In this case District Judge Wolf of the U.S. District Court for the District of Massachusetts entertained a summary judgment motion seeking dismissal of this whistleblower action, which alleges that CIGNA violated the federal False Claims Act, 31 U.S.C. §§ 3729 – 33, (“FCA”) by requiring claimants under its long-term disability (“LTD”) policies to file claims for Social Security Disability Insurance (“SSDI”) even though CIGNA knew or should have known that many of those claimants were ineligible for SSDI benefits.
NELF submitted an amicus brief in the case in support of CIGNA’s summary judgment motion, seeking recognition and application of a government knowledge defense to qui tam claims. It was undisputed that requiring individuals seeking benefits under private LTD policies to apply to the Social Security Administration (“SSA”) for SSDI benefits is a longstanding, industry-wide practice. In fact, many public providers of disability benefits, including the federal government and numerous state agencies, have for decades also required their claimants to apply for SSDI benefits. In light of these and other undisputed facts, NELF argued that Barrett cannot prove that CIGNA was acting with the requisite scienter in causing the alleged false claims to be filed because neither CIGNA nor the SSA treated those claims as representations of eligibility. The claims were instead intended to be, and were in fact, treated by the SSA as requests for official determinations of eligibility. Given the SSA’s knowledge of and acquiescence in this widespread practice, NELF argued, CIGNA should not be found to have acted with the requisite fraudulent intent and Barrett could not prove that the alleged false claims of eligibility were material to SSA’s decision-making. In addition, NELF argued that recognition of an FCA claim in the circumstances presented here would undermine two aspects of the rule of law essential for a healthy economy – namely, certainty and predictability. Longstanding and transparent, industry-wide business conduct that is both accepted and followed by the government should not be susceptible to after-the-fact characterization as fraudulent behavior.
Judge Wolf, ruling from the bench at oral argument, acknowledged the possible viability of a government knowledge defense to a qui tam whistleblower action but concluded that there were disputed questions of fact here about the extent of the SSA’s knowledge regarding the disputed practice that precluded the entry of summary judgment.