Defining “Public Disclosure” Under The False Claims Act: How Loud Must The Whistle Be Blown?

Author: Collin L. Ryan, Associate Member, University of Cincinnati Law Review

The term “whistleblower,” in general, refers to someone who informs on another’s illegal activities. The False Claims Act (FCA), for example, is one of several federal statutes that encourage individuals to disclose to the government their knowledge of another’s illegal activities, i.e., to blow the proverbial whistle.[1] Under the FCA, private individuals can receive large sums of money for blowing the whistle on fraud committed against the government. But once a whistle is blown, the FCA’s “public disclosure bar” prevents subsequent whistleblowers from obtaining rewards for the previously-disclosed fraud.[2] The issue, therefore, is in what manner must the whistle be blown in order for the FCA’s public disclosure bar to go into effect. For a majority of circuit courts that have addressed the issue, the public disclosure bar is not triggered unless the whistle is blown loud enough for the general public to hear it.[3] The Seventh Circuit, however, holds the whistle needs to be blown only loud enough for it to reach the ears of “a competent government official,” regardless of whether the public hears it.[4] Because the Seventh Circuit’s interpretation aligns more with the purpose of the FCA’s whistleblowing provision, it is more persuasive and should be followed by other courts.

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Tax Characterization of FCA Settlements: First Circuit Says, “No Agreement? No Problem.”

Author: Matt Huffman, Associate Member, University of Cincinnati Law Review

On August 13, 2014, the First Circuit addressed an issue of first impression in Fresinius Medical Care Holdings, Inc. v. United States,[1] holding that a court may consider factors beyond a tax characterization agreement when determining the deductibility[2] of a settlement payment under the False Claims Act (FCA).[3] In so holding, the court rejected the government’s argument that the Ninth Circuit had appropriately adjudicated this issue in Talley Industries, Inc. v. Commissioner[4] and that the only pertinent inquiry in determining the deductibility of an FCA settlement payment is whether a tax characterization agreement exists between the government and the settling parties. The court explained its disagreement with the Ninth Circuit: “[i]f Talley stands for the proposition asserted by the government, then Talley is incorrectly decided and does not deserve our allegiance.”[5] In its decision, the First Circuit correctly parted from Talley and determined that the economic realities of a settlement agreement should be considered in the absence of a tax characterization agreement. Nonetheless, in adopting this test, the First Circuit should have gone further to hold that economic realities should not be ignored even in the presence of such an agreement. Considering that FCA settlements often involve hundreds of millions of dollars, the First Circuit’s decision will have significant tax consequences for companies settling FCA suits in the future.

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Why Not Protect Our Elderly, Our Pensioners, and Our State Treasury? The Case for an Ohio False Claims Act

Author: Erin M. Campbell, Esq.

Nursing home residents left to wallow in urine- and fecessoaked beds; a resident suffering from an open bedsore the size of a cantaloupe when persistent and purposeful under staffing leaves residents unturned and in unchanged diapers; residents suffering from repeat scabies infections; residents suffering very high rates of falls and perhaps even left lying overnight on the floor; residents whose diabetes is intentionally mismanaged so that the nursing home can seek higher reimbursements; residents whose untreated wounds result in amputation and death, and facilities falsifying records to hide inadequate staffing levels.

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150th Anniversary of the False Claims Act

Author: B. Nathaniel Garrett, Editor-in-Chief, University of Cincinnati Law Review

President Abraham Lincoln signed the False Claims Act (FCA) into law 150 years ago on March 2, 1863, giving the United States a tool to combat fraud committed against the government.  At the time, it was mostly Civil War defense contractors perpetrating fraud against the government.  As initially enacted, the statute included double damages and a $2,000 per false claim penalty.

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