The opinion
Motion for Rehearing Denied; Opinion of April 7, 2026 Withdrawn. Reversed
and Opinion filed July 2, 2026
In The
Fifteenth Court of Appeals
NO. 15-25-00034-CV
STATE OF TEXAS, Appellant
V.
ALEXANDRA ALVAREZ, JOSHUA LAFOUNTAIN,
DR. CHRISTINE ELLIS, D.D.S., Appellees
On Appeal from the 459th District Court
Travis County, Texas
Trial Court Cause No. D-1-GN-19-004849
OPINION
We withdraw our prior opinion dated April 7, 2026, and substitute the following in
its place.
Alexandra Alvarez, Joshua LaFountain, and Christine Ellis, D.D.S. commenced
qui tam actions under the Texas Medicaid Fraud Prevention Act alleging that multiple
orthodontists fraudulently submitted claims for Medicaid reimbursement and the
administrator reviewing those claims had fraudulently approved them. After many years
and multiple proceedings, Alvarez, Ellis, and LaFountain sought a share of the proceeds
of the State’s settlement of claims against the administrator. The State challenges the trial
court’s award of a share of the proceeds on multiple grounds. For the reasons explained
below, we reverse and render judgment in favor of the State.
BACKGROUND
The Texas Medicaid Fraud Prevention Act (TMFPA) 1 is a “powerful tool”
for targeting fraud against the Texas Medicaid program. In re Xerox Corp., 555
S.W.3d 518, 525 (Tex. 2018) (orig. proceeding). The TMFPA authorizes the
attorney general to investigate and bring actions against individuals or entities that
defraud the Medicaid program in violation of the Act. Id. (citing Tex. Hum. Res.
Code §§ 36.051–.055). The Act also, through qui tam provisions, “deputizes
private citizens to pursue a TMFPA action on the government’s behalf.” Id. (citing
Tex. Hum. Res. Code § 36.101). A person filing such an action, known as a relator,
is required to serve a copy of the petition on the attorney general. Tex. Hum. Res.
Code § 36.102(a). The State has the option to intervene in such a qui tam suit or
decline to take over the action. Id. §§ 36.102(c), .104(a)–(b). If an action is
successful, a relator is entitled to a percentage of the proceeds, including proceeds
of a settlement. Id. § 36.110.
Xerox Corporation and Xerox State Healthcare, LLC 2 (collectively, Xerox)
contracted with the State to perform program administration for Texas Medicaid
which included evaluating authorization requests submitted to Medicaid by dental
providers for approval of orthodontic treatment. Orthodontic treatment is covered
1
The TMFPA was amended in 2023 to include additional state-run health care programs
in addition to Medicaid, and is now called the Texas Health Care Program Fund Prevention Act.
In re Sanofi-Aventis U.S. LLC, 711 S.W.3d 732, 736, 736 n.1 (Tex. App.—15th Dist. 2025, orig.
proceeding). The TMFPA in effect at the time appellees filed their suits in 2012 applies here.
Cites to the Texas Human Resources Code are to the version in effect in 2012.
2
Xerox State Healthcare LLC was previously known as ACS State HealthCare LLC.
2
by Medicaid if the patient meets certain criteria and the treatment is medically
necessary as defined by Medicaid. Alvarez, Ellis, and LaFountain (jointly,
appellees) filed separate qui tam actions in 2012 against multiple Texas Medicaid
dental providers alleging violations of the TMFPA related to the providers seeking
and receiving Medicaid reimbursement for claims that did not meet Medicaid
criteria. They also each sued Xerox, alleging that Xerox routinely approved
Medicaid claims without verifying that that the claims complied with Medicaid
guidelines for reimbursement. The State intervened in each suit.
In May 2014, the State filed its own suit against Xerox for violations of the
TMFPA, alleging that
Xerox fraudulently operated the review process while serving as the
Medicaid program administrator. Among other complaints, the State
alleges Xerox misrepresented, concealed, or failed to disclose that it
was not processing orthodontic prior-authorization requests in
accordance with Medicaid policy, was not substantively reviewing the
evaluative documentation, and was approving vast numbers of prior-
authorization requests for ineligible services. The State claims that
rather than conducting a rigorous review, Xerox actively concealed
the fact that unqualified and inadequately supervised clerical
employees routinely “rubber stamped” orthodontic prior-authorization
requests. According to the State, Xerox’s actions were unlawful,
compromised the Medicaid program’s integrity, and directly or
indirectly caused the State to pay millions of dollars for unauthorized
orthodontic services to Medicaid patients.
State v. Ellis, 681 S.W.3d 501, 506–07 (Tex. App.—Austin 2023, no pet.). Around
this time, “the State sought and received the agreement from appellees to dismiss
or abate their respective qui tam actions.” Id.
In February 2019, the State and Xerox entered into a settlement agreement.
The agreement provided, among other things, that:
• The State “intervened in a number of other actions brought in its
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name by qui tam relators (collectively, and together with any other
such qui tam actions filed in state or federal court alleging claims
arising out of Covered Conduct, the ‘Related Actions’).”
• The parties had “reached a full and final settlement of any and all
of the claims, or potential claims,” including those asserted in the
“Related Actions.”
• The parties allocated some of the settlement amount “towards
payment of attorneys’ fees, costs, and legal expenses incurred by
the State in connection with ... the Related Actions.”
• The State agreed to “promptly seek dismissal of all Related
Actions filed in Texas state court.”
Id. at 507–08.
Appellees filed a joint motion in the State’s suit against Xerox for
determination of their share of the proceeds as relators under TMFPA section
36.110 (the “Joint Motion”). Id. at 507. They also later filed a joint motion to
intervene, noting that they believed they were “‘already proper parties because of
their standing as qui tam relators in previously-filed, intervened lawsuits against
the Xerox defendants in this case’ but filed the motion to intervene ‘out of an
abundance of caution so the Court has a clear understanding of [their] standing to
participate in this case.’” Id. The State moved to sever the claims seeking an
interest in the share of the settlement proceeds from its suit against Xerox. The
State explained that the Xerox defendants had no interest in the remaining claims
and once the Xerox defendants paid the settlement amount in full, the State would
release them. The State stated that the motion to sever “should not, in any way,
prejudice” the appellees.
After the trial court granted the motion and severed the Joint Motion into a
separate cause number, the State filed a plea to the jurisdiction. Id. at 508–09. The
State claimed that it was immune from suit as to the claims in the Joint Motion. Id.
at 509. The State additionally claimed that its immunity was not waived as to the
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claims brought by Ellis and LaFountain because their qui tam claims were based
on the same underlying facts as Alvarez’s earlier claim and the TMFPA prohibits a
person from “bring[ing] a related action based on the facts underlying a pending
action brought under this subchapter.” Id. at 513 (citing Tex. Hum. Res. Code §
36.106). The State asserted that being first to file was a TMFPA statutory
prerequisite to suit and accordingly its immunity was not waived because Ellis and
LaFountain did not comply with the statutory prerequisite. Id. The trial court
denied the plea to the jurisdiction, referencing the TMFPA’s “purpose and
structure.” Id. at 509–10. The State appealed the denial of its plea and the Third
Court of Appeals affirmed. Id. at 504.
On remand, appellees filed a renewed motion for determination of relators’
share, requesting that the court award them a 17.5% share. The State filed special
exceptions, which the trial court denied. The State then filed a motion for summary
judgment asserting that appellees actions were barred by the public-disclosure
provision which provides that a person may not bring a qui tam claim “that is
based on the public disclosure of allegations or transactions.” Tex. Hum Res. Code
§ 36.113. The State claimed that news reports, state and federal audits, legislative
hearings, and news releases by government agencies were prior public disclosures
of Xerox’s failure to properly process orthodontic requests. The trial court denied
the motion for summary judgment and entered a final judgment awarding appellees
$37,160,865 (a 17.5% share of the State’s $212,347,800 settlement proceeds) as
well as prejudgment interest.
ANALYSIS
The State raises five issues challenging the judgment: (1) appellees’ Joint
Motion does not state a cause of action and is barred by sovereign immunity, (2)
appellees’ should receive no share of the settlement proceeds because their qui tam
5
actions were based on earlier public disclosures so they are barred under the public
disclosure provision of the TMFPA, (3) Ellis’s and LaFountain’s qui tam claims
are barred by the TMFPA’s first-to-file provision, (4) The TMFPA does not
authorize the award of pre and post judgment interest against the State, and (5)
appellees are entitled to no more than 7% of the settlement proceeds.
I. Appellees’ Motion for a Share of the Settlement Award Is Not Barred
by Immunity.
The State first claims that appellees’ Joint Motion does not state a cause of
action and is barred by sovereign immunity. Sovereign immunity protects the State
from suit and liability, “thereby depriving trial courts of subject-matter jurisdiction
over suits against them unless the State consents.” Tex. Dep’t of Transp. v. Self, 690
S.W.3d 12, 19 (Tex. 2024). An immunity challenge is properly raised through a plea
to the jurisdiction. Id. We review a trial court’s ruling on a plea to the jurisdiction de
novo. Id.
The State claims that when appellees’ Joint Motion was severed from the
State’s suit against Xerox (on the State’s motion), appellees had no valid cause of
action. The State claims that because the TMFPA does not contain a cause of action
authorizing a relator to sue the State to recover a relator’s share, appellees have no
cause of action on which to base their claims. In the State’s prior appeal challenging
the denial of its plea to the jurisdiction, the State argued that there was no showing
that “the TMFPA clearly and unambiguously waives sovereign immunity to permit
their claims against the State.” Ellis, 681 S.W.3d at 511. While the State did not
directly challenge the lack of a cause of action under the TMFPA, the Third Court of
Appeals first addressed whether appellees Joint Motion was a “suit” in the context of
whether it was authorized under the TMFPA. Id.
The Third Court considered the State’s immunity challenge by looking to “the
plain language of the statutory provisions addressing a qui-tam relator’s role and
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entitlement to a settlement share in the context of the TMFPA’s statutory scheme.” Id.
The court first noted that the appellees’ qui tam actions were asserted against Xerox
and not the State. Id. at 512. The court then explained:
We also do not believe that appellees’ motion—filed within the State’s
suit against Xerox following the settlement—falls within the meaning of
a “suit” at all. See Jaster v. Comet II Constr., Inc., 438 S.W.3d 556, 563–
64 (Tex. 2014) (plurality op.) (explaining that “common meaning of the
term ‘action’ refers to an entire lawsuit or cause or proceeding, not to
discrete ‘claims’ or ‘causes of action’ asserted within a suit, cause, or
proceeding” and that “term ‘action’ is generally synonymous with ‘suit,’
which is a demand of one's rights in court” (quoting Thomas v. Oldham,
895 S.W.2d 352, 356 (Tex. 1995))); Black’s Law Dictionary 1106 (9th
ed. 2009) (defining “motion” to mean “written or oral application
requesting a court to make a specified ruling or order”); see also id. 897
(defining “intervention” to mean “entry into lawsuit by a third party
who, despite not being named a party in the action, has a personal stake
in the outcome”).
Id. at n.8. We agree with the Third Court that appellees’ Joint Motion was not a “suit.”
We additionally agree with the Third Court that “sovereign immunity did not
apply to deprive the trial court of jurisdiction to adjudicate the merits of appellees’
joint motion seeking a relator share of the Xerox settlement proceeds.” Id. at 513. The
court explained that the TMFPA expressly contemplates and authorizes a relator to
receive proceeds from a settlement when the State intervenes in a qui tam action and
later settles the relator’s allegations. Id. at 512 (citing Tex. Hum. Res. Code
§§ 36.109(a), .110(d)). But the TMFPA also provides that “[i]f an alternative remedy
is pursued in another proceeding, the person bringing the action has the same rights in
the other proceeding as the person would have had if the action had continued under
[the qui tam provisions].” Id. (quoting Tex. Hum. Res. Code § 36.109(a)). The court
concluded that the State’s pursuit of claims raised in a separate qui tam suit falls
squarely within the meaning of that provision. Id. In this case, the State intervened in
appellees’ qui tam actions which appellees agreed to abate. Id. The State “filed
‘another proceeding’—the separate suit—against Xerox; and then entered into a
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settlement agreement with Xerox that included settling appellees’ claims that they
raised on the State’s behalf against Xerox in their qui tam actions . . . .” Id. The
settlement agreement between the State and Xerox expressly referenced and settled
appellees’ qui tam actions. Id. at 513. The court concluded that “the trial court did not
err by concluding that sovereign immunity did not apply to deprive the trial court of
jurisdiction to adjudicate the merits of appellees’ joint motion seeking a relator share
of the Xerox settlement proceeds.” Id. We agree with this conclusion.
The State acknowledges that appellees could have filed a motion seeking a
relator’s share in their original qui tam suits but claims that a relator is “required” to
seek a realtor’s share of an alternate proceeding in the original qui tam action and not
the alternate proceeding. The TMFPA provides that if the State pursues an alternative
remedy, a person who brought a qui tam action “has the same rights in the other
proceeding as the person would have had if the action had continued . . . .” Tex. Hum.
Res. Code § 36.109(a). The State does not explain how, if appellees’ rights to seek a
relator’s share in the qui tam suit are “the same” as their rights to seek a relator’s
share in the alternate proceeding, the State does not have sovereign immunity
regarding a motion to recover a relator’s share in one suit but it does have sovereign
immunity in the other. Further, nothing in the federal cases cited by the State indicates
that a motion to recover a relator’s share must be filed only in the original proceeding
and not the alternate proceeding. See United States ex rel. LaCorte v. Wagner, 185
F.3d 188, 191 (4th Cir. 1999); United States v. Wegeler, 941 F.3d 665, 672 (3d Cir.
2019); United States v. L-3 Commc’ns EOTech, Inc., 921 F.3d 11, 30 (2d Cir. 2019). 3
3
The State also cites these cases for the proposition that “federal courts have held that the
alternate remedy provision does not confer a relator with the unfettered right to a determination
of the relator’s share within the alternative proceeding.” But each case cited by the State was
decided on the facts of the case and each is inapplicable here. Lacorte, 185 F.3d at 191
(prohibiting intervention by individuals in a qui tam suit because only the government can
intervene under statute); Wegeler, 941 F.3d at 672 (holding that a qui tam relator could not
intervene in a criminal proceeding to recover a share of the proceeds under the alternate-remedy
provision); L-3 Commc’ns EOTech, Inc., 921 F.3d at 30 (holding that the alternate remedy
8
We agree with the Third court that the trial court had jurisdiction to adjudicate the
merits of appellees’ Joint Motion. We next turn to the question of whether the
TMFPA’s public disclosure provision barred appellees’ qui tam claims.
II. Appellees’ Qui Tam Claims Are Barred by the TMFPA’s Public
Disclosure Provision.
The TMFPA version applicable to this case provided that
A person may not bring an action under this subchapter that is based
on the public disclosure of allegations or transactions in a criminal or
civil hearing in which the state or an agent of the state is a party, in a
legislative or administrative report, hearing, audit, or investigation, or
from the news media, unless the person bringing the action is an
original source of the information.
Tex. Hum. Res. Code § 36.113(b). The TMFPA encourages individuals with
knowledge of government fraud to come forward with that information. But the
public disclosure bar prevents qui tam suits for fraud that is already publicly
known. See United States ex rel. Paulos v. Stryker Corp., 762 F.3d 688, 692 (8th
Cir. 2014) (recognizing that the federal qui tam provision “is designed to promote
private citizen involvement in exposing fraud against the government, while at the
same time, the public disclosure bar works to prevent parasitic suits by
opportunistic late-comers who add nothing to the exposure of the fraud” (citations
and internal quotation marks omitted)).
In its motion for summary judgment, the State asserted that appellees’ qui
tam claims were barred under the public disclosure provision because allegations
that Xerox fraudulently administered the Texas Medicaid program were already
the subject of widespread news reporting, administrative reports, hearings, audits,
and investigations. The trial court denied the State’s motion. “We review summary
provision only entitles a relator to a share of the recovery if the qui tam action was “pending
when the government was choosing what course to pursue”).
9
judgments de novo, taking as true all evidence favorable to the nonmovant, and
indulging every reasonable inference and resolving any doubts in the nonmovant’s
favor.” First Sabrepoint Cap. Mgmt., L.P. v. Farmland Partners Inc., 712 S.W.3d
75, 84 (Tex. 2025) (citation and internal quotation marks omitted). We conclude
that the trial court erred in denying the State’s motion for summary judgment
because the underlying allegations of fraud had already been disclosed in the news
media and the claims were barred by the public disclosure provision.
Relators first point out that the State previously argued in Ellis’s qui tam suit
that some of the articles at issue were not public disclosures, and they urge that the
State must be held to this prior claim. While it is true that the State previously took
the position that the articles were not public disclosures, its prior argument is
inapplicable here because the State’s prior claim involved a different defendant and
not Xerox. In Ellis’s qui tam suit, an individual orthodontist, Dr. Malouf, filed a
motion for summary judgment seeking to have Ellis dismissed as a relator on
multiple grounds, including that her claims were based on the public disclosure of
the allegations. In response, the State and Ellis jointly argued that there had been
no public disclosure of the information in Ellis’s petition. But the arguments were
specifically aimed at Ellis’s claims against the individual provider. A public
disclosure bars a claim only if the public disclosure is specific to a particular
defendant. United States v. CSL Behring, L.L.C., 855 F.3d 935, 944 (8th Cir. 2017)
(“[I]n order to bar claims against a particular defendant, the public disclosures
relating to the fraud must either explicitly identify that defendant as a participant in
the alleged scheme, or provide enough information about the participants in the
scheme such that the defendant is identifiable.” (alterations in original) (quoting
United States ex rel. Kester v. Novartis Pharm. Corp., No. 11 CIV. 8196 CM, 2015
WL 109934, at *8 (S.D.N.Y. Jan. 6, 2015)). It follows that the State is not taking
10
inconsistent positions by arguing that the articles were not public disclosures
regarding a specific dental provider, but they are public disclosures regarding
Xerox.
Turning to the question of whether appellees’ qui tam claims were barred
under subsection 36.113(b), we recognize that no Texas court has interpreted this
public disclosure provision. However, the public disclosure provision of the
Federal False Claims Act is analogous to the public disclosure provision of the
TFMLA. See State v. Caremark, Inc., 584 F.3d 655, 657 (5th Cir. 2009)
(recognizing provisions of the TMFPA are analogous to the Federal False Claims
Act). Accordingly, we find federal cases interpreting the similar federal public
disclosure provision instructive. 4 See, e.g., Prairie View A&M Univ. v. Chatha,
381 S.W.3d 500, 505 (Tex. 2012) (noting that “we have looked to federal law for
4
The prior version of the public disclosure provision in the Federal False Claims Act
provided:
No court shall have jurisdiction over an action under this section 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 action is brought by the Attorney
General or the person bringing the action is an original source of the information.
United States ex rel. Laird v. Lockheed Martin Eng’g & Sci. Servs. Co., 336 F.3d 346, 351 (5th
Cir. 2003) (quoting 31 U.S.C. § 3730(e)(4)(A) (2000)). Appellees assert that the Texas public
disclosure provision should be interpreted less broadly than its federal counterpart because,
unlike the Texas statute, the federal statute is jurisdictional. But both the Texas and federal
public disclosure provisions have since been amended. See Patient Protection and Affordable
Care Act, Pub. L. No. 111-148, Title X, sec. 10104(j)(2), § 3730(e)(4), 124 Stat. 119, 901
(2010); Act of May 25, 2013, 83rd Leg., R.S., ch. 572, § 4, 2013 Tex. Gen. Laws 1536, 1538.
The federal public disclosure provision is no longer jurisdictional, but federal courts have
continued to utilize the same test to analyze the current version of the public disclosure bar. See,
e.g., United States ex rel. Schweizer v. Canon, Inc., 9 F.4th 269, 275 (5th Cir. 2021); United
States ex rel. Holloway v. Heartland Hospice, Inc., 960 F.3d 836, 843 (6th Cir. 2020) (noting
that the same considerations apply “[u]nder either version of the public disclosure bar.”). We
decline to interpret the TMFPA public disclosure provision less broadly than the federal
provision.
11
guidance in situations where the [Texas Commission on Human Rights Act] and
Title VII contain analogous statutory language”); Ellis, 681 S.W.3d at 506 n.3
(“Because the TMFPA’s qui tam provisions at issue, including its first-to-file
provision, use substantially similar language to the FCA’s qui tam provisions, see
31 U.S.C. § 3729–33, federal jurisprudence interpreting the FCA’s comparable
provisions is informative.”).
Federal courts have set out the following considerations when addressing
whether the public disclosure bar applies: “1) whether there has been a ‘public
disclosure’ of allegations or transactions, 2) whether the qui tam action is ‘based
upon’ such publicly disclosed allegations, and 3) if so, whether the relator is the
‘original source’ of the information.” Fed. Recovery Servs., Inc. v. United States,
72 F.3d 447, 450 (5th Cir. 1995) (citation omitted); see United States ex rel. v.
Mortg. Invs. Corp., 987 F.3d 1340, 1353 (11th Cir. 2021) (“We have framed the
public disclosure inquiry as a three-part test: (1) have the allegations made by the
plaintiff been publicly disclosed; (2) if so, is the disclosed information the basis of
the plaintiff’s suit; (3) if yes, is the plaintiff an ‘original source’ of that
information.”) (citation and internal quotation marks omitted); United States ex rel.
Ondis v. City of Woonsocket, 587 F.3d 49, 53 (1st Cir. 2009) (setting out the test as
“(1) whether there has been public disclosure of the allegations or transactions in
the relator’s complaint; (2) if so, whether the public disclosure occurred in the
manner specified in the statute; [and] (3) if so, whether the relator's suit is ‘based
upon’ those publicly disclosed allegations or transactions.” (alteration in original)
(citation omitted). We agree that this test is consistent with the language of the
Texas statute and apply it here.
A. There Was a Public Disclosure of Allegations or Transactions
Through the WFAA Reporting.
We first consider the question of whether there was a public disclosure of
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“allegations or transactions.” Federal courts have interpreted “allegation” to mean
a direct claim of fraud and “transaction” as facts from which fraud can be inferred.
United States ex rel. Mateski v. Raytheon Co., 816 F.3d 565, 571 (9th Cir. 2016)
(citing United States ex rel. Zizic v. Q2Administrators, LLC, 728 F.3d 228, 235–36
(3d Cir. 2013) and United States ex rel. Springfield Terminal Ry. Co. v. Quinn, 14
F.3d 645, 653–54 (D.C. Cir. 1994)). Many courts use a formula to determine
whether fraud can be inferred from the disclosure:
[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.
Quinn, 14 F.3d at 654. In the formula, X and Y are the required elements for the
inference of fraud: “a misrepresented state of facts and a true state of facts.” United
States ex rel. Solomon v. Lockheed Martin Corp., 878 F.3d 139, 144 (5th Cir.
2017) (quoting Quinn, 14 F.3d at 655). The presence of only one “cannot be
expected to set government investigators on the trail of fraud.” Id. (quoting Quinn,
14 F.3d at 655).
The State cites multiple news media reports that it claims inferred Medicaid
fraud by Xerox. Over several months news station WFAA investigated and issued
multiple reports on the issue of Medicaid payments for braces for children and how
the amount of those payments in Texas far surpassed Medicaid payments for
braces by any other state. The first article referenced by the State was posted online
on May 13, 2011, and explained that Medicaid is not meant to pay for braces for
cosmetic purposes, but only for “teeth determined to be so crooked they could
handicap a child.” The article stated that “[c]ritics say the state simply doesn’t
evaluate claims” and quoted an orthodontist as saying that “[t]here’s no legitimated
[sic] approval process.” The article continued that “Medicaid claims are processed
13
by an outside contractor” and “claims are rejected only if paperwork is incomplete,
not on a standard of medical evaluation.”
The next month, a WFAA broadcast reported on Medicaid payments for
braces for children under 12 who generally did not qualify for orthodontic care
except in very limited circumstances. The focus was on the orthodontic providers,
noting that multiple orthodontists had collected over $1 million in Medicaid
payments in one year. But the broadcast also mentioned approval of those claims:
“News 8 has learned nearly a quarter of all the braces paid for under Medicaid last
year in Texas may have been installed by waiving State regulations,” and that the
“State dental director” had to personally approve cases for children under 12 and
19,000 children “got that special approval from the State last year.” The report also
explained that Senator Nelson had added two riders to the Texas Department of
Health and Human Services’ (HHSC) budget. One rider would change “the way
dentists are reimbursed,” because “clearly we need to see if there are certain
companies or individuals that are not being totally honest about what they are
doing” and the other would direct the inspector general to “detect, investigate, and
prosecute abuse by dentists and orthodontists who participate in the Texas
Medicaid Program.”
An August 25, 2011 article dug deeper into Xerox’s role. The article began
that “investigations have revealed hundreds of millions of dollars of questionable
Medicaid spending on braces for children.” “Medicaid money should only be used
on cases of severe deformities, cranial-facial problems, and cleft palates.” The
article noted that federal investigators were auditing HHSC including the
“authorization process for orthodontic treatment under Texas Medicaid” in order to
“review the State’s controls to ensure that only medically necessary orthodontic
cases are paid.” The article explained that orthodontic treatment was authorized by
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Xerox and if state regulations were being followed, the dental director of Xerox
would have personally approved over 18,000 children under 12 for braces in one
year. Xerox additionally approved 60,000 children over 12 for orthodontic
treatment that year. WFAA requested to see and film the Xerox dental review
facilities, but that request was denied due to privacy concerns.
A November 11, 2011 broadcast again addressed Xerox’s role, focusing on
the money the State spent “processing Medicaid claims, the company that does the
work, and how it pays its employees.” The report continued that Texas taxpayers
paid for braces for 80,000 children on Medicaid the past year and those claims
were approved by Xerox. Xerox was “a virtual assembly line of claims
processing.” A former Xerox employee who had processed dental claims was
interviewed and stated that “your tax dollars aren’t working. You’re paying for
services that shouldn’t be paid for.” She asserted that people were awarded for
“ignoring problem claims.” The report continued that “[w]hat may be behind the
problem goes beyond teeth, braces and dentists. It's the way [Xerox] pays its
workers.” Xerox paid workers based on the number of claims it processed. “[F]or
workers the message is clear: rush the claims through whether they’re correct or
not.”
A broadcast the next month reported that the Texas Senate would be holding
investigative hearings to examine how “claims were approved.” The report pointed
to its prior broadcast stating “part of a News 8 investigation that began with braces
and ended up with [Xerox], the company which processes Medicaid dental claims,
paying its workers on how many claims they process rather than how well they do
the work.” Senator Nelson stated in an interview that “it makes me concerned,
quite honestly, about where else this is going on” and that “if there was fraud
taking place, somebody needs to be accountable for that.”
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The news reports set out a true state of facts: Medicaid only covers braces in
very limited circumstances that require specific approval. The news reports also set
out the misrepresented set of facts: Xerox was the private contractor charged with
authorizing orthodontic claims, but under Xerox’s policy, its employees rushed
through claims, approving claims whether they complied with Medicaid
requirements or not.
Appellees claim that these reports did not disclose fraud by Xerox, but rather
focused on the State. We disagree with appellees’ interpretation of the reports. The
reports specifically named Xerox, addressed Xerox’s role in failing to properly
process claims, and revealed Xerox’s policy of encouraging employees to rush
through claims rather than properly analyzing them. We hold that the news reports
publicly disclosed evidence of a fraudulent transaction by Xerox. See Zizic, 728
F.3d at 237 (holding that a fraudulent transaction was publicly disclosed where the
true state of facts—Medicare regulations required physician review of certain
claims—and the misrepresented state of facts—administrators were under contract
to perform physician reviews but failed to do so—were disclosed prior to the qui
tam suit). Because we conclude that the WFAA reporting publicly disclosed the
allegations against Xerox, we need not address whether the other legislative
reports, hearing, audits, or investigations referenced by the State were public
disclosures.
Appellees also claim that the State did not carry its burden to establish any
public disclosures because by its own admissions, the State began investigating
Xerox’s fraud after Appellees had filed suit. The State disputes when it began
investigating Xerox, but the timing of the State’s investigation is irrelevant to
whether the public disclosure provision applies. The statute does not contain any
requirement that the State begin an investigation into or even have knowledge of
16
the fraud in order for the public disclosure bar to apply. See Tex. Hum. Res. Code
§ 36.113(b). And no federal court has interpreted the federal public disclosure bar
to require a government investigation before a quit tam suit is filed in order for the
public disclosure bar to apply. See, e.g., United States ex rel. Davis v. District of
Columbia, 679 F.3d 832, 836 (D.C. Cir. 2012) (holding that the public disclosure
bar prevents suits when the government “already has enough information to
‘investigate’” or “where the information ‘could at least have alerted law-
enforcement authorities to the likelihood of wrongdoing’” (quoting Quinn, 14 F.3d
at 654); United States ex rel. Maur v. Hage-Korban, 981 F.3d 516, 523 (6th Cir.
2020) (explaining that the “key inquiry” in deciding whether a public disclosure
has been made is if the disclosures “could have ‘put the government on notice of
the fraud alleged’” (emphasis added) (quoting Holloway, 960 F.3d at 851)).
B. Appellees’ Claims Were “Based on” the Public Disclosure of the
Allegations or Transactions.
The public disclosure provision bars a qui tam suit that is based on the
public disclosure. See Tex. Hum. Res. Code § 36.113(b) (2011). The Texas
Supreme Court considered the phrase “based on” in another context to determine
whether a claim was “based on or is in response to” the exercise of free speech
under the Texas Citizens Participation Act. Walgreens v. McKenzie, 713 S.W.3d
394, 400 (Tex. 2025) (quoting Tex. Civ. Prac. & Rem. Code § 27.003(a)). The
Court recognized that a court gives undefined statutory terms their ordinary
meaning “unless ‘a different or more precise definition is apparent from the term’s
use in the context of the statute.’” Id. at 399 (quoting TGS-NOPEC Geophysical
Co. v. Combs, 340 S.W.3d 432, 439 (Tex. 2011)). The Court looked to dictionary
definitions and lower court interpretations to conclude that “factually predicated
on,” “main ingredient,” and “fundamental part” were helpful in understanding and
applying the statutory term “based on.” Id. at 400 (citations omitted). But the Court
17
rejected a conclusion that “based on” required that a claim be “entirely” based on
or “solely dependent” on protected activity. Id. at 400–01.
The Texas Supreme Court’s interpretation of “based on” is similar to those
adopted by federal courts interpreting the public disclosure provision. “To be based
on allegations or transactions of fraud, claims need not be actually derived from
public disclosures.” Zizic, 728 F.3d at 237 (citations and internal quotation marks
omitted). Rather, claims are “based upon” a prior public disclosure when
“substantial identity exists between the publicly disclosed allegations or
transactions and the qui tam complaint”—in other words, that “essentially the same
scheme was the primary focus of each.” Holloway, 960 F.3d at 847 (citations and
internal quotation marks omitted); see United States ex rel. Settlemire v. District of
Columbia, 198 F.3d 913, 918 (D.C. Cir. 1999) (holding that a relator’s complaint is
“based on” public disclosures where the complaint “describe[s] allegations or
transactions substantially similar to those in the public domain”) (citations and
internal quotation marks omitted). But the public disclosure bar still applies even
when qui tam actions are “based even partly upon public disclosures.” Holloway,
960 F.3d at 847 (quoting U.S. ex rel. McKenzie v. BellSouth Telecomm., Inc., 123
F.3d 935, 940 (6th Cir. 1997)). We turn to appellees’ claims to determine whether
they were “based on” the public disclosures.
Each Relator brought claims against multiple providers as well as Xerox.
We consider only their claims against Xerox to determine whether those claims
were based on the public disclosures. In Ellis’s petition she alleged that Xerox was
paid by the State to screen and pre-approve every application seeking
reimbursement from Medicaid for braces. “Xerox engaged in a fraudulent course
of conduct over many years and merely rubber stamped almost every single
request by providers to place braces on children who did not qualify.” She
18
additionally claimed that Xerox “failed to provide proper staffing or adequately
trained staff, or both, to evaluate the preauthorization information . . . .” In sum,
she claimed Xerox granted preapproval requests without ensuring the accuracy of a
score meant to measure severe deformities, determining the medical necessity of
the requested appliances, or determining whether the patient was eligible for
services paid by Medicaid.
In Alvarez’s petition she alleged that false claims were submitted to
Medicaid and “processed by Defendant [Xerox], which routinely approved claims
without checking the veracity of whether or not such claims complied with
Medicaid guidelines for reimbursement.” Those false claims included charges that
were double or triple billed, billing for braces that were not medically necessary,
and billing for services that were not performed. She further alleged that Xerox
breached its contract with the Texas Health and Human Services Commission, as
Xerox was to approve only those claims that were compliant with Medicaid criteria
and guidelines, but it “routinely and systematically approved claims without regard
to whether they complied . . . .” Alvarez also claimed Xerox “was negligent and
failed to use due care in approving claims without regard to whether they were in
compliance with Medicaid guidelines and regulations.”
Essentially both Ellis’s and Alvarez’s allegations boil down to assertions
that Xerox approved Medicaid claims for braces without verifying that the claims
qualified for payment. We conclude their actions were “based on” the news media
public disclosures as “essentially the same scheme was the primary focus of each.”
Holloway, 960 F.3d at 847 (citations and internal quotation marks omitted).
The allegations in LaFountain’s petition against Xerox were not related to its
approval for Medicaid for braces. LaFountain claimed that various dental clinics
submitted claims for Medicaid reimbursement for procedures such as “baby root
19
canals,” crowns, extractions, fillings, scalings, and x-rays that were not medically
necessary. He claimed that Xerox was negligent in approving payment of such
false claims without regard to whether they complied with Medicaid guidelines and
that Xerox had an “activity based compensation” program whereby “the people
processing the claims were paid by the number of claims processed, so they had no
incentive to closely analyze and reject False Claims.”
LaFountain raised allegations of approval for dental claims other than
braces, but we conclude those claims were also “based on” the public disclosures.
The allegations in the public domain were that Xerox approved orthodontic claims
without first determining whether the claims complied with Medicaid
requirements. LaFountain alleged that Xerox approved dental claims without
determining whether the claims complied with Medicaid requirements. A relator’s
revelation of specific instances of fraud when the general practice has already been
publicly disclosed does not overcome the public disclosure bar. United States ex
rel. Findley v. FPC-Boron Emps.’ Club, 105 F.3d 675, 687–88 (D.C. Cir. 1997).
Further, the State had enough information through the public disclosures to
investigate Xerox’s approval of Medicaid claims that were not medically necessary
whether for braces or other dental procedures. See id. at 688 (explaining that if a
complaint “merely echoes publicly disclosed, allegedly fraudulent transactions that
already enable the government to adequately investigate the case and to make a
decision whether to prosecute, the public disclosure bar applies”). We conclude
that LaFountain’s claims were also based on the public disclosures.
C. The Original Source Exception Does Not Apply to Any of the
Appellees.
Ellis and LaFountain claim that the public disclosure bar does not apply to
them because they were original sources of the information. The TMFPA contains
an exception to the public disclosure bar if the person bringing the action is an
20
“original source of the information.” Tex. Hum. Res. Code § 36.113(b). The statute
defines an original source as
an individual who:
(1) has direct and independent knowledge of the information on
which the allegations are based and has voluntarily provided the
information to the state before filing an action under this subchapter
that is based on the information; or
(2) has knowledge that is independent of and materially adds to
the publicly disclosed allegations and who has voluntarily provided
the information to the state before filing an action under this
subchapter that is based on the information.
Id. We again turn to federal cases interpreting the nearly identical federal definition
of original source. 5 “Because qualifying as an original source is an exception to the
public disclosure bar, relators will generally bear the burden of demonstrating it
applies. . . . Relators are also best situated to know the facts relevant to whether
they qualify as original sources.” United States ex rel. O’Connor v. USCC Wireless
Inv., Inc., 128 F.4th 276, 287 (D.C. Cir. 2025); see United States ex rel. Bahrani v.
Conagra, Inc., 465 F.3d 1189, 1207 (10th Cir. 2006) (“The burden is on [the
relator] to show that he is an original source.”) (citation omitted). Additionally, the
“information on which the allegations are based” means “the information upon
which the relators’ allegations are based.” Rockwell Int’l Corp. v. United States,
549 U.S. 457, 470–71 (2007).
“Direct” and “independent” knowledge have distinct meanings. Knowledge
is direct when it is “derived from the source without interruption or gained by the
5
The prior version of the federal public disclosure provision defined original source as:
[A]n individual who has direct and independent knowledge of the information on which
the allegations are based and has voluntarily provided the information to the Government
before filing an action under this section which is based on the information.
Laird, 336 F.3d at 352 (quoting 31 U.S.C. § 3730(e)(4)(B) (2000)).
21
relator’s own efforts rather than learned second-hand through the efforts of others.”
United States ex rel. Reagan v. E. Tex. Med. Ctr. Reg’l Healthcare Sys., 384 F.3d
168, 179 (5th Cir. 2004) (quoting Laird, 336 F.3d at 355); Zizic, 728 F.3d at 239
(“[D]irect knowledge is based on first-hand information, and it is gained by the
relator’s own efforts, and not by the labors of others . . . .” (citation and internal
quotation marks omitted)). “A relator’s knowledge is independent if it does not
depend on public disclosures.” Zizic, 728 F.3d at 240 (citation and internal
quotation marks omitted). The federal act “seeks to encourage persons with ‘first-
hand knowledge of fraudulent misconduct,’ or those ‘who are either close
observers or otherwise involved in the fraudulent activity’ to come forward.”
United States ex rel. Barth v. Ridgedale Elec., Inc., 44 F.3d 699, 703 (8th Cir.
1995) (citations omitted).
1. Alvarez has Never Asserted that she was an Original Source.
Alvarez did not assert in response to the State’s motion for summary
judgment that she was an original source of the information on which her
allegations were based. Nor does she argue in this Court that she was an original
source. Accordingly, we hold that Alvarez’s qui tam suit is barred because it was
based on the public disclosure of allegations or transactions from the news media
and she was not an original source of the information. See Tex. Hum. Res. Code
§ 36.113.
2. LaFountain did not Have Direct Knowledge of the
Information on Which his Allegations Against Xerox
were Based.
LaFountain claims that he voluntarily provided the State information about
Xerox’s fraud before filing his suit and that his knowledge was “direct and
independent.” LaFountain worked at Bear Creek Family Dentistry assisting in the
management and development of various dental clinics. He alleged in his qui tam
22
suit that Xerox approved Medicaid claims without checking whether those claims
complied with guidelines for reimbursement and that Xerox used activity-based
compensation that paid employees by the number of claims processed,
disincentivizing the denial of false claims. LaFountain’s information was based on
his observations of “what was submitted to [Xerox] and what they approved.” But
LaFountain admitted that he had no interaction with Xerox and any knowledge was
not based on direct interactions with Xerox. Further, any knowledge about Xerox’s
activity-based compensation program came from a dentist who was conducting
training for Bear Creek clinics who told him about the practice.
LaFountain claims that his knowledge is direct and independent because it
derived from his employment where “his employer’s business model was
dependent on Xerox’s fraudulent pre-approvals” and that his employer “exploited
the very fraud on Medicaid that he alleged Xerox committed.” But LaFountain
alleged that Xerox approved Medicaid claims without checking whether those
claims complied with guidelines for reimbursement and an original source must
have “true knowledge as opposed to guesswork or suspicion.” Prather v. AT&T,
Inc., 847 F.3d 1097, 1104 (9th Cir. 2017) (citation and internal quotation marks
omitted). In United States ex rel. Schumann v. Astrazeneca Pharms. L.P., 769 F.3d
837, 847 (3d Cir. 2014), for example, a relator claimed that he had direct and
independent knowledge where his “experience led him to conclude” that a
pharmaceutical company could not have afforded to enter into certain agreements
if it were complying with the law. The court rejected this claim, explaining that
conclusions that the company intended to pay kickbacks do not qualify as
independent knowledge. Id. (citing United States ex rel. Vuyyuru v. Jadhav, 555
F.3d 337, 353 (4th Cir. 2009) (“[M]ere suspicion that there must be a false or
fraudulent claim lurking around somewhere simply does not carry [relator’s]
23
burden of proving that he is entitled to original source status.”)); Malhotra v.
Steinberg, 770 F.3d 853, 860 (9th Cir. 2014) (holding that a “generalized
suspicion” did not constitute “knowledge” of a kickback scheme).
The information on which LaFountain’s allegations were based was that
Xerox was approving claims “without regard to whether they complied with
Medicaid guidelines and criteria for reimbursement.” But LaFountain had no
firsthand knowledge of how or why Xerox was approving claims, including
whether approval was “without regard” to Medicaid compliance. See United States
ex rel. Aflatooni v. Kitsap Physicians Servs., 163 F.3d 516, 525 (9th Cir. 1999)
(explaining that “firsthand knowledge” is needed to establish direct knowledge).
And because LaFountain had no firsthand knowledge of Xerox’s approval
procedure, his claims of fraud were pure speculation. See id. at 526 (explaining
that the fact that a Medicare administrator did not list the referring physician on
over 50% of Medicare reimbursements, “does not amount to anything more than
pure speculation” that the administrator participated in alleged submission of false
Medicare claims).
The Third Circuit’s analysis of whether a relator was an original source in
Zizic is particularly instructive here. 728 F.3d at 228. In that case, Thomas M.
Zizic, M.D., filed suit against Medicare administrators alleging that they
fraudulently billed Medicare for physician review of benefit claim denials that
were never performed. Id. at 231. In considering whether Zizic was an original
source of the information, the court noted that Zizic had participated in
administrative law judge appeals regarding the claim denials and the records in
those appeals lacked evidence of the required physician reviews. Id. at 233, 239.
But the court rejected Zizic’s claim that his knowledge was direct because the
specific incriminating facts alleged in his complaint were based on the affidavit of
24
a former employee of the administrator who detailed the process of how claims had
been denied without the required physician reviews. Id. at 233, 239. And Zizic had
not discovered the former employee through his own investigation. Id. at 239. The
court concluded that Zizic’s “suspicion of fraud” from his participation in the ALJ
appeals was not direct knowledge. Id. at 239–40. Similarly here, LaFountain had a
suspicion of fraud based on Xerox’s approval of Bear Creek’s claims. But he had
no direct knowledge of the specific incriminating facts alleged in his complaint.
LaFountain cites three cases in support of his claim that his knowledge was
direct and independent “since it derived from his personal involvement in
Medicaid orthodontics.” But none of the cases he relies on support this vague
assertion. In the first two cases LaFountain relies on, the courts concluded that
relators were not original sources. In Glaser v. Wound Care Consultants, Inc., 570
F.3d 907, 912, 921 (7th Cir. 2009), a patient claimed she had direct and
independent knowledge that a clinic fraudulently billed the government for care
rendered by a doctor when care was actually render by a physician assistant. The
court rejected this claim, noting that the patient “made much of the fact that she
had direct knowledge that she had been treated by a physician’s assistant and not a
doctor.” Id. at 921. But the court noted that the “fraud alleged pertains to billing,
not the treatment,” and the patient’s only knowledge of the clinic’s billing practices
came from her attorney. Id. And in Reagan, the court concluded that a relator was
not an “original source” because her knowledge was not direct and independent
where it was not derived from firsthand observations, but from public records. 384
F.3d at 178–80. These cases do not demonstrate that LaFountain had direct
knowledge. LaFountain has never claimed to have firsthand knowledge of Xerox’s
internal operations. He admitted that his only knowledge of how claims were
approved came from a dentist unaffiliated with Xerox.
25
In the third case cited by LaFountain, United States ex rel. Harman v. Trinity
Industries, Inc., No. 2:12-CV-00089-JRG, 2014 WL 47258, at *4–5 (E.D. Tex.
Jan. 6, 2014), the district court considered whether a relator was an original source
in a suit related to modifications made to a guardrail design. The relator alleged in
his suit that after the modifications, the guardrail, which had been previously
approved by the government, no longer functioned as intended. Id. at *1. The court
concluded that the relator’s knowledge was direct and independent where he
uncovered the bulk of the facts related to his claim by “(1) applying his
professional skill and expertise to private and public documents . . .; and (2)
personal investigation” of the guardrails. Id. at *4 (footnote omitted). But this case
also does not help LaFountain because he does not claim that he conducted any
personal investigations, nor did he uncover any facts related to Xerox’s approval
process through his professional skill or otherwise. See also Zizic, 728 F.3d at 239–
40, 243 (holding that a relator was not an original source and noting that he had
failed to provide any information about an investigation to support his claim of
direct knowledge).
Because LaFountain did not have direct knowledge of the information upon
which his allegations against Xerox were based, we need not address whether
LaFountain voluntarily provided the information to State before filing his action.
3. Ellis did not Have Direct Knowledge of the Information
on Which her Allegations Against Xerox Were Based.
Ellis is an orthodontist in private practice who also worked as a clinical
assistant professor in the Division of Oral Surgery at the UT Southwestern Medical
Center. Around 2003 while treating Medicaid patients, she “began to notice that
dentists and orthodontists in Texas were using children to commit Medicaid
fraud.” Those Medicaid patients were receiving orthodontic care that was below an
acceptable standard of care or when they did not qualify for treatment. In 2008 she
26
began voicing her concerns regarding fraud in the Texas Medicaid orthodontics
program to various individuals and organizations. She eventually contracted with
the State in 2011 to review patient files of orthodontists suspected of Medicaid
fraud, program violations, or false misrepresentations. Prior to May 2011, she was
not focused on Xerox’s approval of claims. Rather, she was more focused on
patient care and the providers.
In support of her assertion that she is an original source of the information
on which her allegations are based, Ellis focuses on the State’s prior statements in
Ellis’s qui tam suit against Dr. Malouf that she was an original source. But as the
United States Supreme Court explained in Rockwell, original-source status requires
a claim-by-claim determination. 549 U.S. at 476. Original source status may not be
transferred from one claim onto another. Id. Accordingly, Ellis may not piggy-back
her original-source status in her claim against Dr. Malouf onto her claim against
Xerox. See id.
Ellis claims her she had direct knowledge of the information in her suit
because it was derived from her “personal experiences, insights, treatment of
patients, and contacts gained from over 16 years as a practicing orthodontist with
experience and familiarity with the Texas Medicaid program, as well as [her]
analysis and independent research of materials, anecdotes, and documents.” But
she only quotes the State’s filing in her claim against Dr. Malouf as proof of this
contention. She does not point to any actual firsthand knowledge related to Xerox’s
actions.
As explained above, “direct knowledge” requires firsthand knowledge of the
alleged fraud and not mere speculation. See Aflatooni, 163 F.3d at 525–26. Ellis
alleged that Xerox committed fraud by “merely rubber stamp[ing] almost every
single request by providers to place braces on children who did not qualify” and
27
that “Xerox knowingly approved hundreds of thousands of false Medicaid claims.”
She further claimed that Xerox “failed to provide proper staffing or adequately
trained staff, or both, to evaluate the preauthorization information” and these
“[u]nqualified [Xerox] employees almost always provided pre-authorization for
orthodontic services for clients who did not qualify.” But similar to LaFountain,
while Ellis had direct knowledge that Xerox approved false Medicaid claims, she
points to no direct knowledge that such approval was done “knowingly” or that
Xerox failed to provide proper staffing or training.
Ellis’s communications in which she claims she voluntarily provided the
information on which her allegations are based to the State further demonstrate that
her knowledge regarding Xerox’s fraud was based on speculation. First, without
citing to the record, Ellis claims that “in 2011 she urged [the Office of Inspector
General] to investigate Xerox, and was rebuffed.” Urging an investigation does not
indicate that Ellis had any direct knowledge. Further, in February 2012, Ellis
emailed a policy analyst for the Senate Committee on Health and Human Services,
again urging an investigation into Xerox. She noted that she was “finding that few
if any of the cases submitted qualified for care under [the] guidelines” and that
Xerox “should have been able to see that the case didn’t qualify based on their own
scoring system.” Ellis continued that
since they missed this scoring issue, I don’t think they even looked at
the scoring sheet. There had to have been a rubber stamp approval for
any case submitted with correct demographic information. There have
been rumors of an unofficial policy authorizing all orthodontics . . . . I
would suggest that your committee question broadly if such a policy
was being allowed and if so who ok’d it and who requested it.
This demonstrates that Ellis’s concerns of a “rubber stamp approval” were based
on her thoughts and rumors, not on firsthand information.
Ellis also claims that she was an original source of the of the WFAA stories
28
reporting on fraud in the Medicaid program. But the statute requires that an
original source voluntarily provide the information on which the allegations are
based “to the state.” Tex. Hum Res. Code § 36.113. Whether Ellis provided any
information to WFAA is irrelevant to the question of whether she qualifies as an
original source under the statute. Because Ellis lacked direct knowledge of the
allegations on which her claims against Xerox were based, she was not an original
source of that information.
Having concluded that none of appellees are original sources, they are not
entitled to recover a relator’s share of the settlement. Although Section 36.110(b)
of the TMFPA permits a recovery of up to seven percent where “the court finds
that the action is based primarily on disclosures of specific information, other than
information provided by the person bringing the action,” Tex. Hum. Res. Code
§ 36.110(b), federal courts have interpreted the analogous federal provision as
permitting recovery when a relator is an “original source.” See Fed. Recovery
Servs., Inc. v. United States, 72 F.3d 447, 452 (5th Cir. 1995) (explaining that the
legislative history of 31 U.S.C. § 3730(d)(1), which provided for an award to the
relator of up to 10% of the proceeds of the action where the action was “based
primarily on disclosures of specific information,” indicated that the provision
applied where the relator was an “original source.”); United States ex rel. Merena
v. SmithKline Beecham Corp., 205 F.3d 97, 106 (3d Cir. 2000) (same). We agree
with this interpretation. Accordingly, where a qui tam action violates the public
disclosure bar because the relator is not an original source, a relator is precluded
from recovering a relator’s share of a settlement. See Merena, 205 F.3d 106 (“[A]
relator whose claim is subject to dismissal under [the public disclosure bar] may
not receive any share of the proceeds attributable to that claim.”). Accordingly, we
sustain the State’s second issue and hold that appellees are precluded from
29
recovering a relator’s share of the State’s settlement. Because we reverse the trial
court’s judgment on this ground, we do not reach the State’s remaining issues.
CONCLUSION
We conclude that appellees’ qui tam claims are foreclosed by the public
disclosure bar of the TMFPA. The claims were based on the fraudulent transaction
publicly disclosed in the WFAA reporting, and appellees were not original sources
of the information because they lacked direct knowledge of the information on
which their allegations were based. We reverse the trial court’s judgment and
render judgment that appellees take nothing.
/s/ April Farris
April Farris
Justice
Before Chief Justice Brister, Justice Farris, and Chief Justice Adams. 6
6
The Honorable Terry Adams, sitting by assignment.
30