First whistleblower not entitled to share in settlement of second one's case, Fifth Circuit rules

by Ben Vernia | April 22nd, 2014

On April 16, the Court of Appeals for the Fifth Circuit, in an unpublished opinion in U.S. ex rel. Smart v. Christus Health rejected the argument of one whistleblower that he was entitled to a share of the proceeds of a settlement received by a whistleblower who filed a subsequent case against the same hospital. As the Court described the two cases, the first alleged that the hospital provided office space at below-market rates to induce doctors to refer patients to the hospital; the second alleged the use of inpatient billing codes for outpatient procedures (“upcoding”). The Court found these differences to be dispositive as to all three of the first whistleblower’s arguments:

  • That the settlement agreement’s release was broad enough to encompass the conduct he alleged (in evaluating first-to-file claims, the Court reasoned, it looks to the complaints filed, not the language of any settlement agreement);
  • That his complaint’s allegations were sufficient to alert the government to the fraud alleged by the second whistleblower;
  • That the unsealing of his complaint prior to the second relator’s filing publicly disclosed the allegations.

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