In Tennessee, whistleblower's case largely dismissed for public disclosure

by Ben Vernia | August 21st, 2013

On July 29, in U.S. ex rel Stratienko v Chattanooga-Hamilton Cty Hosp., Eastern District of Tennessee Judge Curtis L. Collier dismissed nearly all of a whistleblower’s Stark Act-based False Claims Act case against a Chattanooga, Tennessee hospital.

In the case, the relator alleged that the hospital engaged in prohibited transactions with, and provided remuneration to physicians and health care providers in violation of the Stark Act and the federal and Tennessee False Claims Acts. The government and Tennessee declined to intervene in the case, and the defendants moved to dismiss on public disclosure and lack of particularity.

The Court dismissed most of the case on public disclosure grounds, finding that the relator’s husband had reported misconduct by the hospital in the past, and that widespread publicity of these charges and their subsequent settlement constituted public disclosure on which the relator’s allegations were based. Judge Collier rejected the relator’s argument that the specific allegations had not been disclosed, and that her complaint concerned conduct following the prior settlement, noting that the prior allegations put the government on notice of the kind of fraud alleged by the relator, and that her allegations substantially resembled those of her husband. The Court noted that the whistleblower had offered no response to the defendant’s assertion that she was not an original source of the allegations, and so it concluded that they must be dismissed under the public disclosure bar, 31 USC 3730(e)(4). (The Court did not, therefore, reach the defendant’s argument that the relator’s complaint lacked particularity.)

The Court did permit the relator to amend her complaint to expand on her allegation that the hospital had breached its Corporate Integrity Agreement, in order to connect those alleged breaches of the agreement to a violation of the False Claims Act.

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