United States v. Chattanooga-Hamilton County Hospital Authority
782 F.3d 260
6th Cir.2015Background
- Relator Robert Whipple, a former revenue-cycle consultant and interim director at Erlanger, alleged Erlanger submitted false claims to federally funded healthcare programs for short inpatient stays, same-day surgery observation charges, renal-dialysis inpatient billing, and unauthorized carotid stenting.
- Whipple discovered the alleged practices while working at Erlanger in early 2006 and filed a qui tam complaint under the False Claims Act in 2011 after disclosing his claims to the government in 2010; the government declined to intervene in 2012.
- Before Whipple’s disclosure, an anonymous tip to HHS–OIG prompted AdvanceMed (a Medicare contractor) to audit Erlanger records (identifying many one- or two-day inpatient claims and a high error rate), and OIG opened an administrative investigation; Erlanger later hired Deloitte and voluntarily refunded $477,140.42, closing the matter administratively in 2009.
- Erlanger moved to dismiss Whipple’s FCA claims as jurisdictionally barred by the FCA’s public-disclosure bar, § 3730(e)(4); the district court granted dismissal of the short-stay, same-day-surgery, and renal-dialysis claims as barred.
- The Sixth Circuit considered whether the prior administrative audit/investigation constituted a “public disclosure” under the 1986 version of § 3730(e)(4) and whether Whipple’s claims were therefore jurisdictionally barred.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the prior administrative audit/investigation constituted a "public disclosure" under § 3730(e)(4) | Whipple: disclosures were internal/confidential and not released to the public; thus no public disclosure occurred | Erlanger: disclosures to government, contractors, auditors and consultants during the audit/investigation put the information into the public domain and trigger the bar | Held: Not a public disclosure; disclosures were confidential and not released into the public domain, so § 3730(e)(4) did not bar jurisdiction |
| Whether disclosure to government contractors/auditors (AdvanceMed, Deloitte) counts as public | Whipple: contractors acted on government’s behalf and maintained confidentiality; not public | Erlanger: contractors and outside auditors were "strangers" to the fraud and effectively made the information public | Held: Disclosures to contractors/auditors acting for the government (AdvanceMed) or retained under confidentiality (Deloitte) are not public disclosures |
| Whether disclosure among government offices (OIG, OCIG, U.S. Attorney) constitutes public disclosure | Whipple: intra-government communications do not release information to the public | Erlanger: government awareness/coordination makes information effectively public | Held: Internal government awareness/coordination does not equal public disclosure; the statute requires information entering the public domain |
| Appropriate standard of review for jurisdictional factual attack | Whipple: district court should have used Rule 56 summary-judgment standards | Erlanger: factual attack under Rule 12(b)(1) permitted weighing evidence | Held: District court properly treated the motion as a factual Rule 12(b)(1) attack; Sixth Circuit reviews factual findings for clear error and legal application de novo |
Key Cases Cited
- Schindler Elevator Corp. v. United States ex rel. Kirk, 131 S. Ct. 1885 (Sup. Ct.) (explains FCA qui tam structure and cautions against interpretations inconsistent with statutory text)
- Graham Cnty. Soil & Water Conserv. Dist. v. United States ex rel. Wilson, 559 U.S. 280 (2010) (discusses history and scope of public-disclosure bar)
- Rockwell Int'l Corp. v. United States, 549 U.S. 457 (2007) (recognizes public-disclosure bar as withdrawal of subject-matter jurisdiction)
- United States ex rel. Rost v. Pfizer, Inc., 507 F.3d 720 (1st Cir. 2007) (rejects treating government-internal investigations as public disclosures)
- United States ex rel. Mathews v. Bank of Farmington, 166 F.3d 853 (7th Cir. 1999) (takes a broader view that disclosure to responsible public officials may be "public")
- Gentek Bldg. Prods., Inc. v. Sherwin-Williams Co., 491 F.3d 320 (6th Cir. 2007) (explains standards for factual attacks on subject-matter jurisdiction)