Filed: Jun. 03, 2020
Latest Update: Jun. 03, 2020
Summary: RECOMMENDED FOR PUBLICATION Pursuant to Sixth Circuit I.O.P. 32.1(b) File Name: 20a0172p.06 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT UNITED STATES OF AMERICA ex rel. KATHI + HOLLOWAY, ¦ Relator-Appellant, ¦ ¦ ¦ v. > No. 19-3646 ¦ ¦ HEARTLAND HOSPICE, INC., ¦ Defendant, ¦ ¦ HEARTLAND HOSPICE SERVICES, LLC; HCR ¦ MANORCARE, INC.; HCR HOME HEALTH CARE ¦ & HOSPICE, LLC; MANORCARE HEALTH SERVICES, ¦ LLC, ¦ ¦ Defendants-Appellees. ¦ + Appeal from the United States District Court for the No
Summary: RECOMMENDED FOR PUBLICATION Pursuant to Sixth Circuit I.O.P. 32.1(b) File Name: 20a0172p.06 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT UNITED STATES OF AMERICA ex rel. KATHI + HOLLOWAY, ¦ Relator-Appellant, ¦ ¦ ¦ v. > No. 19-3646 ¦ ¦ HEARTLAND HOSPICE, INC., ¦ Defendant, ¦ ¦ HEARTLAND HOSPICE SERVICES, LLC; HCR ¦ MANORCARE, INC.; HCR HOME HEALTH CARE ¦ & HOSPICE, LLC; MANORCARE HEALTH SERVICES, ¦ LLC, ¦ ¦ Defendants-Appellees. ¦ + Appeal from the United States District Court for the Nor..
More
RECOMMENDED FOR PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 20a0172p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
UNITED STATES OF AMERICA ex rel. KATHI ┐
HOLLOWAY, │
Relator-Appellant, │
│
│
v. > No. 19-3646
│
│
HEARTLAND HOSPICE, INC., │
Defendant, │
│
HEARTLAND HOSPICE SERVICES, LLC; HCR │
MANORCARE, INC.; HCR HOME HEALTH CARE │
& HOSPICE, LLC; MANORCARE HEALTH SERVICES, │
LLC, │
│
Defendants-Appellees.
│
┘
Appeal from the United States District Court
for the Northern District of Ohio at Toledo.
No. 3:10-cv-01875—James G. Carr, District Judge.
Decided and Filed: June 3, 2020
Before: MERRITT, MOORE, and MURPHY, Circuit Judges.
_________________
COUNSEL
ON BRIEF: Brad J. Pigott, PIGOTT LAW FIRM, P.A., Jackson, Mississippi, for Appellant.
Eric A. Dubelier, Katherine J. Seikaly, REED SMITH LLP, Washington, D.C., James C. Martin,
Colin E. Wrabley, Devin M. Misour, REED SMITH LLP, Pittsburgh, Pennsylvania, for
Appellees.
No. 19-3646 U.S. ex rel. Holloway Page 2
_________________
OPINION
_________________
KAREN NELSON MOORE, Circuit Judge. The qui tam provisions of the False Claims
Act (“FCA”) encourage whistleblowers to act as private attorneys general and sue companies
making false claims for federal money. See 31 U.S.C. §§ 3729–3733. Kathi Holloway, the qui
tam relator in this action, sued Heartland Hospice and related entities (“Heartland”) under the
FCA for orchestrating a corporate-wide scheme to submit false claims for payments from
Medicare and Medicaid to cover hospice care. Heartland allegedly enrolled patients in hospice
when they were not terminally ill and kept them there, even when employees like Holloway
urged their release.
Heartland, however, shoots back that Holloway is not a genuine whistleblower, that her
claims are drawn from prior allegations against Heartland, and accordingly that her qui tam
action is prohibited by the FCA’s public-disclosure bar. In the alternative, Heartland argues that
Holloway has not satisfied the FCA’s heightened pleading standard for allegations of fraud and,
in particular, that she has not satisfied the limited exception to that standard that we announced
in U.S. ex rel. Prather v. Brookdale Senior Living Cmtys., Inc., 838 F.3d 750 (6th Cir. 2016).
We hold that Holloway’s action is barred in light of prior public disclosures. We accordingly
AFFIRM the district court’s judgment of dismissal.
I. BACKGROUND1
Holloway alleges that Heartland fraudulently claimed Medicare and Medicaid payments
to cover hospice care by “recruiting” and keeping patients in hospice despite the fact that many
of them were not terminally ill. R. 69 (1st Am. Compl. at 11–12, ¶ 24) (Page ID #485–86).2
Because these patients were placed into hospice, they were not provided curative treatment for
1The facts are taken from Holloway’s First Amended Complaint, as we take all factual allegations to be
true at the motion-to-dismiss stage. See Guertin v. Michigan, 912 F.3d 907, 916 (6th Cir. 2019).
2We will refer to the Defendants-Appellees collectively as “Heartland” because HCR, the parent company,
“uses that brand name in its hospice operations.” R. 69 (1st Am. Compl. at 4, ¶ 6) (Page ID #478).
No. 19-3646 U.S. ex rel. Holloway Page 3
their non-terminal illnesses. Id. at 17, ¶ 34 (Page ID #491). Meanwhile, Heartland leeched
millions of dollars from the federal government in payments for unnecessary hospice care.
Id. at
43, ¶ 88 (Page ID #517).
A. Heartland’s Scheme
Heartland orchestrated its alleged scheme through incentives, punishments, and training.
To incentivize recruitment of hospice patients, Heartland paid out bonuses to regional directors
of operations, administrators in charge of the hospice agencies, and its “sales team”—equal to
30% of their salaries—if they met “targets” for admitting and retaining hospice patients. Id. at
15–16, ¶¶ 31–32 (Page ID #489–90). Heartland set the targets based on its revenue goals.
Id. at
15–16, ¶ 31 (Page ID #489–90). It authorized the sales team to ask prospective patients to
consent to hospice treatment, rather than curative care, before physician “Medical Directors”
received any information regarding patients’ medical history and prognosis. See
id. It even
incentivized registered nurses employed as “Patient Care Coordinators” to distort clinical records
of patients’ medical conditions and progress in a way that would enable the Medical Directors to
certify patients as hospice-eligible.
Id. at 16–17, ¶¶ 33–34 (Page ID #490–91). They, too, would
receive a 30%-of-salary bonus if Heartland met its targets.
Id. Heartland also handed out paid
vacation hours to the clinical and non-clinical staffs of the facilities that increased their “census,”
or patient enrollment, the most within each corporate region.
Id. at 17–18, ¶ 35 (Page ID #491–
92). On the flipside, Heartland threatened to terminate sales team members and clinical staff if
they fell short of their required census count.
Id. at 18, ¶ 36 (Page ID #492).
To cover its tracks, Heartland “trained its hospice agency nurses and other clinical
personnel . . . to focus their documentation [of patients’ clinical status], not on truthful clinical
evidence of a patient’s stability or need for curative treatment, but instead on purported clinical
indicia of medical decline.” Id. at 22–23, ¶ 43 (Page ID #496–97). Clinical personnel were
trained to avoid “Ship Sinkers” like “improving,” “stable,” or “no change” because they could
render patients hospice-ineligible.
Id. Guided by the “Heartland Best Practice” manual,
executives, regional officers, and local administrators enforced Heartland’s corporate-wide
practice of “negative charting” designed to paint patients as in decline.
Id. at 22–23, ¶¶ 43–44
(Page ID #496–97). At the same time, clinicians were encouraged to use phrases that suggest
No. 19-3646 U.S. ex rel. Holloway Page 4
hospice eligibility like “new skin tears,” “unable to carry on a conversation without shortness of
breath,” “new episodes of chest pain,” and “eating only sweets, snacks – refusing meals.”
Id. at
23, ¶ 45 (Page ID #497).
Effectively useless physician oversight paved the way for claims with no sound clinical
basis to go forward. Heartland did not require its physician Medical Directors to personally
examine patients, or to review the underlying clinical records, “before accepting non-physician
employees’ conclusions that patients were terminally ill.” Id. at 25, ¶ 52 (Page ID #499). And
where Medical Directors or other physicians did determine that patients should be discharged,
they were vetoed. Local hospice facility “Directors of Clinical Services”—who were registered
nurses, not physicians—were authorized to override physicians’ recommendations of discharge.
Id. at 27–28, ¶ 56 (Page ID #501–02). “Heartland likewise . . . authoriz[ed] regional and . . .
corporate-wide administrators to veto, override, or ignore recommendations [of discharge] by
physician Medical Directors . . . .”
Id. at 28, ¶ 57 (Page ID #502). On the occasions when
Heartland did discharge patients, it was company policy not to review the patients’ records to
determine when they became hospice-ineligible and how much money should be refunded to the
government.
Id. at 35, ¶ 76 (Page ID #509).
Holloway also learned that Heartland was misleading the Medicare auditors. She
witnessed a Heartland senior officer direct a physician to change a patient’s general “cancer”
diagnosis to “Stage IV cancer” in response to an audit request, without evidence supporting the
change. Id. at 38, ¶ 80 (Page ID #512). When requests came in from Medicare auditors to
review patients’ files to verify hospice-eligibility, “Heartland’s practice . . . was to refuse to
respond to such requests as to patients Heartland knew (or realized upon inquiry) were not
eligible for hospice services.”
Id. at 37–38, ¶ 79 (Page ID #511–12). Failing to respond came
with a minor penalty worth one month’s payment, whereas answering honestly would make
Heartland liable for refunds stretching back months or years.
Id. Answering honestly could also
prompt the auditors to search for evidence of fraud.
Id. By accepting the minor penalty,
Heartland strategically averted a substantial loss of profits and the discovery of its scheme.
Id.
Corporate executives were at the helm of Heartland’s scheme.
Id. at 18–19, ¶ 37 (Page
ID #492–93). Heartland Vice President Mike Reed, for example, encouraged employees to err
No. 19-3646 U.S. ex rel. Holloway Page 5
on the side of certifying hospice-eligibility.
Id. He reassured them that they would not be
penalized if an auditor later rebuked their determination.
Id. Executives would also use monthly
conference calls to “badger and discipline” local and regional managers who failed to meet
census requirements.
Id. at 19, ¶ 38 (Page ID #493). And, of course, executives doled out
incentives and trained employees. See supra p. 4. “[T]hrough its corporate headquarters and its
most senior corporate leadership[, Heartland] acted with reckless disregard (a) for the truth of
patients’ actual medical conditions and needs, (b) for the clinical accuracy of the resulting
clinical records as to each such patient[], and (c) for the medical necessity of resulting claims to
Medicare and Medicaid for resulting hospice services.”
Id. at 19–20, ¶ 39 (Page ID #493–94).
Thus, Heartland employees certified patients as hospice-eligible under Medicare
regulations, even though many of them were not. Id.; see also 42 C.F.R. § 418.20. The clinical
documents that purportedly supported the certification of hospice-eligibility were distorted. R.
69 (1st Am. Compl. at 20, ¶ 40) (Page ID #494). “Heartland did not and could not reasonably
rely on or affirm the accuracy of physician certifications made in reliance on its non-physician
staff’s clinical records, since Heartland knew that its marketing, training and clinical practices
had substantially corrupted the reliability of such records as a credible and neutral basis for
making such physician certifications.” Id. at 25, ¶ 51 (Page ID #499). Accordingly, Holloway
alleges that the claims based on false certifications that Heartland submitted to Medicare and
Medicaid for payment are “factually and legally false.”
Id. at 21–22, ¶ 42 (Page ID #495–96).
B. Procedural History
Holloway brings this action under three provisions of the FCA: presenting false claims
under 31 U.S.C. § 3729(a)(1)(A) (2009), use of false records or statements under
§ 3729(a)(1)(B), and wrongfully retaining government funds under § 3729(a)(1)(G). Id. at 45–
49, ¶¶ 92–108 (Page ID #519–23). She filed her initial qui tam complaint against Heartland
Hospice, Inc., HCR ManorCare, Inc. (“HCR”), and The Carlyle Group on August 24, 2010. R. 1
(Compl. at 1, ¶ 1) (Page ID #1). After the government declined to intervene, R. 55 (Election to
Decline Intervention) (Page ID #184), Holloway amended her complaint on August 27, 2018 to
delete claims against Heartland Hospice, Inc. and the Carlyle Group, and to add claims against
HCR Home Health Care and Hospice, LLC, Heartland Hospice Services, LLC, and ManorCare
No. 19-3646 U.S. ex rel. Holloway Page 6
Health Services, R. 69 (1st Am. Compl. at 1–2, ¶ 1) (Page ID #475–76). The conduct implicated
in this case began “no later than 2004 and continu[ed] to the time of the filing of [the] First
Amended Complaint.”
Id. at 11–12, ¶ 24 (Page ID #485–86).
Heartland initially moved to dismiss this action on August 6, 2018, R. 68-1 (Motion to
Dismiss) (Page ID #230), and then moved to dismiss the First Amended Complaint on December
3, 2018, R. 82 (Motion to Dismiss) (Page ID #650). The district court entered judgment
dismissing this action with prejudice on June 26, 2019. R. 86 (Judgment) (Page ID #1141).
Although the district court held that Holloway’s complaint was not barred by a prior public
disclosure, the court dismissed her suit for insufficient pleading. U.S. ex rel. Holloway v.
Heartland Hospice, Inc., 386 F. Supp. 3d 884, 899, 902 (N.D. Ohio 2019). We have jurisdiction
over Holloway’s timely appeal. See 28 U.S.C. § 1291.
II. DISCUSSION
To be eligible for hospice care under Medicare or Medicaid, a patient must be certified by
a physician as “terminally ill”—meaning that the patient’s prognosis “is for a life expectancy of
6 months or less if the terminal illness runs its normal course.” 42 C.F.R. § 418.20(b);
418.22(b)(1). Without that certification, the hospice provider is not entitled to payment. See
§ 418.20; 42 U.S.C. § 1395f(a)(7). For the certification to be valid, the hospice medical director
“must consider at least the following information: (1) Diagnosis of the terminal condition of the
patient; (2) Other health conditions, whether related or unrelated to the terminal condition; [and]
(3) Current clinically relevant information supporting all diagnoses.” 42 C.F.R. § 418.25(b).
Submitting a fraudulent certified claim for payment for care provided to a hospice-ineligible
patient constitutes a false claim. See 31 U.S.C. § 3729(a); Prather, 838 F.3d at 761. Holloway
alleges that Heartland submitted false claims by knowingly or recklessly certifying patients’
eligibility for hospice care and billing for those claims.
For Holloway to survive a motion to dismiss, she must surmount the public-disclosure
bar and the heightened standard for pleading FCA claims. We begin and end with the public-
disclosure bar.
No. 19-3646 U.S. ex rel. Holloway Page 7
The FCA bars qui tam actions that merely feed off prior public disclosures of fraud. See
31 U.S.C. § 3730(e)(4)(A) (2010); U.S. ex rel. Walburn v. Lockheed Martin Corp., 431 F.3d 966,
970 (6th Cir. 2005). Congress amended aspects of the public-disclosure bar on March 23, 2010,
and we have decided that the amendments are not retroactive. U.S. ex rel. Antoon v. Cleveland
Clinic Found.,
788 F.3d 605, 614–15 (6th Cir. 2015); Patient Protection and Affordable Care
Act, § 10104(j)(2) Pub. L. 111-148, 124 Stat. 119, 901–02 (Mar. 23, 2010); compare 31 U.S.C.
§ 3730(e)(4)(A) (2010) (“The court shall dismiss [a qui tam] action or claim . . . 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 person bringing the
action is an original source of the information.”) with 31 U.S.C. § 3730(e)(4)(A) (1986)
(“No court shall have jurisdiction over an [FCA action brought by a qui tam relator that is] 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, or investigation, or from the news media unless . . . the person bringing the action is an
original source of the information.”).
Holloway’s complaint alleges FCA violations spanning from 2004 to the date of filing, so
both the pre- and post-amendment versions of the public-disclosure bar apply.3 Under either
version of the public-disclosure bar, Holloway must demonstrate “(1) that the factual premise of
[her] claim was not publicly disclosed before [she] filed the lawsuit, or (2) even if it was, that
[she] was the original source of the information.” U.S. ex rel. Advocates for Basic Legal Equal.,
Inc. v. U.S. Bank, N.A., 816 F.3d 428, 430 (6th Cir. 2016). Under the post-amendment public-
disclosure bar, a relator qualifies as an “original source” if she either (1) “voluntarily disclosed to
the Government the information on which allegations or transactions in a claim are based” “prior
to a public disclosure” or (2) “has knowledge that is independent of and materially adds to the
3After the 2010 amendments, the public-disclosure bar is no longer jurisdictional. U.S. ex rel. Advocates
for Basic Legal Equal., Inc. v. U.S. Bank, N.A., 816 F.3d 428, 433 (6th Cir. 2016). Because Heartland argued its
motion to dismiss under Rule 12(b)(6), and Holloway has not taken issue with that, we will presume that a Rule
12(b)(6) motion to dismiss is appropriate for both the pre- and post-amendment claims.
No. 19-3646 U.S. ex rel. Holloway Page 8
publicly disclosed allegations or transactions, and [she] has voluntarily provided the information
to the Government before filing an action under [the FCA].” 31 U.S.C. § 3730(e)(4)(B) (2010).
Critically, Holloway has not argued that she is an original source. She waived this argument in
the district court by stating that it was “irrelevant,” see R. 83 (Resp. to Mot. to Dismiss at 8–9
n.20) (Page ID #958–59), and she has made no argument on appeal that the original source
exception applies. This might have been the type of case in which the new allegations materially
add to what has been publicly disclosed. We cannot say one way or the other in light of
Holloway’s decision to waive this line of argument.
A. Overview of Potential Public Disclosures
Because Holloway does not argue that she was an original source, she either must show
that the purported prior disclosures were not “public,” or that their contents did not “disclose”
her allegations.4
First, Heartland points to a Department of Justice (“DOJ”) settlement of FCA claims with
SouthernCare Inc., an entity that fraudulently billed Medicare for hospice-ineligible patients but
that is in no way connected with Heartland. See R. 82-14 (SouthernCare Settlement) (Page ID
#874). The accompanying DOJ press release describes only misconduct by SouthernCare Inc.,
not an industry-wide scheme. Id. Similarly (and second), Heartland points to a qui tam
complaint filed by Holloway against her former employer and its affiliates, which are also in no
way connected with Heartland. See R. 82-2 (CLP Compl.) (Page ID #702). The complaint
portrays a similar scheme to that alleged here. See
id. Critically, all that these actions have in
common is the same type of fraud in the same industry—without a shared corporate parent. We
have never inferred an industry-wide disclosure from a set of allegations against a particular
company. That can only work the other way around, when the prior disclosures describe
“industry-wide abuses and investigations.” See U.S. ex rel. Gear v. Emergency Med. Assocs. of
4The list of potential “public” disclosures shrank with the 2010 amendments to exclude filings and rulings
associated with state court proceedings. U.S. Bank, 816 F.3d at 430; compare 31 U.S.C. § 3730(e)(4)(A) (2010)
with 31 U.S.C. § 3730(e)(4)(A) (1986). That change does not affect our analysis of the purported disclosures in this
case.
No. 19-3646 U.S. ex rel. Holloway Page 9
Ill., Inc.,
436 F.3d 726, 729 (7th Cir. 2006). Accordingly, neither of these sources disclosed the
fraud alleged in Holloway’s complaint.
Third, Heartland points to a report issued by the Health and Human Services Office of
Inspector General (“OIG report”) that found that four percent of claims “did not meet
certification of terminal illness requirements.” R. 82-16 (OIG Report at ii, 16) (Page ID #897,
916). The OIG report does not itself constitute a public disclosure. Although a report need not
use the word “fraud” to qualify as a disclosure, it still must carry an inference of wrongdoing.
U.S. ex rel. Burns v. A.D. Roe Co., 186 F.3d 717, 724 (6th Cir. 1999) (quoting U.S. ex rel. Jones
v. Horizon Healthcare Corp.,
160 F.3d 326, 332 (6th Cir. 1998)). The OIG report even falls
short of that. It calls out what it perceives to be a compliance problem stemming from the
technical nature of the claims process. See R. 82-16 (OIG Report at iii, 17) (Page ID #898, 917).
Its recommended action is not an investigation, but instead better education, training, and
monitoring. See
id. There is no insinuation of fraud, but at most noncompliance.
That said, a disclosure can arise from multiple documents taken together, rather than
from a single document. See U.S. ex rel. Poteet v. Medtronic, Inc., 552 F.3d 503, 512 (6th Cir.
2009). Courts use the following formula to explain that concept: “[I]f X + Y = Z, Z represents
the allegation of fraud and X and Y represent its essential elements. In order to disclose the
fraudulent transaction publicly, the combination of X and Y must be revealed, from which
readers or listeners may infer Z, i.e., the conclusion that fraud has been committed.”
Jones, 160
F.3d at 331 (quoting U.S. ex rel. Springfield Terminal Ry. Co. v. Quinn,
14 F.3d 645, 654 (D.C.
Cir. 1994)). In the district court’s view, the OIG report “further marks, however slightly, the
trail of fraud in this case” by “set[ting] out the then-current state of affairs.” Heartland
Hospice,
386 F. Supp. 3d at 896. But we do not see how a disclosure of the “current state of affairs”
matters because the South Carolina complaints expressly allege fraud in the first place (i.e., the
South Carolina complaints are the “Z” and there is no need for an “X” or “Y”). At best, the OIG
report lends some support to Heartland’s industry-wide disclosure theory, which we have already
rejected.
Finally, Heartland points to three qui tam complaints filed in the United States District
Court for the District of South Carolina against HCR ManorCare—Heartland’s parent
No. 19-3646 U.S. ex rel. Holloway Page 10
company—and other Heartland entities (“South Carolina complaints”). See R. 82-6 (Litwin
Compl.) (Page ID #794); R. 82-7 (Olson Compl.) (Page ID #803); R. 82-8 (Williams Compl.)
(Page ID #813). The government declined to intervene, and the initial complaints were unsealed
on July 9, 2007. R. 82-9 (Unsealing Order at 1–2) (Page ID #824–25). Each of the relators
jointly stipulated to dismissal on November 12, 2008. R. 82-13 (Joint Stipulation of Dismissal at
2–9) (Page ID #865–72).
Holloway’s first line of defense against the South Carolina complaints is that they are not
“public” under the amended public-disclosure bar. The amended statutory text bars claims that
were publicly disclosed in a federal proceeding “in which the Government or its agent is a
party.” 31 U.S.C. § 3730(e)(4)(A)(i) (2010). Holloway argues that a qui tam relator is not the
government’s agent and, therefore, that the case is not “public” unless the government
intervenes. District courts are split over this question, and we have yet to weigh in. See, e.g.,
U.S. ex rel. Forney v. Medtronic, Inc., 327 F. Supp. 3d 831 (E.D. Pa. 2018); U.S. ex rel. Gilbert
v. Virginia College, LLC,
305 F. Supp. 3d 1315 (N.D. Ala. 2018). Courts that have adopted
Holloway’s position reason that a qui tam relator is not the government’s agent because the
relator is not authorized by statute to act in the government’s place, is not labeled an “agent”
under the statutory scheme, and is not subject to the government’s control. See Forney, 327 F.
Supp. 3d at 842–44. A majority of courts have rejected that reasoning and instead have held that
a qui tam relator is the government’s agent because the government “is the real party in interest,”
“the relator is the assignee of the Government’s damages claim,” and the government “exerts a
fair amount of control over qui tam litigation.”
Gilbert, 305 F. Supp. 3d at 1324. Even when the
government declines to intervene, it “still receives copies of all pleadings and deposition
transcripts, can move to stay discovery if it interferes with an ongoing criminal or civil
investigation, and has the right to approve or reject a stipulated dismissal.”
Id. (citing
§ 3730(b)(1), (c)(2)(D)(3), (c)(4)). It “may even intervene at a later date upon a showing of a
good cause and subsequently dismiss a case over the relators’ objections.”
Id. (citing
§ 3730(c)(2)(D)(3); § 3730(c)(2)(A)). The district court in this case added that Holloway’s
position “would render the phrase ‘or its agent’ . . . meaningless.”
Holloway, 386 F. Supp. 3d at
895. “Who, if not the private relator, is the government’s agent?”
Id. We are persuaded by the
majority of district courts’ and our own district court’s reasoning and hold that the qui tam
No. 19-3646 U.S. ex rel. Holloway Page 11
relator is, in all cases, the government’s agent under § 3730(e)(4)(A)(i). Accordingly, the South
Carolina cases are public under both versions of the public-disclosure bar, despite the fact that
the government did not intervene.
Now we turn to the substance of the South Carolina complaints. The relators in the South
Carolina cases were registered nurses who worked at a single South Carolina Heartland hospice
facility until they were fired for calling out its practice of making false claims for Medicare
payments for patients who were not terminally ill. See R. 82-10 (Litwin Am. Compl. at 7, ¶ 26)
(Page ID #838); R. 82-11 (Olson Am. Compl. at 9, ¶ 37) (Page ID #850); R. 82-12 (Williams
Am. Compl. at 7, ¶ 26 (Page ID #860). They initially alleged FCA violations alongside
wrongful termination and tort claims. R. 82-6 (Litwin Compl. at 5–8, ¶¶ 29–53) (Page ID #798–
801); R. 82-7 (Olson Compl. at 6–8, ¶¶ 29–53) (Page ID #808–10); R. 82-8 (Williams Compl. at
6–8, ¶¶ 29–53) (Page ID #818–20). Specifically, the relators alleged that Heartland “engaged in
a practice and pattern of altering medical records or omitting crucial information from the
charts,” and in doing so, “systematically misrepresented . . . information concerning the patients’
diagnosis and need for hospice care.” R. 82-6 (Litwin Compl. at 5, ¶¶ 21, 26) (Page ID #798); R.
82-7 (Olson Compl. at 5, ¶¶ 21, 26) (Page ID #807); R. 82-8 (Williams Compl. at 5, ¶¶ 21, 26)
(Page ID #817). According to all three relators, there were “several occasions” when they were
told not to verify a patient’s hospice-eligibility and “to let the office handle it so they could
continue to identify the patient as being eligible.” R. 82-6 (Litwin Compl. at 5, ¶ 25) (Page ID
#798); R. 82-7 (Olson Compl. at 5, ¶ 25) (Page ID #807); R. 82-8 (Williams Compl. at 5, ¶ 25)
(Page ID #817). When the relators instead insisted that their patients’ diagnoses were not
“supported in their medical charts,” they were fired. R. 82-6 (Litwin Compl. at 5, ¶ 25) (Page ID
#798); R. 82-7 (Olson Compl. at 5, ¶ 25) (Page ID #807); R. 82-8 (Williams Compl. at 5, ¶ 25)
(Page ID #817).
Two of the three South Carolina relators ultimately abandoned their FCA claims in their
amended complaint, but all three added examples of particular patients they thought were
hospice-ineligible. R. 82-10 (Litwin Am. Compl. at 4, ¶¶ 17–23) (Page ID #835–38); id. at 8–9,
¶¶ 37–45 (Page ID #839–40); R. 82-11 (Olson Am. Compl. at 5–8, ¶¶ 21–27) (Page ID #846–
49);
id. at 9–11, ¶¶ 41–54 (Page ID #850–52); R. 82-12 (Williams Am. Compl. at 4–7, ¶¶ 17–23
No. 19-3646 U.S. ex rel. Holloway Page 12
(Page ID #857–60);
id. at 8–9, ¶¶ 37–45 (Page ID #861–62).5 In each example, they stated that
they “were told they would be fired if they didn’t continue to work with patients whether they
met the criteria or not.” R. 82-10 (Litwin Am. Compl. at 4, ¶¶ 17–23) (Page ID #835–38); R. 82-
11 (Olson Am. Compl. at 5–8, ¶¶ 21–27) (Page ID #846–49); R. 82-12 (Williams Am. Compl. at
4–7, ¶¶ 17–23 (Page ID #857–60). They also alleged for the first time that Heartland was
“attempting to develop a ‘census’ of patients under continuous care.” R. 82-10 (Litwin Am.
Compl. at 7, ¶ 26) (Page ID #838); R. 82-11 (Olson Am. Compl. at 9, ¶ 37) (Page ID #850);
R. 82-12 (Williams Am. Compl. at 7, ¶ 26 (Page ID #860). All in all, “twenty-two (22) of the
approximately forty-three (43) patients [at the South Carolina facility] failed to meet the criteria
and should [have] be[en] discharged.” R. 82-10 (Litwin Am. Compl. at 7, ¶ 26) (Page ID #838);
R. 82-11 (Olson Am. Compl. at 9, ¶ 37) (Page ID #850); R. 82-12 (Williams Am. Compl. at 7,
¶ 26 (Page ID #860). Because the South Carolina complaints concerned the same corporate
parent and the same type of fraud implicated in this case, we will analyze more fully below
whether they bar Holloway’s qui tam action.
B. The South Carolina Complaints
Having discarded three of the four potential public disclosures, we assess whether
Holloway’s action is barred by the South Carolina complaints. Our decision could, in theory,
turn on which version of the public-disclosure bar applies because the amendments are not
retroactive. See Antoon, 788 F.3d at 614–15. Previously, the 1986 version of the statute barred
claims that were “based upon” allegations or transactions that had already been publicly
disclosed. 31 U.S.C. § 3730(e)(4)(A) (1986). Now, the statute bars claims “if substantially the
same allegations or transactions” have been publicly disclosed. 31 U.S.C. § 3730(e)(4)(A)
(2010) (emphasis added). We must decide whether the South Carolina complaints disclosed the
fraud alleged in Holloway’s complaint under either version of the public-disclosure bar.6
5It does not matter that the relators dropped the FCA claims because “the disclosure is not required to use
the word ‘fraud’ or provide a specific allegation of fraud,” let alone a specific allegation of an FCA violation. See
Poteet, 552 F.3d at 512.
6Both parties believe that they should prevail under either version of the public-disclosure bar. Heartland
states in a conclusory fashion that the amendments do not affect our analysis. Appellee Br. at 37 n.12. Holloway
neither disputes nor concedes that, and she cites both pre- and post-amendment precedent. See Reply Br. at 16.
No. 19-3646 U.S. ex rel. Holloway Page 13
Heartland argues that Holloway’s claims must be dismissed under either version of the
public-disclosure bar because Holloway’s allegations depict essentially the same scheme as that
described in the South Carolina complaints. Appellee Br. at 37–38. We agree and hold that
Holloway’s claims must be dismissed under either version of the public-disclosure bar.
1. The Pre-Amendment Public-Disclosure Bar
We begin with the pre-amendment public-disclosure bar. Prior to the 2010 amendments,
we held that a claim is “based upon” a prior public disclosure when it is “‘supported by’ the
previously disclosed information,” Poteet, 552 F.3d at 514 (quoting U.S. ex rel. McKenzie v.
Bellsouth Telecomm., Inc.,
123 F.3d 935, 940 (6th Cir. 1997))—meaning that a “substantial
identity exists between the publicly disclosed allegations or transactions and the qui tam
complaint,”
id. (quoting Jones, 160 F.3d at 332).7 In applying the substantial-identity test, we
held that the relator’s claims are based on prior public disclosures where “essentially the same
. . . scheme” was “the primary focus” of each.
Id. Qui tam actions are barred if they are “based
even partly upon public disclosures.”
McKenzie, 123 F.3d at 940 (emphasis added).
Heartland asserts, based on McKenzie, that Holloway’s claims are barred because they
are at least partly based on the South Carolina complaints. McKenzie was our first opportunity to
decide how to interpret the “based upon” language in the public-disclosure bar. In doing so, we
declined to adopt the Fourth Circuit’s interpretation of “based upon,” which would have required
a relator to personally know about the prior disclosures, and instead adopted the Tenth Circuit’s
approach. Id. We stated that, under a plain text analysis, the Tenth Circuit interpreted “based
upon” to “include[] any action based even partly upon public disclosures.”
Id. (citing United
States ex rel. Precision Co. v. Koch Indus.,
971 F.2d 548, 552 (10th Cir. 1992)) (emphasis
added). The Tenth Circuit reasoned that “Congress chose not to insert the adverb ‘solely,’ and
we cannot, because to do so would dramatically alter the statute’s plain meaning.”
Id. (quoting
Precision, 971 F.2d at 552). After explaining the Tenth Circuit’s textual analysis, we noted that
“[t]he Tenth Circuit later clarified its interpretation by explaining that a court ‘must determine
whether ‘substantial identity’ exists between the publicly disclosed allegations or transactions
7We have also used the term “substantial likeness.” See Poteet, 552 F.3d at 514.
No. 19-3646 U.S. ex rel. Holloway Page 14
and the qui tam complaint.”
Id. (quoting U.S. ex rel. Fine v. Advanced Sciences, Inc.,
99 F.3d
1000, 1006 (10th Cir. 1996)).
We have described the test for “substantial identity” as whether the relator’s complaint
and the prior disclosures depict “essentially the same” scheme. Poteet, 552 F.3d at 514. That, in
turn, is informed by the principle that qui tam actions will be barred only when “enough
information exists in the public domain” to put the government on notice of the fraud alleged.
Walburn, 431 F.3d at 975;
Poteet, 552 F.3d at 512. The simple reason is that the entire point of
qui tam actions is “to prosecute fraud of which the government is unaware.” U.S. ex rel. Dingle
v. BioPort Corp.,
388 F.3d 209, 215 (6th Cir. 2004).
To decide whether the government is already on notice of the fraud alleged, we ask
whether the relator “merely ‘adds details’ to what is already known in outline.” U.S. Bank, 816
F.3d at 432 (quoting U.S. ex rel. Bogina v. Medline Indus., Inc.,
809 F.3d 365, 370 (7th Cir.
2016)). We can presume that the government is on notice of particular frauds once a general
disclosure of fraud has been made. See
id. at 431–32; Dingle, 388 F.3d at 215; U.S. ex rel.
Gilligan v. Medtronic, Inc.,
403 F.3d 386, 391 (6th Cir. 2005). Thus, relators cannot avoid the
public-disclosure bar “by focusing [their] allegations . . . on sub-classes of potential claims
covered by the initial [disclosure].” U.S.
Bank, 816 F.3d at 432. It is not enough to allege new,
slightly different, or more detailed factual allegations.
Dingle, 388 F.3d at 215;
Poteet, 552 F.3d
at 514.
For instance, in Dingle, we barred a relator’s qui tam action alleging a scheme in which a
company supplied the U.S. government with FDA-noncompliant vaccines. 388 F.3d at 215.
Prior public disclosures revealed that the FDA had cited the company for unspecified
“deviations” from FDA requirements and that there were allegations that the company’s vaccine
was not FDA-approved.
Id. at 214. Because the prior disclosures were “more general and could
have referred to several types of fraud,” the government was on notice of the particular scheme
that the relator alleged.
Gilligan, 403 F.3d at 391 (citing
Dingle, 388 F.3d at 213). The same
was true in Gilligan, where the relators alleged that a company caused doctors and hospitals to
submit false claims to Medicare for use of its FDA-noncompliant pacemakers with
malfunctioning leads. See
id. Prior allegations disclosed that the leads were not safe, that there
No. 19-3646 U.S. ex rel. Holloway Page 15
was manufacturing fraud, and that there were design deviations.
Id. Even though the new
allegations concerned a “slightly different type of fraud,” the prior allegations “were sufficiently
general, and like the allegations in Dingle, could have encompassed the claim of manufacturing
fraud and design deviations surrounding the . . . leads.”
Id. “So long as the government is put on
notice to the potential presence of fraud, even if the fraud is slightly different than the one
alleged in the complaint, the qui tam action” must be dismissed.
Dingle, 388 F.3d at 214–15.
Heartland contends that that is exactly what we have in this case—Holloway is simply
adding new, slightly different, or more detailed allegations to what has already been disclosed in
the South Carolina complaints. We agree. Both sets of allegations were levied against the same
corporate parent for the same type of fraud. Both accuse Heartland of making false claims for
payment from Medicare for hospice patients. Both allege a systemic and patterned practice of
altering or omitting information from clinical documents to make these patients appear to be
terminally ill. Both allege that staff were fired if they challenged this practice, and that
Heartland set a “census,” or required number of patients, for enrollment. We acknowledge, as
the district court observed, that Holloway’s complaint “alleges a complex, sophisticated scheme”
that targets corporate-wide conduct. Heartland Hospice, 386 F. Supp. 3d at 898 (quotation
omitted). But we disagree with the district court’s conclusion that the scheme that Holloway
alleges “differ[s] in both degree and in kind from” the South Carolina complaints.
Id. at 899.
Even if the South Carolina complaints were focused on a single hospice facility, the allegations
against Heartland as a whole were sufficiently general and alike to those alleged here such that
the government was put on notice of the corporate-wide conduct alleged in this case. We
therefore hold that Holloway’s claims are barred by the pre-amendment public-disclosure bar.
2. The Post-Amendment Public-Disclosure Bar
Having held that Holloway’s claims do not survive the pre-amendment public-disclosure
bar, we must decide whether they surmount the “more lenient” post-amendment public-
disclosure bar. See U.S. Bank, 816 F.3d at 430. The 2010 amendments to the public-disclosure
bar replaced “based upon” with “substantially the same.” See 31 U.S.C. § 3730(e)(4)(A) (2010).
Accordingly, the text now reads, “The court shall dismiss an [FCA] action or claim . . . if
substantially the same allegations or transactions as alleged in the action or claim were publicly
No. 19-3646 U.S. ex rel. Holloway Page 16
disclosed . . . .”
Id. How we interpret the post-amendment public-disclosure bar is informed by
the statutory text and the competing purposes of the qui tam provisions.
Prior to the amendments, a majority of circuits adopted interpretations of “based upon”
analogous to our “substantial-identity” test, using the same or slightly different language. See
U.S. ex rel. Ondis v. City of Woonsocket, 587 F.3d 49, 57 (1st Cir. 2009) (collecting cases).
Many circuits described their test as whether “the relator’s allegations are substantially similar to
information disclosed publicly,” see
id. (emphasis added),8 while others described their test as
whether “the allegations in the complaint were substantially the same as allegations in the public
disclosures,” U.S. ex rel. Fine v. Sandia Corp.,
70 F.3d 568, 572 (10th Cir. 1995) (emphasis
added).9 Still others asked whether “material elements” of the allegations were publicly
disclosed, U.S. ex rel. Kirk v. Schindler Elevator Corp.,
601 F.3d 94, 103 (2d Cir. 2010), rev’d
on other grounds by Schindler Elevator Corp. v. U.S. ex rel. Kirk,
563 U.S. 401 (2011), or
whether the relator made “essentially the same” allegations, U.S. ex rel. Reagan v. E. Tex. Med.
Ctr. Reg’l Healthcare Sys.,
384 F.3d 168, 176 (5th Cir. 2004).10 By the time the public-
disclosure bar was amended in 2010, all but one circuit had adopted some version of this
interpretation. See
Ondis, 587 F.3d at 57. The Fourth Circuit was the lonely outlier, interpreting
“based upon” as barring suits only if the relator actually knew about the public information—a
reading the majority of circuits rejected. See U.S. ex rel. Siller v. Becton Dickinson & Co.,
21 F.3d 1339, 1348 (4th Cir. 1994) (barring suits “only where the relator has actually derived
8See U.S. ex rel. Atkinson v. Pa. Shipbuilding Co., 473 F.3d 506, 519–21 (3d Cir. 2007) (substantially
similar); Glaser v. Wound Care Consultants, Inc.,
570 F.3d 907, 910 (7th Cir. 2009) (substantially similar); U.S. ex
rel. Newell v. City of St. Paul,
728 F.3d 791, 797 (8th Cir. 2013) (substantially similar); U.S. ex rel. Meyer v.
Horizon Health Corp.,
565 F.3d 1195, 1199 (9th Cir. 2009) (using “substantial identity” and “substantially similar”
interchangeably), overruled on other grounds by U.S. ex rel. Hartpence v. Kinetic Concepts, Inc.,
792 F.3d 1121,
1128 n.6 (9th Cir. 2015); U.S. ex rel. Osheroff v. Humana, Inc.,
776 F.3d 805, 814 (11th Cir. 2015) (using
“substantially similar” and “substantially the same” interchangeably); U.S. ex rel. Findley v. FPR-Boron Employees’
Club,
105 F.3d 675, 690 (D.C. Cir. 1997) (substantially similar), overruled on other grounds by U.S. ex rel. Davis v.
District of Columbia,
679 F.3d 832, 838–39 (D.C. Cir. 2012).
9The Tenth Circuit has occasionally used the “substantial identity” language that our circuit has used. See,
e.g., U.S. ex rel. Grynberg v. Praxair, Inc., 389 F.3d 1038, 1051 (10th Cir. 2004); U.S. ex rel. Precision Co. v. Koch
Industries, Inc.,
971 F.2d 548, 553–54 (10th Cir. 1992).
10The Fifth Circuit also used “substantively identical” in this case. See id.
No. 19-3646 U.S. ex rel. Holloway Page 17
from that disclosure the allegations upon which his qui tam action is based” (emphasis added));
Ondis, 587 F.3d at 57.
Unsurprisingly, then, the circuits that were in the majority have held that their pre-
amendment precedent continues to control, to varying degrees.11 See Bellevue v. Universal
Health Servs. of Hartgrove, Inc., 867 F.3d 712, 718 (7th Cir. 2017) (“The current version of the
statute expressly incorporates the ‘substantially similar’ standard in accordance with the
interpretation of this circuit and most other circuits.”); U.S. ex rel. Reed v. Keypoint Gov’t Sols.,
923 F.3d 729, 743–45 (10th Cir. 2019) (holding that its pre-amendment precedent should
“primarily guide” its post-amendment inquiry”); U.S. ex rel. Osheroff v. Humana, Inc.,
776 F.3d
805, 812, 814 (11th Cir. 2015) (slotting the new “substantially the same” test into its existing
analytical framework); U.S. ex rel. Winkelman v. CVS Caremark Corp.,
827 F.3d 201, 208 n.4
(1st Cir. 2016) (stating that “[t]he revised statutory language—‘substantially the same’—merely
confirms [its] earlier understanding,” but also that the amended language “has no substantive
effect in this case” (emphasis added)).
For our part, we indicated in an unpublished case, United States ex rel. Armes v. Garman,
that we would continue to be guided by our “based upon” precedent as we embark on
interpreting the amended public-disclosure bar. 719 F. App’x 459, 463 n.2 (6th Cir. 2017)
(“Because this court had already interpreted the “based upon” language to mean a “substantial
identity,” Poteet, 552 F.3d at 514, the 2010 amendment does not affect our public-disclosure
analysis at this second step.”). But we have not expressly adopted our pre-amendment precedent
in a published case. In one post-amendment case, both versions technically applied, but we used
the “more lenient” amended version for the sake of simplicity because the relator would lose
either way. U.S.
Bank, 816 F.3d at 430. We implicitly adopted two principles from our pre-
amendment precedent: (1) an action is barred if a prior disclosure puts the government on notice
of the fraud alleged in the qui tam complaint,
id. at 431, and (2) a broader prior disclosure bars a
11“Similar” obviously has a different meaning than “same.” “Same” means identical; “similar” means
analogous, comparable, or resembling the other. The Merriam-Webster dictionary would have us believe otherwise,
as it dubiously defines “same” as (among other things) “something identical with or similar to another.” Same,
MERRIAM-WEBSTER ONLINE DICTIONARY (last visited Feb. 14, 2020). We instead are guided by the wisdom of
Judge Learned Hand, that “it is one of the surest indexes of a mature and developed jurisprudence not to make a
fortress out of the dictionary.” See Cabell v. Markham, 148 F.2d 737, 739 (2d Cir. 1945).
No. 19-3646 U.S. ex rel. Holloway Page 18
qui tam action based on a narrower set of allegations stemming from the same fraud,
id. at 432.
In another case, we decided that the outcome would be the same under either version of the bar
because, even after the amendments, “a common principle remains[:] public disclosure occurs
‘when enough information exists in the public domain to expose the fraudulent transaction.’”
Ibanez, 874 F.3d at 918 (quoting
Antoon, 788 F.3d at 614–15). We stated that courts must “look
at the essential elements of alleged fraud to determine if enough information exists in the public
domain to expose the fraudulent transaction.”
Id. “Thus, the public disclosure bar is not
implicated—even if one or more of a claim’s essential elements are in the public domain—unless
the exposed elements, taken together, provide adequate notice that there has been a fraudulent
transaction.”
Id. at 918–19. So far, then, we have adopted principles from our pre-amendment
cases that are compatible with the amended statutory text.12
From a textual standpoint, “substantially the same” facially demands a greater degree of
similarity between the qui tam complaint and the prior disclosures than “based upon” does. And
“substantially the same” undoubtedly is more rigorous than “even partly based upon,” as we
interpreted “based upon” to mean. Without the “based upon” language in the statute, there is no
textual hook for McKenzie’s “even-partly-based-upon” rule. See McKenzie, 123 F.3d at 940
(citing
Precision, 971 F.2d at 552).13 We can think of no reason why that plain text
interpretation of “based upon” should influence our reading of the amended text.
At the same time, we continue to be guided by the statute’s general purpose of
encouraging genuine whistleblower actions while snuffing out parasitic suits. See Walburn,
431 F.3d at 970. The public-disclosure bar was intended to be “wide-reaching,”
Schindler,
563 U.S. at 408, but to stop short of “wip[ing] out qui tam suits that rest on genuinely new and
material information,”
Goldberg, 680 F.3d at 935–36. In light of this purpose and the statute’s
12We have not cited McKenzie in any of our binding post-amendment precedent. See U.S. Bank, 816 F.3d
428; Ibanez,
874 F.3d 905.
13The Tenth Circuit, which created the “even-partly-based upon” rule in Precision, conspicuously has
avoided citing to that case for that rule in its post-amendment precedent. See Reed, 923 F.3d at 743–45. It has
instead emphasized its substantial-identity test from
Fine, 99 F.3d at 1006. See
Reed, 923 F.3d at 743–45.
Moreover, it has said only that prior precedent should “primarily guide [its] substantially-the-same inquiry.”
Reed,
923 F.3d at 745 (emphasis added).
No. 19-3646 U.S. ex rel. Holloway Page 19
plain text, we read “substantially the same” as more sensitive to differences between the qui tam
complaint and prior disclosures than the prior “based upon” language.
Holloway’s claims, nevertheless, cannot survive the more lenient post-amendment
public-disclosure bar. As we have already described, Holloway’s allegations are substantially
the same as those made in the South Carolina complaints. If anything, Holloway’s allegations
add some new details to describe essentially the same scheme by the same corporate actor. We
accordingly hold that Holloway’s claims must be dismissed under the amended public-disclosure
bar as well. Because both versions of the public-disclosure bar apply, we need not address
whether Holloway’s allegations were sufficient under Federal Rule of Civil Procedure 9(b) or the
limited exception to that standard that we announced in Prather, 838 F.3d 750. The district court
rightly dismissed Holloway’s claims.
III. CONCLUSION
We AFFIRM the district court’s judgment of dismissal because Holloway’s action is
barred in light of prior public disclosures.
