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Freedom of Information Act Request Does Not Bar False Claims Act Suit, 9th Circuit Holds
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December 4, 2006
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Thelen LLP
Dr. Patricia Haight and the organization In Defense of Animals, as relators, brought a qui tam lawsuit under the False Claims Act (31 USC §§3729 et seq.) against Dr. Michael Berens and Catholic Healthcare West alleging that Dr. Berens submitted a fraudulent grant application to the National Institutes of Health. Dr. Berens was a research scientist at Barrow Neurological Institute, a division of Catholic Healthcare West. The relators alleged that NIH awarded Dr. Berens grants of more than $700,000 on the basis of the allegedly fraudulent application.
Dr. Berens was the primary researcher on a project that used beagle dogs to research glioma, a form of malignant brain tumor. Dr. Berens attempted to develop a model from which to extrapolate knowledge to treat glioma in humans. He injected glioma tumor cells into the flanks of gestating beagle puppies before their immune systems had developed and then attempted to transplant the tumors to their brains after birth.
Dr. Haight, a regional director for In Defense of Animals, performed extensive research on Dr. Berens' study, which was conducted at Barrow and Arizona State University. She determined the source of funding for the study was an institute within the NIH and requested documents relating to Dr. Berens' study through a Freedom of Information Act request. She was informed that she could obtain the documents directly from Barrow, and she personally went to Barrow to obtain the documents. The documents she obtained included the 1997 grant application to NIH.
Dr. Haight also obtained documents from ASU and arranged to tour the ASU facility where the dogs had been housed and a Veterans Administration hospital to which the project had been moved. She interviewed numerous people who provided information about Dr. Berens' research.
As a result of Dr. Haight's research, the relators contended that Dr. Berens' grant application contained a number of fraudulent or misleading statements, including false or exaggerated claims of success.
Before relators sued, several news articles were published regarding Dr. Berens' animal experiments.
The relators filed suit in the U.S. District Court for the Northern District of California. The United States did not intervene in the action. Defendants moved to transfer the case, and the District Court granted the motion, transferring the case to the District of Arizona. The relators filed an amended complaint, and the defendants moved to dismiss for failure to state a claim. After denial of the motion to dismiss, defendants filed an answer, and the parties began discovery.
The defendants later filed another motion to dismiss claiming that suit was barred because the alleged fraud had been publicly disclosed and thus had run afoul of the enumerated source bar in the False Claims Act.
The False Claims Act provides that if the allegations underlying a fraud claim have been publicly disclosed through: (1) a criminal, civil or administrative hearing; (2) a congressional, administrative or General Accounting Office report, hearing, audit or investigation; or (3) the news media and the disclosure consists of the allegations or transactions giving rise to the relator's claim, the lawsuit is barred.
The District Court held that the FOIA response was a public disclosure via an enumerated source and granted the defendants' motion to dismiss for lack of subject matter jurisdiction.
The relators appealed, and the U.S. Circuit Court of Appeal for the 9th Circuit reversed. United States v. Catholic Healthcare West, 445 F.3d 1147 (9th Cir. 2006), cert. denied 127 S. Ct. 725 (2007). The court determined that the enumerated source bar did not apply.
The court reviewed the False Claims Act and found that it encourages private persons to bring qui tam actions on behalf of the federal government. The court also recognized that the act discourages opportunistic relators by depriving courts of jurisdiction when the fraudulent allegations were publicly disclosed by a source listed in the act unless the relator was the original source of the allegations.
The court found that a two-step analysis is needed to bar a false claim complaint. First, the court must determine whether the allegations were disclosed via a source enumerated in the statute and, second, the court must determine whether the relator was the original source of the allegations.
The court concluded that to bar a lawsuit, it essential elements - both the alleged truth and the allegedly fraudulent statements - must be publicly disclosed via a source enumerated in the statute.
Defendants contended that all documents obtained through an FOIA request should be considered public disclosures because an FOIA response is a publicly disclosed "administrative report" or "administrative investigation," thereby coming within the statutory bar.
The court disagreed, concluding that the FOIA response in the case before it was not a "report" or an "investigation." Responding to an FOIA request requires little more than search for and duplication of records. In contrast, reports and investigations require leg work and result in independent work product, the court wrote.
The court supported its conclusion by examining the legislative history of the False Claims Act and noted that the current Act balances twin goals of discouraging opportunistic suits while encouraging whistle blowing by those with valuable information. Barring qui tam suits based on otherwise private information obtained by FOIA requests would be out of step with Congress' intentions, the court concluded. Rather, it would discourage private parties from using government documents to investigate potential fraud. While the government can be expected to be aware of pertinent information in its reports and investigations, it may not become aware of such information merely by responding to an FOIA request.
In this case, the court noted, the FOIA response merely identified the location of responsive documents. The government did not even duplicate the documents, and no governmental work product was provided. In contrast, Dr. Haight made an extensive independent investigation and analysis - exactly the activity encouraged by the False Claims Act. The court concluded that the relators were not opportunistic.
The court further held that if the document itself does not qualify as an enumerated source under the False Claims Act, its disclosure in response to a FOIA request does not make it an enumerated source.
Because the court concluded that the alleged fraud was not disclosed via a source enumerated in the statute, it did not have to determine whether the relators were the original source of the alleged truth and whether the true state of facts was disclosed in an enumerated source.
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©2006 Thelen LLP
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