Cooper v. Blue Cross and Blue Shield of Florida, Inc.

• Decision Date: 21 April 1994
• Docket Number: No. 92-4875,92-4875
• Parties: , Medicare&Medicaid Guide P 42,218 Herbert COOPER, Plaintiff-Appellant, United States of America, ex rel, Plaintiff, v. BLUE CROSS AND BLUE SHIELD OF FLORIDA, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 562

19 F.3d 562

62 USLW 2668, Medicare&Medicaid Guide P 42,218

Herbert COOPER, Plaintiff-Appellant United States of America, ex rel, Plaintiff, v. BLUE CROSS AND BLUE SHIELD OF FLORIDA, INC., Defendant-Appellee.

No. 92-4875.

United States Court of Appeals, Eleventh Circuit.

April 21, 1994.

Tracy E. Tomlin, George, Hartz, Lundeen, Flagg & Fulmer, Coral Gables, FL, for plaintiff-appellant.

S. William Livingston, Jr. and Carolyn F. Corwin, Covington & Burling, Washington, DC, for defendant-appellee.

Appeal from the United States District Court for the Southern District of Florida.

Before EDMONDSON and CARNES, Circuit Judges, and HILL, Senior Circuit Judge.

PER CURIAM:

This appeal involves the jurisdictional bar of the False Claims Act (FCA), 31 U.S.C. Sec. 3730(e)(4) (1986). The district court found appellant James Cooper's (Cooper) qui tam suit barred under this provision. We vacate the dismissal and remand for further proceedings.

The appeal presents three main questions. First, when general allegations of widespread fraud in an industry are publically disclosed, does the jurisdictional bar of the False Claims Act preclude a qui tam plaintiff from bringing suit for the same kind of fraud against a defendant who has not been specifically identified in the public disclosures? Second, if Cooper based this action on information publically disclosed, does he qualify as an "original source"? Third, did Cooper meet the pleading requirements of Fed.R.Civ.P. 9(b)?

I. Facts and Procedural History

In 1988, Cooper was over the age of 65 but still employed with the United States Census Bureau. As a "working aged", he qualified for both Medicare and the Federal Employees Health Benefits Program, which was administered by Blue Cross Blue Shield of Florida (BCBSF). In early 1988, Cooper and his wife began submitting medical bills to BCBSF for payment. Over the next two years, almost every time the Coopers submitted a claim, BCBSF either returned the claim with instructions that "Medicare must pay first" or paid a secondary amount after deducting what it said Medicare would be required to pay first. As a result, Medicare and BCBSF shuffled his claims back and forth before Cooper or his physicians were paid.

Confused, Cooper began researching his benefits and the law governing payment of the his claims. He also contacted members of Congress and the Health Care Financing Administration (HCFA) and expressed his frustration. Cooper learned that, because he was a "working aged", Medicare Secondary Payer (MSP) laws required BCBSF, as his primary insurer, to pay on his claims before sending the balance to Medicare, his "secondary" insurer. ¹ He repeatedly informed BCBSF of his status as a "working aged" and of this rule. Still, BCBSF sent claims back to him, stating that Medicare must pay first. Medicare paid these claims, unaware that Cooper had primary insurance. In 1990 Cooper again contacted HCFA about his problems with BCBSF, including in his letter an article from the Miami Herald indicating this conduct was occurring at other insurance companies. He asked HCFA to act.

On August 17, 1990 Cooper instituted this qui tam action under the FCA alleging BCBSF committed fraud against the government by submitting his claims to Medicare when BCBSF knew it was required to pay primary. BCBSF filed a motion to dismiss for lack of subject matter jurisdiction, claiming Cooper based his actions on publically disclosed information and that he was not an original source of the information disclosed. BCBSF also said Cooper had pleaded fraud with insufficient particularity under Fed.R.Civ.P. 9(b). The district court dismissed the complaint.

II. The False Claims Act

The history of the False Claims Act and its 1986 amendments has been described by this and other courts. See, e.g., United States ex rel. Williams v. NEC Corp., 931 F.2d 1493 (11th Cir.1991); United States ex rel. Stinson, Lyons, Gerlin & Bustamante, P.A. v. Prudential Ins. Co., 944 F.2d 1149 (3d Cir.1991) (hereinafter Prudential ). The 1986 amendments were intended to increase private citizen involvement in exposing fraud against the government while preventing opportunistic suits by private persons who heard of fraud but played no part in exposing it. ² Williams, 931 F.2d at 1493; False Claims Act Implementation: Hearing Before the Subcomm. on Admin. Law and Gov. Relations of the House Comm. on the Judiciary, 101st Cong., 2d Sess. 3 (1990) [hereinafter 1990 Implementation Hearing ] (1986 amendment "sought to resolve the tension between ... encouraging people to come forward with information and ... preventing parasitic lawsuits") (statement of co-sponsor Sen. Grassley). ³ Questions presented under the Act must be considered with these goals in mind.

Section 3730(e)(4) of the Act provides for a jurisdictional bar in certain circumstances. It says:

(4)(A) No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office report, hearing, audit, investigation, or from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.

(B) For purposes of this paragraph, "original source" means an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing an action under this section which is based on the information.

31 U.S.C. Sec. 3730(e)(4). ⁴ A court reaches the original source question only if it finds the plaintiff's suit is based on information publically disclosed. Williams, 931 F.2d at 1500.

BCBSF argues that the allegations upon which Cooper's action is based were publically disclosed before Cooper filed suit. BCBSF also claims Cooper is no original source of the information disclosed and so the suit must be barred. ⁵ To address these claims, we look first to the plain language of the Act's jurisdictional provision. See Consumer Prod. Safety Com. v. GTE Sylvania, 447 U.S. 102, 108, 100 S.Ct. 2051, 2056, 64 L.Ed.2d 766 (1980); Williams, 931 F.2d at 1498. If that language is ambiguous, we may turn to legislative history to determine Congress's intent. Williams, 931 F.2d at 1498.

Because we consider it to be crucial whether BCBSF was mentioned by name or otherwise specifically identified in public disclosures, we consider separately those sources in which it was identified and those in which it was not. ⁶

A. Disclosures in which BCBSF was not named

The allegations of widespread MSP fraud made in sources in which BCBSF was not specifically named or otherwise directly identified are insufficient to trigger the jurisdictional bar. The 1988 GAO report discusses widespread MSP fraud and names other insurance companies, but it never mentions BCBSF. In a similar way, the specific allegations of MSP fraud against other insurance companies in OIG reports, newspaper articles, and a prior similar action against Blue Cross Blue Shield of Georgia do not preclude Cooper's action.

This result seems consistent with the purposes of the FCA and the 1986 amendments. See United States ex rel. Stinson, Lyons, Gerlin & Bustamante v. Provident Life & Acci. Ins. Co., 721 F.Supp. 1247, 1258 (S.D.Fla.1989) (hereinafter Provident ) (qui tam suit not barred when neither defendant's name nor its alleged fraudulent conduct was disclosed in government reports); 1990 Implementation Hearing, at 6 ("The publication of general, non-specific information does not necessarily lead to the discovery of specific, individual fraud which is the target of the qui tam action") (Statement of Sen. Grassley).

Requiring that allegations specific to a particular defendant be publically disclosed before finding the action potentially barred encourages private citizen involvement and increases the chances that every instance of specific fraud will be revealed. To hold otherwise would preclude any qui tam suit once widespread--but not universal--fraud in an industry was revealed. The government often knows on a general level that fraud is taking place and that it, and the taxpayers, are losing money. But it has difficulty identifying all of the individual actors engaged in the fraudulent activity. See United States ex rel. LaValley v. First Nat'l Bank, 707 F.Supp. 1351, 1355 (D.Mass.1988) (noting 1986 amendments passed because fraud against government so rampant and difficult to identify government needed all help it could get from private citizens). This casting of a net to catch all wrongdoers is precisely where the government needs the help of its "private attorneys general". See 1990 Implementation Hearing, at 4 (Statement of Sen. Charles Grassley). BCBSF's approach, on the other hand, would hamper the discovery of specific instances of fraud and the recovery of losses. ⁷

This decision will not, as BCBSF claims, "open the floodgates" by enabling, for example, every insured to sue his insurance company when he hears that many insurance companies are committing fraud. Speculative suits against innocent actors for fraud are generally not favored by the law. For example, the plaintiff must plead fraud with particularity under Fed.R.Civ.P. 9(b). This pleading must include facts as to time, place, and substance of the defendant's alleged fraud Durham v. Business Management Assocs., 847 F.2d 1505, 1511 (11th Cir.1988). This requirement makes it hard for many persons to bring a qui tam suit and guards against "guilt by association".

The False Claims Act has other safeguards against multiplicity of suits. Once allegations against a specific defendant have been made in any forum or by any means listed in section 3730(e)(4)(A), the information about that defendant has been publically disclosed. So, a suit would be barred unless...