August 28, 2013

Jenner & Block recently was victorious in the U.S. Court of Appeals for the Third Circuit for client Q2Administrators, when the court affirmed the dismissal of a False Claims Act (FCA) case at the intersection of health care and government contracts law.

The plaintiff, Dr. Thomas Zizic, had alleged that the defendant, a Medicare contractor, failed to conduct proper reviews of claims for durable medical equipment  -- in this case, a device used to treat osteoarthritis.  Firm attorneys moved to dismiss the case for lack of subject matter jurisdiction, failure to allege fraud with particularity and failure to state a claim.  In March 2012,  the District Court for the Eastern District of Pennsylvania concluded it did not have subject matter jurisdiction because the plaintiff’s complaint was based on public disclosures in prior administrative proceedings as well as in a separate bankruptcy case, and the plaintiff was not an “original source” of the information as required by the FCA. 

On appeal, Dr. Zizic attacked these conclusions, arguing that the administrative proceedings were not open to the public and that, in any event, he was an original source because of his supposedly unique access to the underlying facts, which were otherwise inaccessible because of privacy provisions of the Health Insurance Portability and Accountability Act (HIPAA).  The Third Circuit disagreed, holding that the prior disclosures in the bankruptcy action, including disclosures made both in a motion for summary judgment as well as during discovery, were public disclosures.  The appeals court rejected HIPAA as a constraint and, in doing so, was the first federal appellate court to address the effects of HIPAA on public disclosure. 

The court also found that Dr. Zizic  was not an original source because his knowledge was based on public disclosures and on a third person’s declaration that he had attached to his complaint to bolster his allegations.  The court emphasized a plaintiff’s burden of persuasion in a factual subject matter jurisdiction challenge, noting that Dr. Zizic repeatedly failed to take advantage of opportunities to demonstrate that he was an original source, including failing to amend his complaint.     

The decision was announced on August 26, 2013.  The Jenner & Block team was led by Partner W. Jay DeVecchio, who argued the case, and included Partners Daniel E. Chudd and Matthew S. Hellman, Associate Marina K. Jenkins and Government Contracts Analyst Anna M. Sturgis.