TORRUELLA, Circuit Judge.
This appeal concerns the qui tam provisions of the False Claims Act (the "FCA"), 31 U.S.C. § 3730, which allow whistleblowers (called "relators") to bring certain fraud claims on behalf of the United States.
I. Background
A. The FCA
To provide context, we start with the statutory scheme. The FCA contains qui tam provisions that "supplement federal law enforcement resources by encouraging private citizens to uncover fraud on the government." Rost, 507 F.3d at 727. The qui tam provisions permit whistleblowers (known as relators) to bring certain fraud claims on behalf of the United States; in return, "[a] private relator is entitled to a portion of any proceeds from the suit, whether the United States intervenes as an active participant in the action or not." Id. at 727.
"The qui tam mechanism has historically been susceptible to abuse, however, by `parasitic' relators who bring FCA damages claims based on information within the public domain or that the relator did not otherwise uncover." Id. Accordingly, Congress has amended the FCA several times "to walk a fine line between encouraging whistle-blowing and discouraging opportunistic behavior." See United States ex rel. S. Prawer v. Fleet Bank of Me., 24 F.3d 320, 324-26 (1st Cir.1994) (quoting United States ex rel. Springfield Terminal Ry. Co. v. Quinn, 14 F.3d 645, 651 (D.C.Cir.1994) (detailing the history of such amendments to the FCA's qui tam provisions)).
As a result of these amendments, the FCA includes jurisdictional bars that limit a district court's subject matter jurisdiction over qui tam actions. Two of these bars are relevant to this action. The first, known as the "public disclosure" bar, provides that a court does not have subject matter jurisdiction over any qui tam action that is "based upon the public disclosure of allegations or transactions" concerning the alleged fraud, unless, among other things, "the person bringing the action is an original source of the information." 31 U.S.C. § 3730(e)(4)(A). A relator qualifies as an "original source" if (1) she has "direct and independent knowledge" of the information supporting her claims and (2) she "provided the information to the Government before filing an action." Id. § 3730(e)(4)(B). The second, known as the "first-to-file" bar, provides that when a potential relator brings an FCA action, "no person other than the Government may intervene or bring a related action based on the facts underlying the pending action." Id. § 3730(b)(5).
B. The Complaints
OBP distributes and promotes Procrit — the brand name for epoetin alfa — a drug approved by the FDA for use to treat anemia resulting from chemotherapy, chronic kidney disease, HIV infection, and blood loss from certain types of surgery. Both Relators were sales representatives for OBP who were responsible for the promotion and sale of Procrit in the Western United States. From 1992 to 1998, OBP employed Relator Duxbury, first as a Product Specialist and later as a Regional Key Account Specialist for OBP's Western Division Oncology sales force. From 1992 to 2004, OBP employed Relator McClellan, also first as a Product Specialist but later as a Territory Manager for OBP's Western Division Oncology sales force.
This appeal turns on a number of complaints filed by the Relators and other parties, which we discuss in some detail below.
The Original Complaint contained two counts, one alleging "substantive violations" of the FCA and the other a conspiracy count. (Compl. ¶¶ 47-55 (Count I); id. ¶¶ 56-60 (Count II)). In support of the counts, the Original Complaint alleged that OBP published a fraudulently inflated AWP for Procrit, which resulted in the filing of false claims for reimbursement with the Medicare program. (Id. ¶¶ 1, 29). The Original Complaint further alleged that OBP marketed the "spread" — the difference between the higher, fraudulent AWP and the lower, actual cost of Procrit — to induce medical providers to purchase Procrit. (Id. ¶¶ 23, 29). Thus, according to the Original Complaint, the "spread" not only caused the filing of false claims, but constituted an "illegal kickback" to health care providers. (Id. ¶¶ 23, 30).
The Original Complaint also alleged that OBP provided "free samples" of Procrit as well as "non-public financial inducements," such as rebates, discounts, "unrestricted education grants," and "phony drug studies." (Id. ¶¶ 31, 34, 38, 40, 43). OBP allegedly used these inducements "to lower the providers' net cost of purchasing Procrit," and further "inflate[] the AWP," as "the value of these services was kept off the book, so as not [to] be reflected in the AWP." (Id. ¶ 34; see also id. ¶¶ 32-33). The Original Complaint alleged that these inducements also constituted illegal kickbacks. (See id. ¶¶ 3, 45).
With respect to the "phony drug studies," the Original Complaint alleged at Paragraphs 40 through 42 that OBP utilized "Phase IV Marketing Trials" to, among other things, "encourage the physician, clinic, or hospital to use the drug in a way which [wa]s inconsistent with its FDA approved indications and administration methods." (Id. ¶ 40(c)). The Original Complaint referred specifically to a 1997 trial in which OBP allegedly
(Id.) (emphasis in original). The Original Complaint further alleged that "[t]he 40,000iu dosage scheme was successful for Ortho and doctors, but Ortho ha[d] not received FDA approval for such dosage." (Id. ¶ 41) (emphasis in original).
As required under the FCA, both the Original Complaint and the Blair Complaint were filed under seal to allow the United States time to review both complaints and decide whether to intervene. 31 U.S.C. § 3730(b)(2).
On July 18, 2004, Duxbury, through his counsel, provided a written disclosure of information (the "Information") to the Department of Justice (the "DOJ"). The Information was sent in response to a April 6, 2004 letter by the DOJ summarizing the allegations in the Original Complaint and requesting further information. The Information stated that "[w]e believe the following paragraph describes a more important and damaging fraud identified in Mr. Duxbury's complaint, which we described (see Complaint ¶¶ 40-42) but are not sure you have grasped based on your letter and the interview of Mr. Duxbury." The "following paragraph" stated in part:
The Information then went on to discuss this "scheme" in more detail.
On October 26, 2006, over OBP's objection, the district court allowed Duxbury's motion to amend the Original Complaint, and the next day, on October 27, 2006, both Relators filed a First Amended Complaint (the "Amended Complaint"). The Amended Complaint added Relator McClellan as a party and alleged three counts, two of which are at issue on this appeal.
Count I alleges that, beginning in December 1992 to the present, OBP engaged in a scheme to provide kickbacks to health care providers "to induce them to prescribe ProCrit." (Id. ¶¶ 228-232). The kickbacks allegedly included "free ProCrit, off-invoice discounts and cash in the form of rebates, consulting fees, educational grants, payments to participate in studies or trials, and advisory board honoraria." (Id. ¶ 228). The Amended Complaint alleges that the kickbacks, among other things, "caused providers and hospitals to submit false claims for payment to Medicare for ProCrit." (Id. ¶¶ 229, 243-244).
Count III alleges that, beginning in 1997, OBP unlawfully promoted "[t]he administration of ProCrit at 40,000 units 1X per week to oncology patients," which "was not approved by the FDA." (Id. ¶¶ 131, 271, 273). Thus, the Amended Complaint alleges that OBP's "inflated dosing scheme was a substantial factor causing the submission of false claims for payment for ProCrit," insofar as OBP "caused providers and hospitals to administer ProCrit to chemotherapy patients at 40,000 units 1X/ week[], and in the absence of [OBP's] scheme they would have administered ProCrit at 10,000 IU 3X/week." (Id. ¶ 282).
C. The Dismissal of the Amended Complaint
On January 17, 2007, OBP moved to dismiss the Amended Complaint for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) and, in the alternative, for failure to plead fraud with particularity under Federal Rule of Civil Procedure 9(b). On January 28, 2008, the district court allowed OBP's motion to dismiss with prejudice and entered judgment in OBP's favor. See United States ex rel. Duxbury v. Ortho Biotech Prods., L.P., 551 F.Supp.2d 100 (D.Mass.2008).
As to Count I, the district court first held that the kickback claims were "based upon" a "public disclosure," in this case the "allegations" contained in the MCC filed in the AWP MDL, which also alleged the use of illegal kickbacks. See id. at 105-08. The district court further held that Duxbury "qualifies as an original source" for the kickback claims, but only for those claims that occurred during his period of employment, 1992 through 1998, since "his direct knowledge of OBP's activities only extends to the time he was employed by the company." Id. at 109. Having established its subject matter jurisdiction, the court nevertheless dismissed the 1992 through 1998 kickback claims because the Amended Complaint failed to plead the claims with sufficient particularity under Rule 9(b). Id. at 115-16.
As to the kickback claims from 1998 to the present, the district court held that McClellan did not qualify as an "original source," as the Amended Complaint did not sufficiently allege that McClellan offered
As to Count III, the court dismissed the claims concerning "off-label" promoting because they were barred by the "first-to-file" rule. Id. at 110-14. The district court first held that, even though Paragraphs 40 through 42 of the Original Complaint mentioned unlawful off-label promotion, the Original Complaint did "not provide the essential facts regarding a widespread scheme to promote off-label uses of Procrit." Id. at 114. Thus, the district court considered the Blair Complaint the "`first' complaint to allege claims based upon OBP's alleged off-label marketing of Procrit," and accordingly dismissed the off-label promoting claims in Count III of the Amended Complaint. Id.
As no claims survived, the district court dismissed the Amended Complaint with prejudice as to the Relators. Relators now appeal.
II. Discussion
The district court dismissed a portion of Count I and all of Count III for lack of subject matter jurisdiction. Thus, "[w]e review the district court's determination that it lacked subject matter jurisdiction de novo." Muskat v. United States, 554 F.3d 183, 194 (1st Cir.2009). Subject matter jurisdiction in this case is based on the allegations contained in the Amended Complaint. See Rockwell, 549 U.S. at 473, 127 S.Ct. 1397. Accordingly, "we take as true all well-pleaded facts in the [Amended Complaint], scrutinize them in the light most hospitable to the plaintiffs' theory of liability, and draw all reasonable inferences therefrom in the plaintiffs' favor." Fothergill v. United States, 566 F.3d 248, 251 (1st Cir.2009); see also id. at 251 n. 1 (noting that "[t]his standard applies to motions to dismiss for want of subject-matter jurisdiction that are adjudicated on the pleadings, in advance of jurisdictional discovery and without the taking of any evidence."). "[W]e may affirm an order of dismissal on any ground made apparent by the record (whether or not relied upon by the lower court)." Aguilar v. U.S. Immig. & Customs Enf., 510 F.3d 1, 8 (1st Cir. 2007).
The district court dismissed the remaining portion of Count I under Federal Rule of Civil Procedure 9(b) for failure to plead fraud with sufficient particularity. We similarly "review de novo the district court's dismissal order for failure to comply with Rule 9(b)." United States ex rel. Gagne v. City of Worcester, 565 F.3d 40, 45 (1st Cir.2009).
A. Count I
The Relators contend that the district court erred in dismissing the kickback claims contained in Count I, which the court dismissed, in part, based on the "public disclosure" bar, and, in part, based on Rule 9(b).
"The threshold question in a False Claims Act case is whether the statute bars jurisdiction." Rost, 507 F.3d at 727. The district court's dismissal of the kickback claims turns on the "public disclosure" bar, set forth at 31 U.S.C. § 3130(e)(4). It provides:
31 U.S.C. § 3730(e)(4)(A) & (B) (emphasis added).
As we discussed in Rost, analysis of the "public disclosure" bar "requires several inquiries":
507 F.3d at 728. On appeal, the Relators do not challenge the district court's holding that the kickback claims contained in Count I are "based upon the public disclosure of allegations ... in a ... civil ... hearing," in this case the allegations of illegal kickbacks contained in the MCC filed in the AWP MDL. Thus, we turn our attention to the fourth question, whether the Relators fall within the "original source" exception as defined in § 3730(e)(4)(B).
1. The "Provided" Language in the Original Source Exception
On appeal, OBP and the United States, appearing as an amicus, propose an alternative ground to affirm the dismissal of Count I. Under the FCA, an "original source" is defined as:
31 U.S.C. § 3730(e)(4)(B) (emphasis added). In determining whether the Relators qualified as original sources, the district court held that "[t]he plain language of the FCA only requires the relator to provide his information to the government prior to filing his action," and that "[t]his unambiguous statutory language must guide the court's interpretation." Duxbury, 551 F.Supp.2d at 109.
Both OBP and the United States argue that this was error, and contend that 31 U.S.C. § 3730(e)(4)(B) requires a relator to provide the information to the government before the public disclosure itself, not just before the filing of the relator's suit. As there is no allegation in the Amended Complaint that either McClellan or Duxbury provided any information concerning their kickback claims to the government prior to the public disclosure of the kickback allegations in the AWP MDL, both OBP and the government contend that we can affirm the dismissal of the kickback claims on this alternative ground. As explained in more detail below, and after a careful analysis of the FCA, we disagree, and conclude that the district court's interpretation is the correct one.
Although we are about to travel a well-trodden path, our first step remains the same. "Our first step in interpreting a statute is to determine whether the language at issue has a plain and unambiguous meaning with regard to the particular dispute in the case." Robinson v. Shell Oil Co., 519 U.S. 337, 340, 117 S.Ct. 843, 136 L.Ed.2d 808 (1997). "The plainness or ambiguity of statutory language is determined by reference to the language itself, the specific context in which that language is used, and the broader context of the statute as a whole." Id. at 341, 117 S.Ct. 843.
By its terms, the "original source" exception only requires the relator to "provide[] the information to the Government before filing an action under this section which is based on the information." 31 U.S.C. § 3730(e)(4)(B). Section 3730(e)(4)(B) does not impose any other timing requirement. Nor does § 3730(e)(4)(A). Thus, like the Fourth Circuit and the district court below, we conclude that the plain terms of § 3730(e)(4)(B) begin and end the matter. See Robinson, 519 U.S. at 340, 117 S.Ct. 843 ("Our inquiry must cease if the statutory language is unambiguous and `the statutory scheme is coherent and consistent.'" (quoting United States v. Ron Pair Enters., Inc., 489 U.S. 235, 240, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989))).
The government argues that the language of § 3730(e)(4)(B), when read in context, supports its view. Following the D.C. Circuit, the government points to the meaning of the terms "original source" itself, contending that a "source" is defined as "[t]he originator or primary agent of an act, circumstance, or result." Black's Law Dictionary 1522 (9th ed.2009) (using the example "she was the source of the information."). Thus, a source cannot "originat[e]" information that has been publicly disclosed. The D.C. Circuit similarly found significance in "Congress's decision to use the term `original source' rather than simply incorporating subparagraph (B)'s description into subparagraph (A)." Findley, 105 F.3d at 691.
However, we decline to rely upon the plain meaning of the terms "original source" when the statute defines the term at § 3730(e)(4)(B). It is only "[w]hen a word is not defined by statute" that we
Typically, we end our review when "the plain language of a statute unambiguously reveals its meaning, and the revealed meaning is not eccentric." United States v. Meade, 175 F.3d 215, 219 (1st Cir.1999) (noting that, in such circumstances, "courts need not consult other aids to statutory construction"). OBP and the government, however, argue that such an eccentricity would result.
Both OBP and the government primarily argue that interpreting the "provided" language in § 3730(e)(4)(B) by its plain terms would conflict with the intent of Congress. See United States v. Am. Trucking Ass'n, 310 U.S. 534, 542, 60 S.Ct. 1059, 84 L.Ed. 1345 (1940) ("In the interpretation of statutes, the function of the courts is ... to construe the language so as to give effect to the intent of Congress."). Specifically, they argue that reading § 3730(e)(4)(B) by its plain terms would permit relators to bring suit based upon fraud that was already publicly disclosed, so long as the relator had "direct and independent knowledge" of the fraud. For example, a relator who learns about fraud against the government in the Huffington Post would be permitted to bring a qui tam suit "based upon" that "public disclosure" if she has "direct and independent knowledge" of the fraud and provides that information to the government before filing suit, literally the day before filing. The same would be true if the "public disclosure" resulted from a long-standing government investigation, where a relator would be entitled to bring suit so long as he or she had "direct and independent" knowledge of the public disclosure.
The D.C. Circuit concluded that, although the FCA provides financial incentives to provide information about fraud to the government, "[o]nce the information has been publicly disclosed, however, there is little need for the incentive provided by a qui tam action." Findley, 105 F.3d at 691. The Sixth Circuit discusses this point in more detail, holding that requiring a relator to disclose his or her information to the government prior to the public disclosure at issue advances the twin goals of (1) alerting the government to potential fraud and (2) creating incentives to do so as early as possible. McKenzie, 123 F.3d at 942-43. As put by the Sixth Circuit,
Id. at 943; see also Wang, 975 F.2d at 1419 ("Qui tam suits are meant to encourage insiders privy to a fraud on the government to blow the whistle on the crime. In such a scheme, there is little point in rewarding a second toot."). Thus, both OBP and the government argue that requiring the relator to provide his or her information before the public disclosure corrects this problem and ensures that only productive suits are filed, that is, those suits in which a "true whistleblower" alerts the government of fraud not publicly disclosed.
After careful consideration of the arguments in favor of adopting the middle approach, we conclude that honoring the plain and unambiguous meaning of § 3730(e)(4)(B) would not conflict with the intent of Congress. Our decision is supported by our own review of the "language, structure, and history" of § 3730(e)(4)(B) and the "public disclosure" bar. See Rost, 507 F.3d at 728-29 (reviewing the language, structure and history of the terms "public disclosure" in rejecting interpretation that conflicted with the plain meaning of the statute). As we have just discussed the language of § 3730(e)(4)(B), we turn to the structure and history of the statute.
i. Structure
The structure of the FCA mitigates many of the concerns that lead the D.C. and Sixth Circuits to adopt the middle approach and, in fact, demonstrates that the middle approach has the potential to prohibit productive suits. As an initial matter, the "first-to-file" rule already provides potential relators significant incentive not to sit on the sidelines. As we discuss in more detail below, "a goal behind the first-to-file rule" is to provide incentives to relators to "promptly alert[] the government to the essential facts of a fraudulent scheme." United States ex rel. Lujan v. Hughes Aircraft Co., 243 F.3d 1181, 1188 (9th Cir.2001). It is unclear why a relator would wait for a public disclosure and risk another relator bringing suit.
Moreover, the Supreme Court's recent decision in Rockwell, which interpreted the "direct and independent" knowledge requirement of the public disclosure bar, substantially undercuts the conclusion by the D.C. and Sixth Circuits that "little incentive" is necessary for suits brought after a public disclosure. In addressing the meaning of the "direct and independent knowledge" requirement of the "original source" exception in § 3730(e)(4)(B), the Rockwell Court also addressed the meaning of the term "information" found in both § 3730(e)(4)(A) and § 3730(e)(4)(B). It held that "information" for purposes of both subparagraphs refers to the "information underlying the allegations of the relator's action," not the information underlying the public disclosure. Rockwell, 549 U.S. at 472, 127 S.Ct. 1397. The Court noted:
Id. at 471-72, 127 S.Ct. 1397 (emphasis added).
Rockwell clarifies that the information that the original source has "direct and independent knowledge" of does not have to be the same as the information upon which the public disclosure is based. Thus, a public disclosure concerning governmental fraud resulting from a Huffington Post article may be based on information that is different (to use the example in Rockwell, "what a confidential source told a ... reporter about insolid pondcrete") than the information a relator may have in support of the same fraud ("that a defective process would inevitably lead to insolid pondcrete"). See id. The same would be true of an ongoing governmental investigation, where the information upon which the government's public disclosures are based may be different from the information that the relator has in his possession.
But as a result of that clarification, Rockwell strongly suggests that situations can arise where the information upon which the public disclosure is based may be unavailable (such as a reporter protecting a source) or be of little value (if based on rumors), while a relator may have different information of the publicly disclosed fraud (such as eyewitness testimony, documents, etc.) of great significance. This has substantial plausibility when the public disclosure is based on the "news media," where sources may fear to come forward to serve as witnesses but others with "direct and independent knowledge" may be so willing. Although in such a situation, the relator, in a technical sense, is not a "true whistleblower," we disagree that such a relator does not "deserve[] any reward that may be obtained by pursuing a qui tam action under the FCA." See McKenzie, 123 F.3d at 942-43. Thus, the approach taken by D.C. and Sixth Circuits has the potential to bar productive suits.
ii. History
The history of the "public disclosure" bar and the "provided" language under § 3730(e)(4)(B) also does not require us to deviate from the plain meaning. The legislative history of the "public disclosure" bar has been well rehearsed by this and other circuits. See, e.g., Prawer, 24 F.3d at 324-26; see also Findley, 105 F.3d at 679-81. We only discuss legislative history relevant to our inquiry here.
The "provided" language in § 3730(e)(4)(B) was specifically enacted to "`correct[]' the holding of United States ex rel. Wisconsin v. Dean." Findley, 105 F.3d at 691; see also Siller, 21 F.3d at 1354; FMC Corp., 975 F.2d at 1419 ("Seeking only to `correct' opinions like Dean, Congress permitted one who publicly disclosed the information to bring a qui tam suit."). Dean was a 1984 Seventh Circuit decision decided prior to the 1986 amendments that resulted in the current "public disclosure" bar. The case concerned a previous jurisdictional bar, adopted in 1943, that barred relator suits
Congress obliged, and in 1986 Congress amended the FCA to "`encourage more private enforcement suits.'" Findley, 105 F.3d at 680 (quoting S.Rep. No. 93-345, at 23-24 (1986), reprinted in 1986 U.S.C.C.A.N. 5266, 5288-89); see also Rost, 507 F.3d at 730 (same). As emphasized by the Sixth Circuit, one goal of the amendments was to "prevent `parasitic' qui tam actions in which relators, rather than bringing to light independently discovered information of fraud, simply feed off of previous disclosures of fraud." McKenzie, 123 F.3d at 943 (quoting Siller, 21 F.3d at 1347).
But two additional changes are relevant here. The first was to abolish the "government knowledge" regime entailed by the 1943 jurisdictional bar, which Congress concluded "proved too restrictive of qui tam actions, resulting in the under-enforcement of the FCA." Rost, 507 F.3d at 729. Congress replaced the "government knowledge" regime with one, as shown by the "public disclosure" bar, focused on the "public disclosure of information given to the government." Id. As put by the D.C. Circuit, "Congress thus changed the focus of the jurisdictional bar from evidence of fraud inside the government's overcrowded file cabinets to fraud already exposed in the public domain." Findley, 105 F.3d at 684. To replace the "government knowledge" bar, Congress "`broadened the universe of potential [qui tam] plaintiffs, with only four exclusions' enumerated in § 3730(e)." Rost, 507 F.3d at 730 (quoting United States ex rel. LeBlanc v. Raytheon Co., 913 F.2d 17, 19 (1st Cir.1990)).
The second was to reinstate the "original source" exception proposed, but not adopted, in 1943, so as to avoid the situation in Dean where a potential relator who provided information to the government was not barred from bringing a qui tam suit. It is this second change that the "provided" language sought to remedy, by allowing individuals to maintain suit and "provide their information to the government." As put by the Fourth Circuit:
Siller, 21 F.3d at 1354.
The second additional change provides a direct justification of the "provided" language
The D.C. Circuit was quite explicit that its approach "may on occasion prevent qui tam lawsuits that may not be truly `parasitic.'" Findley, 105 F.3d at 685. However, we have rejected readings of the "public disclosure" bar that "would create a new exclusion not articulated in the text" which would discourage "productive private enforcement." See Rost, 507 F.3d at 730. In Rost, we rejected an interpretation of "public disclosure" under § 3730(e)(4)(A) to include self-disclosures made by a private party only to government agencies without further disclosure, as it would "reinstate exactly what Congress eliminated — the `government knowledge' bar." Id. Although the reading urged here would not return us to the "government notice" regime, it is overbroad so as to prohibit cases that are "productive private enforcement suits." Thus, just as we eschewed reading an exclusion in Rost that did not have textual support and resulted in discouraging "productive private enforcement," we similarly decline to do so here.
We conclude by emphasizing that we are cognizant of our institutional role and the limits of our competence in interpreting the FCA. As noted by the Fourth Circuit, in criticizing the approaches taken by the Second and Ninth Circuit:
Siller, 21 F.3d at 1354-55. We agree. The FCA has many moving parts, so that any attempt by us to move one may upset others. Given the difficulty in determining the right "balance," we conclude that the better approach is to rely upon the plain and unambiguous language of § 3730(e)(4)(B) in the absence of any clear direction to do otherwise.
2. McClellan
The Relators contend that the district court erred in holding that McClellan failed to qualify as an original source. We disagree. As an initial matter, the Amended Complaint alleges that "Relator McClellan does not bring any new legal claims against [OBP], but rather adds additional supporting facts to the legal claims previously made [in the Original Complaint]." (Am.Compl. ¶ 28). Thus, the district court correctly concluded that McClellan was required, in order to qualify as an "original source," to provide his information prior to the filing of the Original Complaint, rather than the Amended Complaint. See Duxbury, 551 F.Supp.2d at 109.
Although the Amended Complaint alleges that "[b]oth Relators have direct and independent knowledge of information on which the allegations are based, and have provided such information to the United States before filing suit, as required by 31 U.S.C. § 3730(e)(4)," (Am.Compl. ¶ 16), the district court noted that Duxbury "proffered no support for this conclusory allegation" and the district court refused to "reasonably infer it," as "Duxbury did not move to add McClellan as a relator until October 2006." Id. at 110. We agree.
McClellan counters that we are required to "take as true all well-pleaded facts in [the] complaint[]" and "draw all reasonable inferences therefrom in [his] favor." See Fothergill, 566 F.3d at 251. However, we are under no obligation to credit McClellan's conclusory allegations, which simply parrot the elements of the statute. See Rodríguez v. SK & F Co., 833 F.2d 8, 8 (1st Cir.1987) (per curiam) (affirming dismissal for lack of subject matter jurisdiction where "the plaintiff has failed to allege grounds upon which to support either his conclusory allegation of diversity jurisdiction or federal question jurisdiction."); cf. Ashcroft v. Iqbal, ___ U.S. ___, ___, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (in reviewing a motion to dismiss for failure to state a claim, "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.").
We also refuse to "reasonably infer" McClellan's allegation concerning disclosure. On appeal, McClellan points to a single allegation in the Original Complaint that he "had over 400 Patient Trial Cards in his possession in one time." (Compl. ¶ 39). This allegation does not support an allegation that he provided his information about the kickback claims prior to the filing of the Original Complaint. McClellan also points to the Information, which was provided to the government after the filing of the Original Complaint. The Information provides significant detail concerning the Relators' off-label promotion claims, not its kickback claims, and thus the Information also provides no support for his allegation that he provided his information prior the filing of the Original Complaint.
For the above reasons, we hold that the district court did not err in holding that McClellan did not qualify as an "original source" under § 3730(d)(1), and thus affirm the dismissal of those kickback claims
3. Duxbury
We finally address the dismissal of Duxbury claims under Rule 9(b). Duxbury seeks reversal. We agree.
In applying Rule 9(b), the district court held that the rule "requires relators to `provide details that identify particular false claims for payment that were submitted to the government.'" Duxbury, 551 F.Supp.2d at 114 (quoting Rost, 507 F.3d at 731) (emphasis added). This was error. In Rost, we noted a distinction between a qui tam action alleging that the defendant made false claims to the government, and a qui tam action in which the defendant induced third parties to file false claims with the government. 507 F.3d at 732 (noting that latter action is "in a different category" than former).
Similar to this case, Rost concerned allegations that "false claims were allegedly submitted by doctors who were allegedly induced and seduced by defendants into prescribing Genetropin for off-label uses to their patients, including federally insured patients." Id. at 732. We acknowledged that "Rost's complaint amply describes illegal practices in which Pfizer allegedly engaged." Id. However, "[a]s presently pled, the complaint d[id] not sufficiently establish that false claims were submitted for government payment in a way that satisfies the particularity requirement." Id. at 733. We noted:
Id.
Here, as in Rost, Duxbury does not allege that OBP itself submitted false claims to the government, but that, through OBP's illegal kickbacks, false claims to the Medicare Program were filed by medical providers for reimbursement of Procrit purchases. However, unlike in Rost, Duxbury does more than "suggest fraud was
(Am.Compl. ¶ 211d). Duxbury provides more specifics with respect to other medical providers. As to St. Joseph's Hospital, Duxbury alleges that the hospital submitted "approximately 4,800 claims a month for Medicare reimbursement" based upon OBP's unlawful kickbacks. (Am.Compl. ¶211a).
Although a close call, Duxbury's claims satisfy Rule 9(b) under this "more flexible standard." See Gagne, 565 F.3d at 46. Although Duxbury does not identify specific claims, he has alleged the submission of false claims across a large cross-section of providers that alleges the "the who, what, where, and when of the allegedly false or fraudulent representation." See Rodi v. So. New England Sch. of Law, 389 F.3d 5, 15 (1st Cir.2004) (quotation omitted); see also Rost, 507 F.3d at 731 (noting that Rule 9(b) requires a plaintiff to allege "`the time, place, and content of an alleged false representation.'" (quoting Doyle v. Hasbro, Inc., 103 F.3d 186, 194 (1st Cir. 1996))). In particular, Duxbury has identified, as to each of the eight medical providers (the who), the illegal kickbacks (the what), the rough time periods and locations (the where and when), and the filing of the false claims themselves.
Moreover, as to his (a)(2) claims, Duxbury has also alleged facts with respect to the medical providers he identifies that support his claim that OBP intended to cause the submission of false claims. See Allison Engine, 128 S.Ct. at 2126 (holding that an action under subsection (a)(2) requires a relater to allege "that the defendant intended that the false record or statement be material to the Government's decision to pay or approve the false claim"); see also Gagne, 565 F.3d at 47 (affirming dismissal of an (a)(2) claim under Rule 9(b) where "[r]elators fail to connect the only falsity or fraud for which they provide any detail").
Unlike in Rost, where the allegations gave rise to only speculation as to whether the alleged scheme caused the filing of false claims with the government, Duxbury has alleged facts that false claims were in fact filed by the medical providers he identified, which further supports a strong inference that such claims were also filed nationwide. We thus have allegations of "factual ... evidence to strengthen the inference of fraud beyond possibility." Rost, 507 F.3d at 733.
Thus, we hold that the kickback claims attributable to Duxbury, from the years 1992 through 1998, satisfied Rule 9(b). As the district court has jurisdiction over these claims since Duxbury established himself as an "original source," we reverse the dismissal of these claims.
B. Count III
The Relators contend that the district court erred in dismissing the "off-label" promotion claims contained in Count III. The district court relied upon the "first-to-file" bar, which provides that "no person other than the Government may intervene or bring a related action based on the facts underlying the pending action." 31 U.S.C. § 3730(b)(5). The Blair Complaint, filed nearly a year before the Amended Complaint, also alleged a similar "off-label" promotion claim. Accordingly, the district court examined whether the Original Complaint, filed a month before the Blair Complaint, sufficiently alleged an "off-label" claim to be considered the first-filed complaint for purposes of the "first-to-file" bar. Duxbury, 551 F.Supp.2d at 110-11. After carefully considering the allegations contained in both complaints, the district court concluded that, despite some similarities, the Original Complaint did "not provide the essential facts regarding a widespread scheme to promote off-label uses of Procrit." Id. at 114 (emphasis added). We agree.
As the Ninth Circuit has noted, "a goal behind the first-to-file rule" is to provide incentives to relators to "promptly alert[] the government to the essential facts of a fraudulent scheme." Lujan, 243 F.3d at 1188. All courts that have addressed the issue have interpreted § 3730(b)(5) to bar "a later allegation [if it] states all the essential facts of a previously-filed claim" or "the same elements of a fraud described in an earlier suit." United States ex rel. LaCorte v. SmithKline Beecham Clinical Labs., Inc., 149 F.3d 227, 232-33 (3d Cir.1998) (emphasis added); see also United States ex rel. Hampton v. Columbia/HCA Healthcare Corp., 318 F.3d 214, 217-18 (D.C.Cir.2003) (holding that "§ 3730(b)(5) bars any action incorporating the same material elements of fraud as an action filed earlier" and "reject[ing] another possible test, one barring claims based on `identical facts.'"); Lujan, 243 F.3d at 1188-89 (following LaCorte, and rejecting an "identical facts" test). Under this "essential facts" standard, § 3730(b)(5) can still bar a later claim "even if that claim incorporates somewhat different details." LaCorte, 149 F.3d at 232-33. We take the same approach.
The Relators contend that the Original Complaint, in particular, Paragraphs 40
However, the Original Complaint and Blair Complaint differ in one crucial respect. As recognized by the district court, the Blair Complaint contained a number of allegations that discuss, in significant detail, OBP's promotion of the "off-label" use, and alleged such "promotion" efforts as
Id. at 113 (citing Blair Compl. ¶¶ 27, 28-79). By contrast, Paragraphs 40 through 42 of the Original Complaint only allege one method by which OBP promoted the "off-label" use of Procrit, the use of "clinical trials," and, in particular, an unnamed "Phase IV Study" that "resulted in Medicare Part B paying for 40,000iu/week of Procrit in cancer chemotherapy patients instead of 30,000iu/week — an increase in 33% in payments for each Medicare Beneficiary receiving Procrit for treatment of their chemotherapy related anemia." (Compl. ¶ 40(c)). As this allegation fails to encompass the other allegations contained in the Blair Complaint concerning OBP's "off-label" promotion, it fails to allege the "essential facts" of the "off-label" promotion scheme contained in the Blair Complaint. In fact, the Original Complaint nowhere refers to a "off-label" promotion scheme. Thus, we conclude that the Original Complaint cannot trump the Blair Complaint for purposes of the "first-to-file" rule.
On appeal, the Relators argue that the Information, which the Relators provided to the DOJ in response to its inquiries concerning the allegations contained in the Original Complaint, provided further allegations that covered the "essential facts" contained in the Blair Complaint. We have previously held that, in reviewing a dismissal for lack of jurisdiction, "we need not confine our jurisdictional inquiry to the pleadings, but may consider those other materials" in the district court record. Aguilar, 510 F.3d at 8. We decline to do so here. The "first-to-file" rule is "exception-free," Lujan, 243 F.3d at 1187, and does not permit us to consider the Information, which was provided after the filing of the Blair Complaint.
For the above reasons, the district court did not err in dismissing Count III.
III. Conclusion
For the foregoing reasons, we affirm the dismissal of all claims except those kickback claims attributable to Duxbury. For these latter claims, we reverse the dismissal and remand for further proceedings consistent with this opinion.
FootNotes
United States ex rel. Rost v. Pfizer, Inc., 507 F.3d 720, 727 n. 4 (1st Cir.2007) (quoting Rockwell Int'l Corp. v. United States, 549 U.S. 457, 463 n. 2, 127 S.Ct. 1397, 167 L.Ed.2d 190 (2007)), overruled on other grounds by Allison Engine v. United States ex rel. Sanders, ___ U.S. ___, 128 S.Ct. 2123, 170 L.Ed.2d 1030 (2008).
(footnote omitted).
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