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In a recent decision authored by Chief Judge Easterbrook in the case of U.S. ex rel. Goldberg and Beecham v. Rush University Medical Center, et al.  ("Goldberg"), the Seventh Circuit Court of Appeals reversed a decision of the district court, reviving claims that had been dismissed based on the False Claims Act's public disclosure bar. The decision continued the trend in the Seventh Circuit narrowing the applicability of the public disclosure bar when the government is aware of general, industry-wide, fraudulent practices.

In Goldberg, the relators alleged that individual orthopedic surgeons working for defendant Midwest Orthopedics billed Medicare for simultaneously occurring surgeries when, in contravention of Medicare rules, those surgeons were not "immediately available" to assist in the surgeries.  The teaching physicians could not have been immediately available because they were supervising simultaneously occurring surgeries, and the Medicare rules provide that a teaching physician is, by definition, not immediately available when he or she is involved in another surgical procedure.

The issue before the court was whether investigations conducted in the 1990s by the Department of Health and Human Services and the General Accounting Office ("GAO") concerning billing practices of physicians at teaching hospitals (the "PATH Audits") publicly disclosed those allegations and, if so, whether the relators' claims were "based on" the PATH Audits.  In the Seventh Circuit, like virtually all of the other circuits, a private suit is deemed "based on" a public disclosure if it is "substantially similar" to the publicly disclosed allegations.  See Glaser v. Wound Consultants, Inc., 570 F.3d 907, 920 (7th Cir. 2009).

Rejecting the district court's conclusion that the relators' allegations were "based on" the PATH Audits, the court held that the district court had inappropriately applied the substantially similar standard "at a high level of generality."  Judge Easterbrook wrote that "a very high level of generality is inappropriate because then disclosure of some frauds could end up blocking private challenges to many different kinds of fraud."  In particular, Judge Easterbrook noted that "no one who read the GAO report, or followed the progress of the PATH Audits, would know or even suspect that Rush University was misrepresenting the 'immediate availability' of teaching physicians during concurrently scheduled procedures."  Accordingly, construing the PATH Audits with the proper level of generality, relators' claims were not "substantially similar" to the PATH Audits such that they were based on them.  The Goldberg decision is directly in-line with the most recent Seventh Circuit authority on the scope of the public disclosure bar: U.S. ex rel. Baltazar v. Warden, 635 F.3d 866 (7th Cir. 2011).

On July 11, 2012, the Seventh Circuit denied a request for a rehearing en banc, and the case has now returned to the district court where the relators will work to prove that teaching physicians at defendant Midwest Orthopedics, with the assistance of Rush employees, unlawfully conducted simultaneous surgeries that on their face violated Medicare rules.