all information that is posted on the internet is considered a public disclosure by the “news media.” United States ex rel. Integra Med Analytics Llc v. Providence Health & Servs., No. CV 17-1694 PSG (SSx), 2019 U.S. Dist. LEXIS 125352 (C.D. Cal. July 16, 2019). Judge Phillip S. Gutierrez analyzed the text of news media public disclosure bar and declined to follow the trend of cases applying the news media public disclosure bar to all documents posted on the internet.

The Relator, Integra Med Analytics LLC, filed a qui tam lawsuit against Defendants Providence Health and Services, seven of its affiliated hospitals (collectively the “hospital defendants”) and Defendant J.A. Thomas and Associates, Inc. (JATA) alleging that the hospital defendants and JATA worked together to train doctors to describe medical conditions so that the hospital defendants could increase the acuity level and receive higher reimbursements from Medicare in violation of the False Claims Act (“FCA”). [1] The Relator was not an insider and had no “first-hand knowledge” of its allegations. Instead the Relator based the claims on CMS claims data and “information it gathered about JATA’s business practices.” Id. at *4-5.

The Defendants moved to dismiss the case based primarily on the public disclosure bar, as well as failure to adequately allege all elements of an FCA claim, failure to adequately plead a reverse FCA claim, failure to adequately plead FCA conspiracy, and failure to adequately plead an FCA violation based on the Anti-Kickback Statute (“AKS”).  Judge Gutierrez granted the Defendants motion to dismiss the claims that were based on the public disclosure of CMS Claims Data and denied the remaining Defendants’ motions.

Defendants Position

The Defendants asked to court to adopt the position that “information publicly available on the Internet generally qualifies as news media.” Id. at *31 (quoting United States ex rel. Hong v. Newport Sensors, Inc., No. SACV13-1164 JLS (JPRx), 2016 WL 8928246, at *5 (C.D. Cal. May 19, 2016) (Hong I). For this position the defendants stated since ninety-three percent of Americans get their news online, according to a poll by VOX, all information on the internet must qualify as news media. The defendants argue that Congress implicitly ratified previous holdings that all information on the internet was news media because Congress did not change the language of news media section while they amended the public disclosure bar in 2010. Judge Gutierrez did not find these arguments persuasive and noted that the Ninth Circuit had explicitly not adopted the “broad holding that most public webpages … generally fall within the category of news media.” United States ex rel. Hong v. Newport Sensors, Inc., 728 F’App’x 660, 662-663 (9th Cir. 2018) (Hong II).

Courts Position

In denying the defendants motion for claims based on JATA’s business practice information, Judge Gutierrez reviewed the plain text of the FCA statute as well the Supreme Court Case Schindler Elevator Corp. v. United States ex rel. Kirk, 563 U.S. 401 (2011). A claim is barred if “substantially the same allegations or transactions, as alleged in the action or claim were publicly disclosed… from the news media.” 31 U.S.C. § 3730(e)(4)(A)(iii). The bar does not capture all information that is public but applies to “some methods of public disclosure and not others.” Schindler Elevator, 563 U.S. at 414. 

In deciding that everything posted on the internet is not subject to the public disclosure, Judge Gutierrez defined news media as methods of communication used to transmit information. Judge Gutierrez then used common sense to contrast a restaurant’s menu or a doctor’s website posting next available appointment, with intent to transmit information.

Having found that not everything on the internet is news media for the purpose of the public disclosure bar, Judge Gutierrez did not specifically address whether “proprietary and confidential” information posted only on “internal staff homepages” or internal newsletters, were news media. However, he did state that those facts “could be relevant to whether the sources at issue were ‘news media’ sources within the meaning of the FCA.”  

Conclusion

A Relator’s personal information is always the most important thing that they bring to the case. It is often the difference between a successful and an unsuccessful qui tam action. This holding potentially broadens the categories of information upon which a successful qui tam action can be based.


[1] Of note, The Relator recently had similar claims based on CMS Data dismissed with prejudice for failure to state a claim in the Western District of Texas. U.S. ex rel. Integra Med Analytics, LLC v. Baylor Scott & White Health et al., No. 5:17-cv-00886-DAE (W.D. Tex. August 5, 2019).

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