U.S. Ex Rel. Hartpence v. Kinetic Concepts

Under the False Claim act, there are only two requirements for a claimant to be considered an “original source”: (1) must have direct and independent knowledge of the information on which their claims are based and (2) that they voluntarily provided that info to the Government before filing suit; playing a role in public disclosure is not required.

Kinetic Concepts, Inc and KCI USA, Inc. (“Defendants”) manufactured a Medicare covered device that helped heal wounds. While employed by Defendants, Steven Hartpence and Geraldine Godecke, discovered that Defendants were fraudulently submitting claims to Medicare and proceeded by filing qui tam claims in district court. Hartpence alleged the Defendants violated the False Claim Act by intentionally submitting false claims by misusing a billing code that ensured to Medicare that supplier had records to show the claim billed met all criteria. In addition to what Hartpence alleged, Godecke further alleged Defendants failed to complete required Detailed Written Orders and that they improperly retained overpayments. The district court granted the Defendants’ Federal Rule of Civil Procedure 12(b)(1) motion, since Hartpence and Godecke did not qualify as “original sources” because the Medicare fraud had already been publicly disclosed. Additionally, they had not demonstrated that they had a hand in the public disclosures under the Wang rule. Further, the court found Godecke’s claim was bar by the first-to-file bar. On appeal, the Ninth Circuit reversed and remanded both claims. The panel overruled its Wang decision, concluding that under the False Claims Act (“FCA”) there are only two requirement for a claimant to be considered an “original source”: (1) must have direct and independent knowledge of the information on which their claims are based, and (2) that they voluntarily provided that info to the Government before filing suit; playing a role in public disclosure is not required. The panel reasoned that the Wang panel impermissibly drew on language from the FCA to read a nonexistent third requirement. Further, it concluded that Godecke’s claim was not bar by the first-to-file bar because her second and third claims were based on different material facts and materially distinct. REVERSED and REMANDED.