Judge Vance’s decision consistent with ABA analysis of Supreme Court’s Rockwell decision – a Branch qui tam update

A post on Insurance Law Hawaii (h/t CLS) sent me racing to the Branch qui tam docket thinking I’d missed an Order more recent than those I linked in taproot – digging out the fact on Branch qui tam.

As it turned out, I had not.  Sop posted Judge Vance’s 69-page Order of October 19 in Judge Sarah Vance Educates Insurers about Federal Court Jurisdiction in False Claims Act Cases that I linked in taproot.

However, while SLABBED focused on the big picture of Judge Vance’s ruling; i.e., Branch was moving forward,  Tred Eyerly, the attorney who writes Insurance Law Hawaii, pointed to the ruling of Branch Consultants qualified as an “original source” – a ruling the Defendant are challenging in their Motion for Certification of an Interlocutory Appeal.

State Farm tried to run the “original source” rabbit in the Rigsby qui tam; but, the dog didn’t hunt.  Let’s take a look at why and see if we pick up the scent of the “good neighbor”.

Wednesday the Defendants filed a Reply in Further Support…for Interlocutory Appeal and now collectively claim:

Whether a “sleuth” like Branch, without first-hand involvement in an alleged fraud, can qualify as an “original source” by providing “additional” or “specific” examples of a publicly-disclosed, alleged fraudulent scheme is a controlling question of law that involves a substantial ground for difference of opinion, and if answered “no” would terminate the action. It is, therefore, an appropriate question for certification under 28 U.S.C. § 1292(b). Branch’s attempt to reduce the issue to a mere disagreement with the Court’s application of “well-settled law to the particular facts of this case,” Opp. Br. at 1, is disingenuous and plain wrong.

In 2007, the Supreme Court overturned long-standing Fifth Circuit precedent on the original source standard and questioned the type of opinions or information that can qualify a relator as an original source.

The referenced 2007 Supreme Court decision was Rockwell v USA:

Branch’s criticism of Defendants’ distinction between pre- and post-Rockwell decisions is misplaced. Rockwell not only overruled existing precedent addressing the test for an original source, but also called into question the type of opinions or information that can qualify a relator as an original source.  (finding that relator’s opinion that certain machinery would prove defective did not qualify relator as original source). Branch’s suggestion that Rockwell—the most recent and most relevant Supreme Court decision on the subject matter at issue—has no potential bearing on whether there is substantial ground for difference of opinion here, is misguided.

Misguided, not. Branch simply knows the relevance of Rockwell to their qui tam litigation is not the relevance the Defendants claim. An analysis of Rockwell appearing in  The Procurement Lawyer, a publication of the American Bar Association, explains:

The statute defines “original source” as “an individual who 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.”  The twists and turns of the language in the public disclosure bar and its accompanying exception for original sources have led to multiple, inconsistent interpretations by the circuit courts and district courts.

…the [Supreme] Court addressed whether the term “allegations” in the FCA’s definition of “original source”—requiring that the relator “has direct and independent knowledge of the  information on which the allegations are based”—relate to allegations in the qui tam complaint or to allegations in the public disclosure. Despite the split in circuit court authority, the parties all agreed that a relator must have knowledge of information on which his or her complaint is based.  The Court reasoned first that the context in which the term “allegations” is used in section 3730(e)(4)(B)25 indicates that it means allegations in the complaint because “[s]urely the information one would expect a relator” to provide to the government would be information underlying the claims in the relator’s complaint.

The opinion also found that Congress’s use of different terms in section 3730(e)(4)(A)’s public disclosure bar provision, which refers to “allegations or transactions,” and section 3730(e)(4)(B)’s original source definition provision, which refers only to “allegations,” further indicates that the latter refers to something different than the former. Finally, the Court reasoned that, as a matter of common sense, “[i]t is difficult to understand why Congress would care whether a relator knows about the information underlying a publicly disclosed allegation . . . when the relator has direct and independent knowledge of different information supporting the same allegation. . . .”

The Defendants reference to a “sleuth” like Branch strikes a familiar cord – and is as prejudicial as State Farm’s reference to “stolen documents” [sic] in the Rigsby qui tam. Coincidence? Likely not. Like a good neighbor, State Farm is there. If not for the Rigsby qui tam, the Company would be a Branch defendant.

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