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In U.S. ex rel. Repko v. Guthrie Clinic et
al., the Third Circuit recently ended an attempt by Rodney
Repko, former general counsel and executive vice president for
Guthrie Healthcare System and its related entities, to bring a qui
tam case against his former employer. After he left his job
at Guthrie, Repko allegedly attempted to steal two million dollars
by forging the name of Guthrie officials on loan documents.
As part of a plea agreement to bank fraud charges, prosecutors
required Repko to cooperate by "providing information
concerning the unlawful activities of others."
Within months of purportedly informing the government about
questionable Guthrie arrangements, Repko filed a qui tam
action under the federal False Claims Act (FCA), alleging those
same Guthrie arrangements violated the Stark and Anti-Kickback
statutes, resulting in the filing of false Medicaid and Medicare
claims. A District Court Judge dismissed the matter, finding
the court lacked subject matter jurisdiction to hear the FCA case
because Repko did not qualify as the original source of the
information about the alleged FCA violations. Repko
appealed.
In affirming the lower court's dismissal, the Third Circuit
agreed that much of the information on which the alleged FCA case
was based had been publicly disclosed before Repko's qui
tam case was filed, through postings on websites and filings
in prior litigation. Under the FCA, prior public disclosure
is a jurisdictional bar to pursuing a FCA case unless the qui
tam relator can show he is the original source of that
disclosed information. The FCA defines an original source to
include one who, prior to a public disclosure, "has voluntarily disclosed to the Government the
information on which the allegations or transactions in a claim are
based," The appellate court was persuaded by the
fact Repko had initially disclosed the challenged arrangements to
the government under his plea agreement; the disclosure was
bargained-for consideration which enabled Repko to obtain a lower
sentence on his bank fraud charges. While never mentioning
the word "voluntarily," the court found that since the
plea agreement compelled his disclosures to the government, Repko
was essentially estopped from invoking the original source
exception. Without the exception, the public disclosure bar
remained applicable and the lower court correctly ruled that it had
no subject matter jurisdiction over the FCA action.
The import of the Third Circuit's opinion may be limited;
indeed, the Third Circuit decision is stamped as "not
precedential." And while many individual plea agreements
do not require disclosure of other unlawful activities, diversion
agreements or conditions of probation may contain provisions
requiring an individual report suspected illegality. So if
you face a qui tam suit brought by an ex-employee who at
one time faced criminal charges, and there is a public disclosure
issue, some targeted discovery related to the terms of any
agreements with government attorneys, and/or conditions of
probation, may be warranted.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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