Seventh Circuit Finds 2010 Amendments to “Original Source” Definition are Retroactive

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14753852511_c47a94f979_zAlthough numerous courts have determined that the amendments to the public disclosure bar by the 2010 Dodd-Frank Act were not retroactive because they were a substantive change to the law, this past week the Seventh Circuit determined that the amendments to the original source exception of the public disclosure bar in the same Act are retroactive because they merely clarify the prior statute.

InĀ U.S. ex rel. Bogina v. Medline Indus., Inc., No. 15-1867 (7th Cir. Jan. 4, 2016), the Seventh Circuit suggested courts must undertake a line-by-line, change-by-change determination of whether statutory amendments are substantive or clarifying, which determines whether the amendments are retroactive. In the underlying suit, Bogina had alleged that Medline violated the Anti-Kickback Statute, which were similar to allegations in a prior suit. In response to Medline’s motion to dismiss under the public disclosure bar, Bogina invoked the original source exception.

The court held that Dodd-Franks’s amendments to the original source exception were clarifying, rather than substantive, “because the earlier definition is inscrutable as well as skimpier than the current one.” In other words, the court found the amendment was a clarification because the prior statutory language was confusing and difficult to interpret and apply.

While the court’s conclusion seems correct, its rationale is rather thin. Concluding that the amendment must be clarifying and not substantive simply because the prior statute was poorly drafted is overly simplistic and reductionist.

Nevertheless, the decision is interesting because it signals that courts must carefully examine specific provisions within statutory amendments to determine whether they are retroactive and cannot characterize all amendments in a piece of legislation as a group.