KNOX COUNTY EX REL. ENVIRONMENTAL TERMITE & PEST CONTROL, INC. v. Arrow Exterminators, Inc.
350 S.W.3d 511
Tenn.2011Background
- Environmental filed a qui tam action under Tennessee False Claims Act after identifying overbilling in Knox County termite contracts.
- Environmental obtained and analyzed public records, then reported findings to County officials who had not discovered the fraud.
- County delayed remedial action; Environmental filed a qui tam suit in Knox County Chancery Court, later consolidated with the County's action.
- Parties settled Allied/Arrow overbilling; Environmental sought a share of the settlement proceeds; trial court awarded 28% ($71,546.46).
- Court of Appeals affirmed the 28% award but remanded to redetermine settlement value; Knox County sought discretionary review.
- Tennessee Supreme Court held Environmental is an “original source” under Tenn. Code Ann. § 4-18-104(d)(3)(A)-(B) and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Environmental is an original source under Tenn. Code Ann. § 4-18-104(d)(3)(A)-(B). | Environmental has direct, independent knowledge, voluntarily disclosed before filing, and catalyzed the investigation. | Environmental is not an original source under the statute. | Yes; Environmental is an original source. |
Key Cases Cited
- United States v. Griswold, 24 F. 361 (D. Or. 1885) (early articulation of FCA purpose to deter fraud against the government)
- United States ex rel. Reagan v. E. Tex. Med. Ctr. Reg'l Healthcare Sys., 384 F.3d 168 (5th Cir. 2004) (describes the qui tam private enforcement role)
- United States ex rel. Merena v. Smithkline Beecham Corp., 114 F. Supp. 2d 352 (E.D. Pa. 2000) (discusses public disclosure and original source concepts)
- Vt. Agency of Natural Res. v. United States ex rel. Stevens, 529 U.S. 765 (2000) (explains scope of public disclosure bar and original source)
