In this qui tam proceeding under the False Claims Act, 31 U.S.C. §§ 3729-33, Kelly Baltazar contends that her former employer submitted fraudulent bills to the Medicare and Medicaid programs. Baltazar, a chiropractor, worked for four months in 2007 at Advanced Healthcare Associates. According to Baltazar’s complaint, she noticed that the firm’s staff added to her billing slips services that had not been rendered and changed the codes for services that had been performed. *867 (This latter practice, designed to depict the procedure as one that fetches higher reimbursement, goes by the name “upcoding.”) After doing a little digging, Baltazar concluded that this was normal practice at the firm and that a substantial fraction of all bills submitted to the federal government had been fraudulently inflated on the instructions of Lillian Warden, the firm’s owner. Baltazar quit and filed this suit.
Qui tarn
suits under the False Claims Act cannot be “based upon the public disclosure of allegations or transactions” in public agencies’ reports revealing the fraud, unless the relator is “an original source of the information.” 31 U.S.C § 3730(e)(4)(A). See
Graham County Soil & Water Conservation District v. United States ex rel. Wilson,
- U.S. -,
The district judge, particularly impressed by the 2005 Report, granted the motion and dismissed the suit. The 2005 Report concluded that 57% of chiropractors’ claims (in a sample of 400) were for services not covered by the Medicare program, and another 16% were for covered services that had been miscoded. This establishes such prevalent fraud, the judge thought, that it is unnecessary to give private relators a piece of the action in order to locate wrongdoers. Instead the United States should file the suits and receive the entire recovery. The court briefly considered the possibility that Baltazar should be treated as an original source of the information that led to this suit, but the judge observed that Baltazar had not supplied any of the information underlying the 1987, 2000, or 2005 Reports and therefore is not the “original source” of the disclosures that the judge had found dispositive.
Section 3730(e)(4)(A) poses three questions: (i) are “disclosures of allegations or transactions” revealing the fraud in the public domain?; (ii) is the suit “based upon” those disclosures?; and (iii) if so, is the relator nonetheless “an original source of the information”? The district court resolved all three against Baltazar. Her suit must be reinstated if she prevails on any one. We concentrate on (ii) and discuss (i) and (iii) only briefly.
Defendants pay scant attention to the statutory language, which speaks of “disclosures of allegations or transactions” that the suit is “based upon”. There have assuredly been many allegations of unwarranted claims by health care providers in general, and chiropractors in particular. Yet although bills for services never performed likely reflect fraud, miscoded bills need not; the errors may have been caused by negligence rather than fraud (which means intentional deceit). What is more, none of the materials on which defendants rely mentions Lillian Warden or Advanced Healthcare Associates (or, indeed, any other provider). A statement such as “half of all chiropractors’ claims *868 are bogus” does not reveal which half and therefore does not permit suit against any particular medical provider. It takes a provider-by-provider investigation to locate the wrongdoers. Baltazar contends in this suit that defendants are among the providers who have submitted intentionally false claims. That allegation is not based on public reports; it is based on Baltazar’s knowledge about defendants’ practices. By placing defendants among the perpetrators of fraud, Baltazar performed the service for which the False Claims Act extends the prospect of reward (if the allegations are correct).
Other courts of appeals have concluded that reports documenting a significant rate of false claims by an industry as a whole — • without attributing fraud to particular firms — do not prevent a
qui tam
suit against any particular member of that industry. See, e.g.,
In re Natural Gas Royalties Qui Tam Litigation,
This would be clear if the dispute concerned the statute of limitations. No one would contend that the 1987, 2000, or 2005 Reports “disclosed” any given provider’s fraud and thus started the period of limitations for suit by the United States; only information that a
particular
provider had committed a
particular
fraud would do that. Similarly a report by the SEC revealing widespread securities fraud would not start the time to sue
every
issuer for
every
fraud; again that requires a person-specific disclosure that establishes not only falsity but also intent to deceive, which is an element of fraud. See
Merck & Co. v. Reynolds,
— U.S. -,
As far as we can tell, no court of appeals supports the view that a report documenting widespread false claims, but not attributing them to anyone in particular, blocks
qui tam
litigation against every member of the entire industry. The closest is our own decision in
United States ex rel. Gear v. Emergency Medical Associates of Illinois, Inc.,
Defendants rely heavily on
Gear,
but to say that a report identifying a
uniform
practice activates § 3730(a)(4)(A) does not imply anything about the effect of a report disclosing that some but not all firms use a practice. Once the GAO concluded that teaching hospitals routinely disregarded the required distinction between work in the teaching program and work as an attending physician, the only extra fact required was that the defendant is a medical school or teaching hospital. That’s public knowledge. Gear’s suit did not add one jot to the agency’s fund of information; the panel rightly called it “parasitic.”
Our conclusion that Baltazar’s suit is “based on” her own knowledge rather than the published reports makes it unnecessary to decide whether those reports disclosed the “allegations or transactions” underlying the suit. That is a more difficult question, because the answer depends on whether we understand the reports to allege widespread fraud (that is, intentional deceit) or only errors: fraud is actionable under the False Claims Act, while negligent errors are not. It is similarly unnecessary to decide whether Baltazar qualifies for the original-source exception. If the complaint is accurate, Baltazar was the original source of the information that defendants committed fraud. The question is whether the relator is an original source of the allegations in the complaint and not, as the district court supposed, whether the relator is the source of the information in the published reports. “ ‘[Original source’ means an individual who has direct and independent knowledge of the information on which the allegations are based”. 31 U.S.C. § 3730(e)(4)(B). See generally
Rockwell International Corp. v. United States,
Being an original source of the allegations is not enough to take advantage of
*870
the exception. An original source
also
must have “voluntarily provided the information to the Government before filing an action under this section”. § 3730(e)(4)(B). Baltazar says that she complied with this requirement by alerting an Assistant United States Attorney that a False Claims Act suit was soon to be filed. Yet Baltazar’s letter narrates the complaint’s conclusions without specifics. A relator need not have seen the claims submitted to the federal government, see
United States ex rel. Lusby v. Rolls-Royce Corp.,
The judgment of the district court is reversed, and the case is remanded for further proceedings consistent with this opinion.