Matt Anderson, a relator, sued St. Elizabeth Medical Center and Summit Medical Group under the federal False Claims Act and Kentucky state law. Anderson alleged that the medical centers engaged in a scheme to bill government programs for medically unnecessary kidney dialysis and vascular procedures, including the payment of illegal kickbacks to physicians. These allegations were largely identical to those made in a lawsuit filed seven years earlier by James Kent, which had been voluntarily dismissed by the estate administrator. The district court granted judgment on the pleadings for the defendants, ruling that Anderson's claims were barred by the public disclosure of the prior Kent complaint and that his state-law claim failed because Kentucky law does not allow private citizens to sue for healthcare fraud in the same manner as the federal government.
The Sixth Circuit analyzed three primary issues. First, regarding the False Claims Act's public disclosure bar, the court determined that Anderson's allegations concerning kidney dialysis were 'substantially the same' as those in the prior Kent complaint. The court explained that adding minor details, such as the name of a specific doctor or the software used for referrals, does not transform the allegations into new fraud that the government was unaware of. While Anderson's allegations regarding a 'Vascular Center' were not previously disclosed, they failed to survive the second hurdle. The court held that Anderson did not qualify as an 'original source' because he never voluntarily disclosed his information to the government before filing suit, and his additions to the public record were not material enough to change the government's decision-making. Second, the court addressed the specific allegations about the Vascular Center. Even though these were not publicly disclosed, the court found they failed to meet the heightened pleading standard of Federal Rule of Civil Procedure 9(b). Anderson provided only four sentences alleging the existence of the center without identifying a single representative false claim or providing specific personal knowledge to support a strong inference of fraud. Third, the court examined the Kentucky state law claim. Anderson argued that a state criminal statute and a negligence per se statute created a private cause of action similar to the federal qui tam provision. The court rejected this, noting that the state criminal statute protects the state's medical programs, not whistleblowers, and Anderson did not fall within the class of persons the statute was intended to protect.
The decision reinforces the strict application of the False Claims Act's public disclosure bar, preventing relators from filing 'parasitic lawsuits' that merely repackage previously public allegations. It clarifies that adding minor operational details to a known scheme does not constitute a new fraud for FCA purposes. Furthermore, the ruling confirms that relators must have a direct, material, and pre-filing disclosure to the government to claim original source status. Finally, it establishes that Kentucky law does not offer a parallel private enforcement mechanism for healthcare fraud, limiting the avenues for whistleblowers in that jurisdiction.
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