US Ex Rel. Baltazar v. Warden
2011 U.S. App. LEXIS 3414
7th Cir.2011Background
- Baltazar, a chiropractor, worked four months in 2007 for Advanced Healthcare Associates and observed staff adding non-rendered services and upcoding to inflate bills.
- Baltazar filed a qui tam action under the False Claims Act alleging the firm submitted false claims to Medicare and Medicaid based on her knowledge of the defendants' practices.
- District court dismissed under § 3730(e)(4)(A) citing public reports (GAO and HHS/OIG) documenting widespread false claims in the industry.
- The district court concluded the public reports foreclosed a private relator and found Baltazar not the original source since she did not contribute to the underlying reports.
- Seventh Circuit reversed, holding Baltazar supplied defendant-specific facts showing fraud and that the suit is not based solely on public disclosures; remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the suit is based on public disclosures | Baltazar's allegations are based on her knowledge of defendants' practices, not on general public reports. | Public reports about industry-wide fraud displace individual suits under 3730(e)(4)(A). | Not based solely on public disclosures; suit relies on defendant-specific facts. |
| Whether Baltazar qualifies as an original source | Baltazar provided direct, independent knowledge of fraud by defendants. | Original source status not shown because disclosures came from public reports. | Court does not decide definitively; Baltazar could be an original source if conditions are met. |
| Whether Baltazar's pre-suit disclosure to the AUSA satisfies § 3730(e)(4)(B) | Baltazar alerted the government, suggesting fraud likely exists. | Pre-filing disclosure was insufficiently specific to constitute a full original-source disclosure. | Not decided; requires further fact development on sufficiency of disclosure. |
Key Cases Cited
- United States ex rel. Gear v. Emergency Medical Associates of Illinois, Inc., 436 F.3d 726 (7th Cir. 2006) (public disclosures must add facts to constitute base for suit; 'parasitic' when not)
- Glaser v. Wound Care Consultants, Inc., 570 F.3d 907 (7th Cir. 2009) (substantial similarity to published reports can render complaint based on reports)
- Lusby v. Rolls-Royce Corp., 570 F.3d 849 (7th Cir. 2009) (original-source knowledge requirement and disclosure obligations)
- Merck & Co. v. Reynolds, 131 S. Ct. 1784 (Supreme Court 2010) (fraud onset and reliance on information; specifics required for falsity and intent)
- Rockwell International Corp. v. United States, 549 U.S. 457 (Supreme Court 2007) (requires direct and independent knowledge for original-source determination)