Qui Tam Defendant’s Confidentiality-Breach Counterclaim Fails

What if a whistleblower discloses the protected health information (PHI) of privately insured patients in making the claim that his employer submitted false Medicare claims?  And what if that violates a confidentiality agreement the whistleblower signed with the employer?  Does the employer have a counterclaim against the whistleblower?

On May 9 a federal court said that the answer requires balancing competing policy interests, and that in the case at hand the answer was no, the employer had no counterclaim.

Matthew Cieszyski alleged that LifeWatch submitted false claims to the government for heart monitoring services.  LifeWatch counterclaimed, alleging that Matthew violated a company privacy policy and a confidentiality agreement.  In support of its counterclaim, LifeWatch pointed to Matthew’s disclosure of a spreadsheet with PHI of some 52,000 patients, including private-pay patients with no connection to the allegedly false Medicare claims.

On May 9 the court addressed Matthew’s motion to dismiss the counterclaim.  In ruling, the court accepted as true LifeWatch’s allegation that Matthew had signed a confidentiality agreement with broad prohibitions against disclosure of confidential information and that in pursuing his qui tam case, he had disclosed a spreadsheet that included PHI of private-pay patients.  But the court rejected LifeWatch’s claim that the company privacy policy was part of the employment contract, ruling that LifeWatch hadn’t provided facts supporting that conclusion.

The court said that ruling on the motion to dismiss required balancing the need to protect whistleblowers in their efforts to uncover fraud, against an employer’s legitimate expectation that confidential information will be protected.  In this case, the balance favored Matthew for two basic reasons.  First, while the spreadsheet included private-pay patients, it would be “unrealistic to impose on a relator the burden of knowing precisely how much information to provide the government when reporting a claim of fraud.”  Second, there was no allegation that Matthew used the information for any reason other than to support his qui tam claim.

The case is U.S. ex rel. Cieszyski v. LifeWatch, No. 1:13-cv-04052 (N.D. Ill. 2016).

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