Knox County ex rel. Environmental Termite & Pest Control, Inc. v. Arrow Exterminators, Inc. et al.

This appeal involves a claim under Tennessee’s False Claims Act. A local vendor of termite control services became suspicious that two of its competitors had overbilled Knox County for termite control services provided to Knox County’s public schools. After confirming its suspicions by obtaining and reviewing public records and by hiring an attorney and private investigator, the vendor presented a detailed report of its findings to county officials who were unaware that the overbilling had occurred. When the County delayed taking remedial action, the vendor filed a qui tam suit authorized by Tenn. Code Ann. § 4-18-104(c) (2005) in the Chancery Court for Knox County. The County joined the vendor’s lawsuit and eventually settled with both of the companies named as defendants in the vendor’s lawsuit. When the qui tam plaintiff sought a share of the County’s settlement with one of the defendants, the County asserted that the qui tam plaintiff was not eligible to receive any of the settlement proceeds. The trial court heard the matter without a jury and held that the qui tam plaintiff was an “original source” for the purpose of Tenn. Code Ann. § 4-18-104(d)(3)(A) and, therefore, was entitled to receive 28% of the settlement proceeds or $71,546.46. The Court of Appeals affirmed the trial court’s conclusion that the qui tam plaintiff was entitled to recover 28% of the value of the settlement proceeds but remanded the case for the purpose of redetermining the value of the settlement proceeds. In re Knox Cnty., Tenn. ex rel. Envtl. Termite & Pest Control, Inc., No. E2007-02827-COA-R3-CV, 2009 WL 2144478 (Tenn. Ct. App. July 20, 2009). The County filed a Tenn. R. App. P. 11 application on the sole issue of whether the qui tam plaintiff is eligible to recover a portion of the settlement proceeds. We affirm the decisions of both the trial court and the Court of Appeals that the qui tam plaintiff is an “original source” and, therefore, is eligible to receive a portion of the proceeds from the County’s settlement with one of the vendors.