“We have to pass the bill so that you can find out what is in it” (continued)

I mean this in less snarky way than the title of this post suggests, but I continue to be surprised by some of what worked its way into the health care reform bill.

Today the Supreme Court held 7-2 in an opinion by Justice Stevens that 31 U.S.C. 3730(e)(4)(A), a provision of the False Claims Act that bars qui tam actions that are based upon the public disclosure of allegations of fraud against the government in (among other things) “a congressional, administrative, or [GAO] report, hearing, audit, or investigation,” includes state and local administrative hearings, audits, or investigations, and not just federal ones.   But tucked away in a footnote is notice that the holding of the case (Graham County Soil & Water Conservation District v. United States ex rel Wilson, 08-304), will have limited application going forward:

On March 23, 2010, the President signed into law the Patient Protection and Affordable Care Act, Pub. L. 111–148, 124 Stat. 119.  Section 10104(j)(2) of this legislation replaces the prior version of 31 U.S.C. §3730(e)(4) with new language.  The legislation makes no mention of retroactivity, which would be necessary for its application to pending cases given that it eliminates petitioners’ claimed defense to a qui tam suit. See Hughes Aircraft Co. v. United States ex rel. Schumer, 520 U. S. 939, 948 (1997).

The health care reform law changes the relevant text to provide for dismissal of a qui tam action based on a public disclosures “in a congressional, [GAO], or other Federal report, hearing, audit, or investigation.”  Thus, it essentially overrules today’s decision.  The amendment also eliminates the old language, under which a court would not have jurisdiction over a case based on a public disclosure, to simply state that a court shall dismiss an action, unless opposed by the Government, if substantially the same allegations were publicly disclosed.

The full text of the revised language is available after the jump. A redline reflecting the change is available here.

Critics of the change note that the amendments “are not limited to FCA actions against health care companies,” but it’s not unusual for Congress to make a change apply across-the-board even if it is nominally motivated by concern in a particular area. (Think of the USA PATRIOT Act, which, unless you believe the conspiracy theorists, was prompted by terrorism investigations but which amended provisions of general applicability.)  But the case before the Court involves flood cleanup, not health care fraud.  The amendment to the FCA is germane to health care reform in that it makes it easier to maintain a qui tam action against an entity that allegedly has defrauded the government. But the provision still looks a bit like the sort of provision that gets attached to must-pass legislation as a favor to a powerful constituency, rather than something that Congress considered directly relevant to the subject of the legislation. 

UPDATE: Both because I assume a high degree of background knowledge from our readers, and because I’m too lazy to provide much background, I don’t explain much about the qui tam mechanism.  One of the posts in the comment thread gives a helpful primer for people who aren’t already steeped in this area of the law.  It’s a fascinating area, with an interesting historical pedigree and which raises juicy separation-of-powers issues.

Here’s the full text:

(4)(A) The court shall dismiss an action or claim under this section, unless opposed by the Government, if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed–

(i) in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party;

(ii) in a congressional, Government Accountability Office, or other Federal report, hearing, audit, or investigation; or

(iii) 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 either (i) prior to a public disclosure under subsection (e)(4)(a), has voluntarily disclosed to the Government the information on which allegations or transactions in a claim are based, or (2) who has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and who has voluntarily provided the information to the Government before filing an action under this section.

H.R.  3590, § 10104(j), 111th Cong. (2009) (emphasis added).