U.S. Ex Rel. Thomas F. Jamison v. Mckesson Corp..

• Citation: 649 F.3d 322
• Decision Date: 05 August 2011
• Docket Number: No. 10–60376.,10–60376.
• Parties: UNITED STATES of America ex rel. Thomas F. JAMISON, Plaintiff–Appellant,v.McKESSON CORPORATION; McKesson Medical–Surgical Medinet, Inc.; GGNSC Holdings, L.L.C.; Golden Gate Ancillary, L.L.C.; Beverly Enterprises, Inc.; Ceres Strategies, Incorporated; Ceres Strategies Medical Services, Incorporated, Defendants–Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

649 F.3d 322

UNITED STATES of America ex rel. Thomas F. JAMISON, Plaintiff–Appellant,

v.McKESSON CORPORATION; McKesson Medical–Surgical Medinet, Inc.; GGNSC Holdings, L.L.C.; Golden Gate Ancillary, L.L.C.; Beverly Enterprises, Inc.; Ceres Strategies, Incorporated; Ceres Strategies Medical Services, Incorporated, Defendants–Appellees.

No. 10–60376.

United States Court of Appeals, Fifth Circuit.

Aug. 5, 2011.

James Clifton Johnson, II (argued), Joe Bradley Pigott, Pigott, Reeves, Johnson, P.A., Jackson, MS, Albert Thomas Morris, U.S. Dept. of Justice, Antitrust Div., Washington, DC, Feleica Lockhart Wilson, Asst. U.S. Atty., Oxford, MS, for Plaintiff–Appellant.Jeffrey R. Chanin (argued), Benjamin W. Berkowitz, Daniel Erin Jackson, David J. Silbert, Keker & Van Nest, L.L.P., San Francisco, CA, Kenneth Harold Coghlan, Rayburn Coghlan Law Firm, P.L.L.C., Oxford, MS, Patric Hooper, Hooper, Lundy & Bookman, Inc., Los Angeles, CA, Robert Salcido (argued), Kelly M. Cleary, Akin, Gump, Strauss, Hauer & Feld, L.L.P., Washington, DC, Robert Gilmon Anderson, Sr. Counsel, James B. Tucker, Butler, Snow, O'Mara, Stevens & Cannada, P.L.L.C., Ridgeland, MS, for Defendants–Appellees.Appeals from the United States District Court for the Northern District of Mississippi.Before SMITH and STEWART, Circuit Judges.^*JERRY E. SMITH, Circuit Judge:

The public disclosure bar of the False Claims Act (“FCA”) deprives the district court of jurisdiction whenever qui tam relators bring a suit based on publically available information. The district court held that it lacked jurisdiction. Because the relator's action included no allegations specific to the defendants, but merely repeated a general description of fraud easily available in several government documents, we affirm.

I.

Thomas Jamison operates a Durable Medical Equipment (“DME” or “DMEPOS”) business that provides enteral nutrition products to nursing homes. Under Medicare Part B, such suppliers can obtain a supplier number that allows them to submit reimbursement claims assigned to them by the insured beneficiary. While attempting to sell his product during the late 1990's, Jamison noticed that some nursing homes, including some run by defendant Beverly Enterprises (“Beverly”), turned him down because they had set up joint ventures with other DME suppliers. Jamison soon learned that Beverly had created a subsidiary, Ceres Strategies, Inc. (“Ceres”), which had its own Medicare supplier number.¹ Ceres in turn had entered into a joint venture with McKesson Corporation and its subsidiary, McKesson Medical–Surgical Medinet, Inc.² (collectively “McKesson”), a DME supplier, to provide DME to Beverly's nursing homes.

Shortly thereafter, Jamison consulted government reports indicating that Beverly's scheme might be fraudulent. Specifically, he read the 2003 Special Advisory Bulletin, regarding “Contractual Joint Ventures,” from the Health and Human Services Office of the Inspector General (“OIG”). That report provided an example of a fraudulent arrangement:

A hospital establishes a subsidiary to provide DME. The new subsidiary enters into a contract with an existing DME company to operate the new subsidiary and to provide the new subsidiary with DME inventory. The existing DME company already provides DME services comparable to those provided by the new hospital DME subsidiary and bills insurers and patients for them.

Under such an arrangement, the DME supplier allows the nursing home to keep a portion of the reimbursement from Medicare in return for a guarantee that the nursing home will buy all of its DME from that supplier. With a guaranteed customer, the supplier can charge more for its products, and Medicare will pay the extra cost. At the same time, the nursing home gets less expensive DME. Nonetheless, the arrangement is fraudulent, because the nursing home represents itself as a DME supplier but has merely created a shell company that in fact plays no part in the delivery of DME and that consequently cannot comply with the standards for DME suppliers. See 42 C.F.R. § 424.57(c).

In December 2004, Jamison filed a qui tam complaint under the FCA against McKesson and Beverly, alleging that they participated in such a fraudulent scheme.³ The complaint named about 450 other defendants, including other nursing homes, DME suppliers, and owners or officers of such organizations, whom Jamison suspected of setting up similar arrangements. ⁴ Although Beverly, McKesson, and related entities were included in a list of offenders, the complaint included no specific allegations and described the scheme only generally.

While waiting for the government's decision on intervention, Jamison focused his continued investigations on Beverly and McKesson. He summarized his findings in a letter from his lawyer to the Department of Justice (“DoJ”) in November 2005 indicating that Jamison had traveled to Beverly's headquarters and discovered that no entity named “Ceres” had a physical office there. He described further conversations with Beverly's employees through which he learned that McKesson “handles everything” for Beverly and that McKesson, not Ceres, received Beverly's DME orders, delivered the DME, and submitted the claims for reimbursement to Medicare using Ceres's supplier number.

In June 2006, Jamison filed his First Amended Complaint, which contained the same theories of fraud but included specific allegations against Beverly and McKesson.⁵ In October 2008, the DoJ decided to intervene. The district court then dismissed Jamison on the ground that his action violated the public disclosure provisions of the FCA.⁶ Jamison appeals, arguing that his suit was not based on public disclosures and that he was an original source of the information on which his suit was based.

II.

“ ‘[A] challenge under the FCA jurisdictional bar is necessarily intertwined with the merits' and is, therefore, properly treated as a motion for summary judgment.” United States ex rel. Reagan v. E. Tex. Med. Ctr. Reg'l Healthcare Sys., 384 F.3d 168, 173 (5th Cir.2004) (citation omitted). We review a summary judgment de novo, applying the same standard as the district court. Id. Summary judgment will be granted if, viewing the evidence in the light most favorable to the non-moving party, there is no genuine dispute at to any material fact and the movant is entitled to judgment as a matter of law. Id. See Fed.R.Civ.P. 56(a).

III.

Before the 2010 amendments, the public disclosure provisions of the FCA provided that

(A) 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.

(B) For purposes of this paragraph, “original source” means an 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.

31 U.S.C. § 3730(e)(4) (2006). We have distilled those provisions into a three-part test, asking “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).

We need not follow the three steps rigidly, however. See, e.g., United States ex rel. Fried v. W. Indep. Sch. Dist., 527 F.3d 439, 442 (5th Cir.2008) (combining the first two steps). Indeed, combining the first two steps can be useful, because it allows the scope of the relator's action in step two to define the “allegations or transactions” that must be publicly disclosed in step one. That is, for the public-disclosure bar to apply, the publicly disclosed allegations or transactions need only be as broad and as detailed as those in the relator's complaint, because that is all that is needed for the action to be “based on” the publically disclosed allegations.

A.

Consequently, we ask first whether Jamison's action was based upon public disclosures of allegations or transactions. Before we undertake that inquiry, however, there are two preliminary issues.

1.

The first relates to the burden of proof. Typically, the party seeking to invoke federal jurisdiction bears the burden of demonstrating that jurisdiction is proper. Santos v. Reno, 228 F.3d 591, 594 (5th Cir.2000). In regard to the first two steps of the public disclosure bar under the FCA, however, that rule would require the relator to prove a negative: that there are no public disclosures of allegations or transactions upon which his action is based. We do not construe our precedent to require such an impossibility. Nonetheless, once the opposing party has identified public documents that could plausibly contain allegations or transactions upon which the relator's action is based, the relator bears the burden of demonstrating that they do not.

In the context of this summary judgment motion, that rule means that the defendants must first point to documents plausibly containing allegations or transactions on which Jamison's complaint is based. Then, to survive summary judgment, Jamison must produce evidence sufficient to show that there is a genuine issue of material fact as to whether his action was based on those public disclosures.⁷ In evaluating that question, we view the evidence Jamison produces in the light most favorable to him.

2.

Second, before defining the scope of Jamison's action, we must decide which of his complaints is relevant to that issue. He contends that we should look to his...